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San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

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Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#171

Post by xivzgrev »

mxcrossb wrote: post #26

> The figures underscore how the pandemic has roiled property markets and changed renter preferences. With companies allowing employees to work from home, people have fled cramped and costly urban areas in droves, seeking extra room in the suburbs or cheaper cities. I am skeptical. Yes a lot of Bay Area companies are allowing work from home for now, but are people really weighing that so heavily that they’re moving?…

You’d be surprised. There is a surge of demand away from metro areas eg upstate NY, Tahoe, etc.

I don’t get it. The pandemic will get under control, and people will go back to offices. Will employers require 5x per week in office, or 2-3x per week, or perm WFH?

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#172

Post by blululu »

barry-cotter wrote: post #106
komali2 wrote: post #77

Earlier quoted context omitted.

I disagree that it's a demand problem alone. There was tons of new construction. If I wanted to, I could have moved to any neighborhood in the city on a whim... As long as I was willing to move into a brand new luxury apartment $4k studio. The demand was high for reasonably priced older units. "Just add new construction" doesn't work if all that gets built is luxury apartments.

Again, think on the margin. If there’s suddenly a lot of new luxury apartments then those looking for something cheaper have less competition from the deep pocketed. If they build so many luxury apartments that prices for them break that’s also a victory condition.

It's not so simple. The newer buildings were constructed at a much higher cost than the old ones and they are priced accordingly (and with less flexibility to go down in price). In spite of the price tag and the 'luxury' appellation, they really are not that nice (they tend to be small and the gym/pool that comes with the apartment is closed during Covid. Consequently there is a subtle structural shortage on apartments that doesn't go away by simply building more apartments. If it were possible to build apartments at a lower price with more space per unit in the city then it would be a simple matter of total housing stock. As long as housing stock is differentiated in price and quality a shortage can endure even with an increase in total supply (rent controlled units for example will always be in short supply regardless of new construction).

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#173

Post by lotsofpulp »

dylan604 wrote: post #88
nradov wrote: post #17

Is there any data on rent changes in Texas? A Bay Area school district employee told me that she has noticed a big increase in requests to transfer student records to Texas districts. But I don't know how widespread that is.

There's been a few articles lately about the number of west coast people moving to Texas to the point that Texas will be considered a purple state after the upcoming election. I'm from Texas, moved to CA for a number of years, and have since returned to TX. Things like no state income tax and lower sales tax are major attractions, add to that the dirt cheap prices of property in comparison to CA. There are other thin…

> There are other things that are cheaper that just make day-to-day life easier.

Not having any protections or laws supporting laborers help make things cheaper too. No parental/sick leave, no per day overtime maximums, no mandatory break times, no non compete ban, lower minimum wages, etc.

Not that it’s the only reason, but I notice it to be a trend in “low cost” states. The exception seems to be WA, which has decent labor protections, but not quite as good as CA.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#174

Post by baby »

whimsicalism wrote: post #97
ecf wrote: post #83

From what I’ve seen, rent prices aren’t falling. Landlords are just offering 1-2 months fee if you sign a year lease.

Oh they definitely are - just not on the listed prices. What you're describing is also only true of new luxury towers that don't want to lock in a low price, which is the minority of housing in the Bay. I found it easy to get the landlords to drop the price $200. The few landlords who refused to play ball were messaging me a month later with discounts begging me to take the place.

Plenty of people I know negotiated 10% decrease of their rent. And that was a few months back.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#175

Post by burlesona »

komali2 wrote: post #77
burlesona wrote: post #51

I would say the city being “closed” is the major driver. Among my group of ~40 coworkers, about 30 (including me) have left the city. As far as I know all but one were renting. Everyone who left gave the following rationale: - we can work remotely so move wherever or nomad now - SF is not very fun during the pandemic - WFH in my tiny apartment is much less enjoyable than when I was working in the office and didn’t sp…

I disagree that it's a demand problem alone. There was tons of new construction. If I wanted to, I could have moved to any neighborhood in the city on a whim... As long as I was willing to move into a brand new luxury apartment $4k studio. The demand was high for reasonably priced older units. "Just add new construction" doesn't work if all that gets built is luxury apartments.

