It wasn’t until San Francisco resident Gary McCoy stopped looking for an apartment to share with his husband that one became available in their price range.
Earlier this month, after a “frustrating” year and a half of searching for a home to call their own, the couple signed a lease for a rent-controlled studio with a full kitchen and bathroom in The City’s Civic Center neighborhood. The price? Less than $1,800 a month.
“It’s still an uncomfortable amount of rent compared to what we’ve been used to … [but] to find a pretty large studio with full kitchen and full bathroom for less $1,800 blew us away,” said McCoy, 38.
Prior to finding the studio, McCoy said each apartment the couple viewed cost a minimum of $1,800 a month, “and that’s for the smallest studio that we actually looked at.”
San Francisco’s sky-high cost of living is nothing new. Rents and home sales have soared in recent years, as have evictions and new laws seeking to both streamline the production of new housing as well as stave off the displacement of longtime residents.
But McCoy’s experience finding an “affordable” apartment may not be an anomaly amid the expensive hills of San Francisco. It’s possible, according to recent data as well as housing experts who spoke with the San Francisco Examiner, that rents — at least in some neighborhoods — may finally be dropping.
The City saw a 7 percent drop in the price of a one-bedroom apartment between May and June, and a 5 percent drop for an apartment of the same size between June and July, the first consistent decrease in San Francisco’s rents in recent months, according to Sam Radbil, a spokesperson for the online apartment marketplace ABODO.
While the average monthly one-bedroom cost rose slightly between July ($3,726) and this month ($3,952), that’s still considered “a win” because the rent remained below $4,000 a month for a one-bedroom, Radbil said.
“It’s a simple game of supply and demand, especially in San Francisco — a city with very tight rental inventory,” Radbil said. “When there’s limited supply, landlords have more leverage but as new supply comes on the market as we’re seeing now, that’s going to bring some relief to renters.”
Planning Commission Vice President Dennis Richards, however, cautioned there are multiple types of housing in San Francisco, which are difficult to lump together when calculating rental prices.
“There seems to be more supply right now of brand new units, like in Potrero [Hill] or Mission Bay,” Richards said. “These big planned unit developments or large projects, they’re all coming on the market at the same time. That’s a different product type than a Victorian flat.”
He added, “I think we need to be careful [in saying] is everything falling, or is it just this product type?”
Last month, friends of Richards sought to rent their two-bedroom top floor apartment next to Dolores Park for a year and asked $7,300 a month. There were no takers.
His friends have since dropped the price twice, most recently to $6,800 a month. Richards — who conceded that price “still seems high” — estimated that if the home had been rented at this time last year, there would have been no need to reduce the rent.
YEAR OVER YEAR
The recent drop in rents over the summer doesn’t necessarily indicate rents are steadily decreasing throughout San Francisco, said Ralph McLaughlin, chief economist at Trulia, a residential real estate website.
“The housing market for both sale and for rent goes through a seasonal pattern,” McLaughlin explained. “About the mid-summer is when the season comes to an end and you start to see prices and rents decline a little bit. That’s normal.”
Year-over-year changes give a better picture of rent trends, he said.
That method shows rents are up by about 5 percent in San Francisco from the previous summer. But that increase “actually isn’t so outrageous” because just several years ago, rents increased by 10 to 15 percent each year in The City, noted McLaughlin.
Of San Francisco’s nearly 70 neighborhoods, just six have seen a drop in rents in apartments, while rents have decreased in single-family homes in 13 neighborhoods in the past year, according to McLaughlin.
But some of the “hottest” neighborhoods in recent years — Telegraph Hill, Lower Pacific Heights, Russian Hill and Haight-Ashbury — have all seen a drop in rents in single-family homes in the past year, with Telegraph Hill seeing the largest decrease at 11.6 percent.
At this time last year the median rent at Telegraph Hill was more than $7,000. Now it’s around $6,000, which McLaughlin acknowledged is still “by no means affordable to your average renter.”
In fact, rents remain widely unaffordable to those who earning less than the area median income for San Francisco, which in 2015 was an annual salary of $71,350 for one person and $101,900 for a family of four.
Public school teachers, for instance, have had such a hard time finding housing that Mayor Ed Lee even included in The City’s 2015 affordable housing bond some $80 million specifically to assist middle-income households, including educators.
“In no way do we see any cooling off in the rental market for teachers — in fact, the opposite,” said Matthew Hardy, a spokesperson for the teachers union United Educators of San Francisco.
“We get calls every day of someone either getting evicted, someone facing a steep rent increase, someone looking for housing or someone just scared to death they’re not going to be able to make rent and looking at their options,” he said.
McCoy, set to move into his new rent-controlled apartment, conceded rents are still too high, but was optimistic that he finally found a place to live that he and his husband can afford.
“Rents have definitely come down,” McCoy said.