Apartment rents in San Francisco are on the rise, while rents across the bay in Oakland are falling. The two trends, based on supply and demand, may not last.
Over the past year, the typical rent for a one-bedroom unit in San Francisco rose 1 percent to $2,740, while the rent in Oakland fell 6 percent to $1,790, the San Francisco Chronicle reported, citing figures from Apartment List.
Rents in the East Bay city, which have ticked up slightly in the past few months, have fallen faster than nearly any major city in the U.S., which saw a 1 percent decline overall.
While rents across the nation are higher than they were before the pandemic, rents in San Francisco and Oakland still haven’t rebounded to typical levels before 2020.
While rents have ticked up in San Francisco, falling rents in Oakland indicate less demand for apartments following a building boom.
Less competition for apartments has forced landlords to lower rents, or offer discounts to attract tenants. Last month, 8 percent of rental listings in Oakland buildings with at least 10 units were vacant, twice the rate of San Francisco.
A glut of Oakland building permits for apartments leading up to the pandemic resulted in a peak of 4,200 rental units flooding the market in 2021. The next year, another 3,400 were completed.
That surge of supply, combined with a population drop early in the pandemic, has contributed to suppressed rents, according to the Chronicle.
Many of the apartment highrises were built in Downtown and Uptown Oakland, where prices have dropped the fastest, according to Zillow.
The trend might not last, according to the newspaper.
Oakland development has slowed, with the city permitting fewer than 800 rental units last year, down from 2,100 in 2022 and 1,900 in 2019.
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Higher interest rates make it harder for developers to obtain project financing. And some experts say a nationwide building boom will subside after next year, while depressed rents in Oakland have caused some investors to seek more profitable projects elsewhere.
Some developers suggest the slight rise in San Francisco rents was caused by an uptick in artificial intelligence jobs creating more competition for homes, which could increase demand for Oakland apartments.
— Dana Bartholomew