This is happening a bit in Seattle too. I was able to negotiate a _decrease_ in rent after several years of 9% increases. 10% is the max allowed increase in Seattle if I understand the rules correctly.
San Francisco, Silicon Valley rents plunge amid downturn
201–210 of 342 posts
Re: San Francisco, Silicon Valley rents plunge amid downturn
#202Earlier quoted context omitted.
Rent control has a lot of unintended consequences. It is supposed to be a short term band-aid for bad zoning policies, but the zoning policies actually have to be fixed if you want to remove the band-aid.
I'm willing to bet you more than a beer that a large share of people under rent-control are high earners.
Rent control is trumpeted as some sort of protection for low-income people, but it actually has no such provisions that make it available to, or targets such people. The only beneficiaries of rent-control are people who happen to be incumbent residents.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#203Earlier quoted context omitted.
Supply increased significantly due to condo and SFH owners opting to wait it out until 2021 rather than test the sales market (listed as rental and willing to offer competitive prices since they’re sensitive to vacancies). This is driving the General strength in sales pricing for Bay Area housing. Demand for buying has come back strong in May while supply’s return is slow. I do see listings picking up in the last 2 w…
Can you explain more about this?
I believe they are contrasting the supply of property used for real estate sales vs for rentals. Owners that would have put their properties on the market are supposedly holding off on selling and instead listing them as rental units. An increase in availability of rental units would drive down the price of an apartment.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#204My office has announced WFH through the end of 2020, with permission to work from anywhere and no changes to compensation during that time. I would estimate 1/3 of people have moved out of the Bay Area as a result - many moving back home to stay with family or friends. Saving 6 months of Bay Area rent is a big deal.
The folks who haven't moved out of the Bay Area have mostly moved to the distant exurbs, expecting (probably correctly) that even if we do "return to the office" in 2021 they'll likely be able to continue to WFH 2-3 days a week, thus the commute won't be as painful as it would otherwise be.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#205If remote work becomes permanent for a lot of people and/or social distancing lasts a long time, I would expect a number of changes to happen:
- Homes with more bedrooms will become significantly more attractive because people will want home offices (maybe one for each spouse!)
- Homes with outdoor space will become more attractive
- Quiet homes without noise from neighbors or the surrounding area will become more attractive
- Proximity to public transit, freeways, and downtown areas will become less attractive as the drawbacks will exceed the benefits for most people
All of this will tend to push buyers toward large suburban homes rather than apartments or condos. In the long term, I expect rents and sale prices for apartments and condos will drop for those reasons.
House prices might even go up, relatively speaking, compared to prices for apartments and condos.
What we are seeing right now is not that -- right now, what we are seeing is people unable to pay rent and landlords desperate for paying tenants.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#206Earlier quoted context omitted.
I live on 22 block Valencia.. I've had 4 neighbors move out in the past month. So as far as price.. I can't say. But as far as folks moving out. I can.
People are moving out but not in. Move-ins determine the rental market price.
This is an oversimplification of already simple market dynamics. What sets the market is the supply and demand. If demand drops sharply after an event like covid-19 and supply is held constant, prices will go down except in extremely distorted markets like the ones ISPs and telcos play in.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#207Re: San Francisco, Silicon Valley rents plunge amid downturn
#208Earlier quoted context omitted.
> Landlords are very reluctant to lower rents, because with the statewide rent control that limits increases to 5% a year, we're incentivized to keep the rents high and give months of free rent, just so our base rate doesn't drop. God what a short-sighted policy. Not that I expect rent control to go well but that's nuts.
Rent control has a lot of unintended consequences. It is supposed to be a short term band-aid for bad zoning policies, but the zoning policies actually have to be fixed if you want to remove the band-aid.
In defense of rent control, it provides a stabilizing force during a downturn. How many folks who live in an apartment that has been under rent control for 10+ years are packing up and moving into their parents basement right now? My guess is very few.
It certainly has its issues, but there are much worse market distorting policies that I would like to see be fixed before rent control gets put on the chopping block.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#209I think the reality will set in soon on this once the CARES bonus UI is removed (and if it is not replaced) and the PPP loans run out. Right now everyone I know in real estate is still convinced it was just a minor blip and love to cite cherry picked stats about how a recovery is already under way. Coincidently I have been seeing a lot of fully furnished units coming on the market which I assume were former Airbnbs.
Looking at the real estate data, prices haven't really dropped that much. 2020 started with a historically low inventory of houses for sale nationwide. During the virus lockdowns, both supply and demand dropped so prices remained relatively stable.
I don't think we are going to know the real impact on the housing market until the lockdowns end and people resume normal activities like buying and selling homes. Then we will see if the relationship between supply and demand shifts.
Personally, I think that if work from home continues for a large number of people, people who have families are going to want to get out of condos and apartments and into houses where they can have dedicated office space. I wouldn't be surprised if demand shifts away from places like San Francisco toward houses in the suburbs with 4 or more bedrooms.
Re: San Francisco, Silicon Valley rents plunge amid downturn
#210Earlier quoted context omitted.
People not moving is literally the problem. This is part of a broader negative demand shock in the economy at large. Where exactly do you expect people without jobs, or with significantly reduced income to move to ?
> Where exactly do you expect people without jobs, or with significantly reduced income to move to? I mean I personally hope that the government steps in and helps them stay where they are, but that will also keep rents artificially high and would be a transfer of wealth from the treasury to landlords. So pros and cons. Realistically what seems to be happening is people are moving to lower cost areas within Californi…
You've missed or failed to acknowledge the actual point I was making. I think any reasonable person would agree that forcing double digit millions of people out of their homes is a very undesirable outcome. Most of those people would agree that something needs to be done (exactly what being dependent on one's political and economic ideology). Many of those people would probably also agree that the government is the one that needs to do something, simply because almost all political ideologies agree that one of the purposes of government is to do things that private citizens cannot. Let's just agree on this, unless I'm grossly misinterpreting what you're saying.
What I'm actually saying is that you can't simultaneously agree that "people aren't moving to SF," and that "the market is fine, because it's a thin market and these prices reflect very few transactions." The latter is a consequence of the former, and the root cause of both is that people just don't have the money to move. This, in combination with the coronavirus eviction moratorium in California, leads me to believe that people aren't moving anywhere, not that they're moving to lower cost areas.
I hope I'm wrong, because unless the government steps in with something radical like a debt jubilee, those people staying in their SF apartments with no income and incurring debt are just going to suffer more down the road.