After San Francisco has been decrying the outrageous sums that landlords are now commanding for rental units over the past two years, things finally seem to be simmering down. According to new rental data, rents in S.F. are only going to go up about 3% this year, compared to 10% in 2012.
In the East Bay, things are also going to hover around 3% growth, according to industry experts Marcus & Millichap, with the average rent over there now at $1,575 (an average of all unit sizes in market-rate developments). In S.F. that average number will hit $2,455 this year, they say. Of course, that number sounds extremely reasonable when you consider it includes things at the higher end of the spectrum like this $6,500 two-bedroom in SoMa, which theoretically would go for $6,695 by year's end if that 3% bump holds true.
The reason for the slow-down in giddy rental rate increases is largely due to an increase in supply i.e. all those cranes and new buildings going up everywhere which is set to bring 3,000 new rental units to market in 2013, including things like the massive Trinity Plaza phase 2 tower, and that insane NEMA thing, also on mid-Market. So, the silver lining for all those who don't like all this new development is that, actually, it does have the effect of keeping prices in check for those desperate to move.
At the high end of the market, developers competing with each other for new tenants are likely to have lower their expectations for the rents they can command this year and next.
We still expect that no one with a reasonable, high-five-figure/low-six-figure income, an average expense budget, and a sane person's notion of what to spend on rent will ever be able to afford an apartment in the Mission, SoMa, or Castro ever again. That is, without five roommates.