Renters in San Francisco and the East Bay seeking new digs should consider acting now: Recent data shows asking rents headed downward both nationally and in the San Francisco-Oakland-Berkeley area.
According to a January report by Rent.com, San Francisco area rents were basically flat, declining year-over-year by just over 1% as of December and falling 0.7% month over month.
Further south, the numbers tell a different story: Rents in the San Jose-Sunnyvale-Santa Clara area increased year-over-year by nearly 9.5%, the third-highest increase in the country behind Providence, R.I., and Columbus, Ohio.
These diverging trends have led to a rare period where the median Silicon Valley rent exceeds that of San Francisco and the East Bay, which has occurred only twice since 2019.
Rents in both the San Francisco and San Jose area remain some of the highest in the country with a median rent of $3,631 and $3,795 respectively, ranking the metros at No. 4 and No. 2 as of December 2023.
Nationally, median monthly rents declined year-over-year by 2% in November, followed by a further decrease of 0.8% in December. The current national median price for an apartment is $1,964. Median rents peaked in August 2022 at $2,054.
November marked the first time in more than three years that national median apartment rents declined by more than a single percentage point.
It’s yet another sign the white-hot multifamily market is now cooling, primarily due to new supply hitting the market, but there are plenty of markets around the U.S. where affordability will remain a challenge.
The national picture
Once considered a darling of the commercial real estate industry, the rental housing market is showing warning signs, as slower growth and reduced demand, high interest rates, and greater operational expenses plague owners and developers alike.
But from a macro point of view, rents remain elevated overall. Since November 2019, prices have increased more than 22% or about $355.
There has been a changing of the guard in the hottest apartment markets.
In the Midwest, yearly rent growth increased from 4.08% in October to 4.57% in November, then fell to 3.67% in December. But Midwestern asking rents remain well below other areas. The current Midwestern median rent of $1,434 is nearly $1,000 cheaper than median rents in the Northeast and West and $200 less than monthly payments across the South.
Outside of the Midwest, all other regions saw year-over-year declines in November, which was a sharp reversal for the Northeast, where median rents had grown by more than 3% annually in October. Although by December, the Northeast again bounced back with a 1.69% increase.
On the metro level, Rochester, New York (up 7.04%); Madison, Wisconsin (up 5.91%); and Buffalo, New York (up 5.72%) led the way for highest increases in effective rents.
At the other end of the spectrum, Cape Coral-Fort Myers, Florida (down 7.9%); Austin, Texas (down 6.05%); and Salt Lake City, Utah (down 5.77%); showed the largest declines.
As for the most expensive metros for effective apartment rents, New York City ($4,560), San Francisco ($3,178) and San Jose ($3,059) easily topped the list.
