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San Francisco, Silicon Valley rents plunge amid downturn

sfchronicle.com

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Re: San Francisco, Silicon Valley rents plunge amid downturn

#251

Post by ilyaeck »

jedberg wrote: post #73

This article seems to be based on only a few transactions, as not a lot of people are actually moving right now. I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks). Landlords are very reluctant to lower rents, because with the statewide rent control…

Doesn't an increase in $0 deposits and many weeks of free rent constitute a drop in effective prices?

Re: San Francisco, Silicon Valley rents plunge amid downturn

#252

Post by Psyonic »

landryraccoon wrote: post #245
qqqwerty wrote: post #208

Earlier quoted context omitted.

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.

I’m not sure this is a good argument. What landlords would try to raise rents or evict aggressively during a recession? Rent control prevents rents from aggressively dropping because landlords know the rents can’t be increased later. This is during a time when rents really need to go down.

Not the OP, but I think his point was people aren't ending their lease and moving home til covid is over, because if they did, they wouldn't be able to get that low of rent again.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#253

Post by tharne »

Between Covid and the current protests/riots, I think we're going to see a major reversal of the urban renaissance that took place from roughly 1990 to the present.

A formerly tacky suburban bungalow with a fenced in backyard starts looking pretty good in a quarantine compared to a one-bedroom apartment where the only way outside is via a germ-filled elevator. Watching downtowns like Chicago's burn is going to make a lot of business rethink locating to urban cores, especially when remote work is proving to be highly effective.

Even if all of this passes quickly, the imagery and emotion will remain. Just like 3-mile Island effectively put an end to nuclear energy in the U.S. even though it was an isolated incident, memories of quarantines and burning police cars are going to do lasting damage to economic development in urban cores.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#254

Post by joshribakoff »

raincom wrote: post #138
jedberg wrote: post #73

This article seems to be based on only a few transactions, as not a lot of people are actually moving right now. I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks). Landlords are very reluctant to lower rents, because with the statewide rent control…

That's the first step, and this has happened many times before. No REIT drops rents; instead, they offer "$0 deposit", "no rent for the first 45 days", etc. Once these tricks are exhausted, rents will drop. The issue is: how long does it take for these tricks to exhaust?

What do you mean tricks exhaust? It's a loophole, so it will work until the laws are changed to close the loophole. It makes no different to the landlord or tenant if the base rent is dropped, or the effective rent is dropped (assuming everyone can do basic math)

Re: San Francisco, Silicon Valley rents plunge amid downturn

#256

Post by gpm »

joshribakoff wrote: post #254
raincom wrote: post #138

Earlier quoted context omitted.

That's the first step, and this has happened many times before. No REIT drops rents; instead, they offer "$0 deposit", "no rent for the first 45 days", etc. Once these tricks are exhausted, rents will drop. The issue is: how long does it take for these tricks to exhaust?

What do you mean tricks exhaust? It's a loophole, so it will work until the laws are changed to close the loophole. It makes no different to the landlord or tenant if the base rent is dropped, or the effective rent is dropped (assuming everyone can do basic math)

The landlord is selling:

- A month (or year) of time in the apartment for cost $x.

- An option on purchasing more time for cost $y/time unit.

What these "tricks" do is make $x less than $y. That makes sense in the short term when you expect to be able demand higher rent/unit time in the future. When that expectation is no longer likely, it makes sense to lower $y to $x because other landlords will, and they will have less turnover (costs) and the same amount of income.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#257

Post by redis_mlc »

tharne wrote: post #253

Between Covid and the current protests/riots, I think we're going to see a major reversal of the urban renaissance that took place from roughly 1990 to the present. A formerly tacky suburban bungalow with a fenced in backyard starts looking pretty good in a quarantine compared to a one-bedroom apartment where the only way outside is via a germ-filled elevator. Watching downtowns like Chicago's burn is going to make a…

> the imagery and emotion will remain

People have short memories.

> Just like 3-mile Island effectively put an end to nuclear energy in the U.S. even though it was an isolated incident

Construction cost killed nuclear.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#258

Post by tmpz22 »

jedberg wrote: post #73

This article seems to be based on only a few transactions, as not a lot of people are actually moving right now. I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks). Landlords are very reluctant to lower rents, because with the statewide rent control…

I'm moving to a new location in SF and I'm seeing rents plummet. My landlord dropped rents across the board by about %20 (after ignoring my email for a rent decrease...). My new apartment is a pretty big down size but is nearly 1/3 of my previous. Rental groups on Facebook are showing a similar decrease in pricing.

More anecdata, but as a resident who IS moving I really disagree with your take - we're probably both right in different ways.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#259

Post by jotto »

tmpz22 wrote: post #258
jedberg wrote: post #73

This article seems to be based on only a few transactions, as not a lot of people are actually moving right now. I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks). Landlords are very reluctant to lower rents, because with the statewide rent control…

I'm moving to a new location in SF and I'm seeing rents plummet. My landlord dropped rents across the board by about %20 (after ignoring my email for a rent decrease...). My new apartment is a pretty big down size but is nearly 1/3 of my previous. Rental groups on Facebook are showing a similar decrease in pricing. More anecdata, but as a resident who IS moving I really disagree with your take - we're probably both r…

Curious, from what neighborhood to what neighborhood?

Re: San Francisco, Silicon Valley rents plunge amid downturn

#260

Post by tylerhou »

jedberg wrote: post #121
tedivm wrote: post #104

Earlier quoted context omitted.

My coworkers in Berkeley are all telling their property managers that they need to either lower the rent or they're not going to renew. Once the UC system said they weren't opening back up for physical classes in the fall demand for places near campus dropped considerably. My landlord hasn't lowered rent, but to incentivize us to stay he replaced our washing machine and upgraded some stuff around the property. That b…

> Once the UC system said they weren't opening back up for physical classes in the fall demand for places near campus dropped considerably. You've been given bad info. The UC President said all campuses will be open in the fall, in a hybrid mode. Berkeley's Chancellor has said that labs will be open with restrictions, but most likely lectures will not. That of course could change. One of the properties I manage is in…

UC Berkeley has not yet made a decision on whether classes will open in the fall. There are three possible plans for the fall at the moment [1].

The UC President has said that they expect a hybrid mode of instruction, but it's not clear whether there will be in person classes. It seems like each school themselves have a say in the decision.

> Napolitano indicated that each UC campus would be required to “meet system-wide thresholds” for Covid-19 testing, contact tracing and isolation before being allowed to open.

> Once the standards are met, campuses “can consider whether to maintain fully remote instruction in the fall or return some portion of their students to campus.”

> A decision is expected in the middle of June. [2]

A Berkeley CS professor also posted that he thinks the fall term will (and should) be online-only: https://www.reddit.com/r/berkeley/comments/g9vxb0/why_i_thin...

[1] https://news.berkeley.edu/2020/05/06/an-update-on-uc-berkele... [2] https://www.mercurynews.com/2020/05/20/coronavirus-universit...

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