SF has least competitive rental market in state, report finds

Occupancy rates and rents are up, but the city has less demand than elsewhere

(Illustration by The Real Deal with Getty)
(Illustration by The Real Deal with Getty)

San Francisco is the least competitive housing market in the state, according to Yardi research showing that there are only seven would-be tenants per vacant apartment, compared with double that number in Silicon Valley and the East Bay.

In Orange County, the most sought-after rental market in the state, there are 20 renters competing for every vacant apartment.

The commercial research company used the number of prospective renters, the occupancy rate and the average days an apartment sits vacant to come up with a “competitive score.” It also lumped the city’s figures with those in Marin and the Peninsula for the purposes of its analysis.

San Francisco’s occupancy rate rose to 93 percent in the second quarter, compared with 89 percent a year earlier. Also, apartments rented eight days faster at an average of 41 days. Still, San Francisco got an overall competitivity score of 11, compared with 91 in Orange County, where apartments rent in 31 days and are more than 97 percent occupied.

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“Despite growing demand for apartments and a recovering job market, San Francisco is faced with a slower return to physical offices as more flexible remote work policies have been put in place locally in the past two years,” said report author Veronica Grecu of Yardi’s Rent Cafe apartment listing site.

The continuing work-from-home trend may impact the whole Bay Area, where the most competitive market, Silicon Valley, had a competitivity score of 47. That puts it behind six Southern California markets and Sacramento, which has long been the destination of choice for Bay Area transplants fleeing the region’s high prices.

Despite the relative lack of interest, San Francisco is well past its pandemic-era freefall, in part because of younger renters who have been increasingly interested in the city, in part because it is more affordable than it used to be. San Francisco doubled its share of Gen Z rental applications in 2021 compared to the previous year, Grecu said via email.

In July, rental listing site Zumper reported that the city had reached a median of $3,100 per month for one-bedrooms, the highest since July 2020 and a 14 percent year-over-year increase. The revitalized rental market is bringing apartment buyers back, with the recent $18 million sale of a trophy building in Alamo Square as the priciest market-rate multifamily trade of 2022.

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