There have been a number of studies looking at this, but the TLDR is that globally most new construction is and always has been high-end compared to the surrounding market. What typically happens in a healthy market is the rich overwhelmingly live in new construction (or remodels), and everyone else lives in the places that rich people lived in 10, 15, 20, or more years ago. Since construction is durable, a luxury apartment building from the 70s should still be a nice place to live as long as it has been maintained. And if lots of nice new stuff has come in since then, the old stuff should be in less demand and therefore affordable.

For well-studied examples of this, see Japan: https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#176

Post by jeffbee »

seanmcdirmid wrote: post #142
jeffbee wrote: post #133

Earlier quoted context omitted.

The "yellow peril" theory that Bay Area housing bubbles are caused by foreign money laundering is popular on Nextdoor but I think on HN you're going to need some evidence. Prior to this pandemic 97% of dwellings in San Francisco were physically occupied by actual living people. Nobody is parking money in empty SF condos. It's true that investors are attracted to Bay Area real estate, because the government has dedica…

Chinese has had a huge influence on markets like Vancouver BC. In the USA west coast, tech jobs are much more of a factor, though many of those techies happen to be Chinese (but many are also Indian, American, Russian, and so on...). My aunt in West Seattle had people make unsolicited bids for her house (that wasn’t in the market), but these people were Indian (and they could have as easily been Chinese, Russian, Ame…

A guy rang my doorbell in Oakland and brandished a bank check for well over a million dollars to buy my house. He was a white American, though, so I don't get to build an awkward racist narrative around that event, I guess.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#177

Post by AtlasBarfed »

simonw wrote: post #16
jeffbee wrote: post #11

Earlier quoted context omitted.

Rent is like a traffic jam. The market collapses on the margin. You don't need to remove 30% of the cars to reduce freeway congestion by 30%, and you don't need to remove 30% of the residents to lower asking rents by 30%, either.

I hadn't heard "You don't need to remove 30% of the cars to reduce freeway congestion by 30%" before, any chance you could elaborate?

There's a limited tolerance/buffer (a literal buffer: the distance cars keep between themselves) for the compression waves caused by humans "overbraking".

Once the buffer is gone, the whole system dramatically collapses to stop-go traffic jam.

It's why (theoretically) automated highway driving can increase the car throughput: they can gain foreknowledge and better "system planning" via mesh communication and consensus (they are motivated because without consensus the system crashes to traffic jam), and probably/possibly follow each other much more closely to maximize the use of the concrete geography.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#178

Post by dan-robertson »

mywittyname wrote: post #112
sitkack wrote: post #66

Earlier quoted context omitted.

Sounds like for things that are inelastic, we should find ways (on both sides) to maintain a buffer if we want to have stable systems.

This is what leases are for, they fix prices for a year or so by adding cost friction to moving (usually a few months of rent). Which, in theory, act as a buffer to stabilize prices. The problem is that the cost savings of moving is so great that it was cheaper to pay to break the lease than it would be to stay. We saw the reverse of this before: when landlords were paying people $8,000 to move early because rent inf…

Possibly leases did stabilise this. Not everyone was in a position to cheaply give up their lease so if x% of people (on net) would want to leave the city modulo lease obligations, maybe something like x/12% of people would actually leave in a given month.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#179

Post by mywittyname »

dylan604 wrote: post #92
murph-almighty wrote: post #85

Earlier quoted context omitted.

I'm really curious about the macro political effects too- if a surge of CA-based liberal leaning tech workers move to Texas, is Texas purple?

The 2020 election will tell. Up to now, it has definitely not been purple.

H. Clinton did relatively well in Texas -- it's one of the few states where she out-performed Obama. Still, a 800,000 vote gap is much too large too close in only four years.

Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.

#180

Post by xyhopguy »

burlesona wrote: post #160
PascLeRasc wrote: post #90

Earlier quoted context omitted.

Compared to other big tech-hub cities, I'd think SF would be one of the better ones to spend the pandemic in. There's great parks like Dolores, Lands End, etc, and they'll still be comfortable to be in during this winter. Is there more to it than that?

SF is indeed a nice city and better than many in terms of parks and outdoor amenities. However, the space at home, when you WFH, is pretty rough. If you take what a typical couple pays for SF rent you can buy two houses in most of the US. So... if you're going to be spending a lot of time at home, for many people it makes sense to move out to a cheaper and more spacious locale, at least for now.

agreed -- portland is right there with very similar recreational activities and literally 25% the rent. why rent a 1b1b in SF when you can rent a mansion right on washington park for the same price?
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