As rents explode nationally, San Francisco’s lag

Prices have recovered a small fraction of their pandemic losses

New York, Miami, Chicago, Los Angeles, San Francisco and Chicago (iStock)
New York, Miami, Chicago, Los Angeles, San Francisco and Chicago (iStock)

In a year of exploding rents nationwide, San Francisco has been an outlier. Its rental market has struggled to recoup the ground it lost during the pandemic and has renounced its title as the most expensive in the U.S.

When vaccines rolled out 11 months ago, Bay Area rents were down a staggering 23.4 percent from a year earlier and the median price for a one-bedroom was $2,680. Today it is $2,810, up only 4.9 percent and still 20 percent below the pre-pandemic mark, according to a new report by Zumper.

Nationally, rents are 11.6 percent above where they were last year, Zumper’s State of the American Renter report found. Strong demand coupled with limited supply has powered the increase.

The report’s author, Jeff Andrews, writes that context is key to understanding the extent of that jump. Rents rose 0.6 percent last year and 0.3 percent in pre-pandemic 2019.

“To move the national index in the numbers we’ve seen in 2021 takes incredible rent growth all over the country,” wrote Andrews. “And that’s exactly what’s happened.”

In a year of robust growth in rents, five of the 10 cities where they soared the most were in Florida.

Miami and Tampa rents skyrocketed 38 percent, the highest gains nationwide. Rents also shot up in Orlando, Jacksonville and St. Petersburg, by 32 percent, 27 percent and 24 percent, respectively.

Miami’s gain represented a turnaround; rents had fallen 10 percent from March 2020 through January 2021. Tampa’s rents had risen 7.1 percent in the same period.

New York rents are up 32 percent, fourth most among U.S. cities. In the process, New York surpassed San Francisco as the most expensive city in the country. The median price for a one-bedroom in the Big Apple is up to $3,190.

At this time last year, New York City apartments were on the discount rack. Rents had fallen 14 percent in 12 months and more than half of available apartments were offering concessions. The drop created potential for a large percentage increase this year.

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From left: Phoenix, Tampa and Las Vegas had the largest rises in rent, according to a Yardi report. (iStock)
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Historically, rents have risen in step with home prices. As the latter rise, renters become more likely to stick to renting, taking pressure off home prices. The push and pull keep the two markets roughly in balance.

But when the pandemic accelerated homebuying plans and the housing market got hot, lockdowns kept many renters frozen in place or sent younger ones back to their parents’ homes. Then vaccines arrived in January 2021 and renters slowly recovered their mobility, started searching for apartments and drove up prices.

Nationally, over half of the 9,000 renters surveyed by Zumper said they are paying more in rent than before the pandemic.

Those gains were prompted by a national inventory shortage. Eviction bans made some landlords hesitant to list units when they came open this year, increasing competition for those made available.

In 2020, nearly 45 percent of renters surveyed said they’d submitted just one application before signing their last lease. In 2021, only 30 percent said they hit on their first attempt.

Meanwhile, the number of tenants who said they applied to five or more before signing a lease doubled to almost 15 percent, the report showed.

The good news for tenants: The rate of rent growth has ebbed in the latter half of 2021, a sign that rents might normalize next year.

Andrews said that although rent rose by as much as 2 percent month-over-month in the summer, that velocity slowed in the fall. And this month, rents nudged down, dipping 0.5 percent from November.

“This could foreshadow a more stable rental market in 2022,” Andrews wrote, noting the potential that the seasonality of rents — up in the summer, down in the winter — could return.

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