San Francisco Rental Market Shows Signs Of Cracking Under Pressure Of Excess Supply

Tyler Durden's picture

Luxury apartment buildings in San Francisco are starting to offer some pretty serious incentives as America's most expensive rental market shows more signs it's on the verge of cracking.  Excess supply of luxury apartments in San Francisco is putting serious downward pressure on rental rates as pointed out by Yahoo Finance:

“Listings that once rented in just two to three weeks can now take two to three months to rent,” explains Paul Hwang, principal broker at Skybox Realty, a San Francisco-based real estate agency.

 

At least four new apartment buildings have opened within a three-block radius of one another during the last 18 months in San Francisco’s thriving South of Market neighborhood, which is home to major tech companies like Airbnb, Pinterest and Yelp (YELP).

 

Those four buildings — Jasper, 340 Fremont, 399 Fremont and Solaire — frequently offer some sort of bargain for prospective renters. 340 Fremont is offering six weeks of free rent; Solaire is pitching four weeks of free rent, free on-site storage and $1,000 discounts to renters who work at tech companies like Apple (AAPL), Facebook (FB) and Yahoo (YHOO). Meanwhile, another building, 399 Fremont, even tried giving away free bikes one weekend.

New buildings aren't the only ones offering incentives.  Craigslist is also flooded with listings like the one below offering free rent and a $500 gift card to interested renters.

Craigslist

Incentives are starting to show up in the data as well.  According to Zillow, YoY growth of rental rates turned negative for the first time in June...  

SF Median Rents

 

As supply is set to skyrocket...

SF Housing Units

 

And employment levels are peaking...

SF Employment

As we've warned multiple times, the San Francisco real estate market is on the verge of imploding.  Given the perfect storm of rising housing supply and peaking employment, we're afraid that even a $0 down, 30-year, adjustable-rate, jumbo mortgage backed by illiquid stock options from the San Francisco Federal Credit Union won't be able to save the day.

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Spungo's picture

Shit. We better print more money to prevent proles from living too cheap.

NotApplicable's picture

Uncle Sugar to the rescue*!

*of the oligarchs

Spungo's picture

The rest of us get Uncle Paul

Here2Go's picture
Here2Go (not verified) Spungo Aug 10, 2016 5:36 PM

So many fags, so few affordable shit holes...

bamawatson's picture

lots of cracks
lots of pressure

Mr. Universe's picture

Nothing says "I loved being hosed on outrageous rent every month" like a $500 gift card and a free bike.

RmcAZ's picture

Did they finally run out of people to spend $5,000/month on a studio apartment with parking as an additional charge? Who'da thunk?

Falling Down's picture

Couldn't happen to a better-deserved city.

Dixie Rect's picture

There isn't enough money in Mr. Yellen's printing press to make me want to live in San FranSicko. What a massive maggot pile.

Mr. Universe's picture

You know at one time it was a decent kind of place. It had it's wild side, sure, but people came from over to live the American Dream. I really think the turning point was the murder of JFK. I think at that point the elite knew they could get away with anything and so they started acting like it. 

Kirk2NCC1701's picture

<-- A good time for a Mega-Quake to break some Keynesian windows

<-- A good time for a Mega-Quake to swallow SF, and create new Beachfront

sleigher's picture

nah..   the beaches suck there.

Mr. Universe's picture

STFU! The beaches are awesome in Northern California. The problem is the water is so damn cold.

Here is one, but good luck getting to it.

https://www.flickr.com/photos/seemoo/4691167946

PaperTaperFakerCaper's picture

STFU!  Go to any beach on the east coast (summer, of course).  Makes NCal (even SCal) look like sh!t, which it is. 

skinwalker's picture

When you consider the free wifi I think they are competitively priced.

buzzsaw99's picture

three grand for less than 700 sq ft lulz

wmbz's picture

$3050 a month for 679 sq.ft. sounded a tad high to me. Until I noticed that a $500.00 gift card was being thrown in.

Well who in their right mind could resist! Where do I sign.

ACES FULL's picture

Can you apply the gift card to your 5000.00 security deposit?

Falling Down's picture

Would be comedy gold if the "back to the land" idiots started squatting in SanFran.

alexcojones's picture

"Cracking Under Pressure?"

Wait til the Big One strikes Frisco again.

Talk about cracking under pressure

Images for San Francisco 1906 earthquake

 

homiegot's picture

Wait till the earthquake.

AgainstYourThought's picture

Hopefully this means I won't get hit with another 10% rent increase next year for my San Jose shoebox apartment, though I ain't holding my breath. 

Consuelo's picture

 

 

 What's that tag line that Mc D's uses on the paper bags they put your food in...?

 

"I'm Lovin' it"...

 

And to think, the announcer is just introducing the line up - the game hasn't even started...!!!

Consuelo's picture

 

 

And just to show what a caring soul I am...

 

I don't want to see rents just fall.   Nor places going vacant for 6 months.   I want them torn down in a bankruptcy where there's no bid at all because there won't be another phony $ad-revenue based economy to fill them back up for 25 years...!!!  :-) :-) :-)

Happy-happy, Joy-joy...

 

 

Houses Depreciate's picture

San Francisco, CA Housing Prices Plunge 12% YoY As Speculators Dump Properties

 

http://www.zillow.com/san-francisco-ca-94121/home-values/

kareninca's picture

Rents here are astronomical.  That place in Redwood city in the article is typical.  I am looking to bring my 91 y.o. father in law out here to live with us in Silicon Valley.  A 261 square foot unit in an assisted living facility (food and assistance NOT included)  -  a place that isn't fancy  -  is $3,800 per month.  He is going to have to get used to our spare bedroom.  This area is getting more and more and more crowded every month; the traffic is getting much worse; there are simply more people here, largely from China, India and the Middle East; the shift has been abrupt.  I talked with a social worker who told me that elderly women in this area can't afford the dementia care facilities around here for their husbands, so they have to put their husbands in facilities a hundred miles off, and rent out rooms in their homes to help cover costs (those who actually own a house could sell, but everything they know is here and they are ancient themselves).  If your job is here, well, that is that I suppose.

Houses Depreciate's picture

Rents are high but still half the cost of buying at current grossly inflated asking prices of resale housing.,

brooklinite8's picture

Wait till the FB and other tech bubble starts bursting which have no use to average joe's life.. I believe Iphone was the most useful gadget that has come out of Silicon Valley so far which has passed its peak and now tapering off. Leaving aside the fed induced equity bubble Wall Street is not proud of their achievements either. When these two establishments start cracking the brick walls of the high end start cracking. Could n't be happier to see this accelerate to buy some house at a fire sale. Hope I am right. I am saving my every penny for the next bubble. Watching this crisis unfold on daily basis. I am not missing this one bitches.... Let it roll

Bay Area Guy's picture

While not a rental property, it's interesting to note that the Millenium Tower, a huge condo pimple.....I mean complex.....in the downtown area is sinking and tilting.  The developers are blaming the Transbay Terminal Boondoggle.....I mean project.....next door for disturbing the soil, but that project says no way.  At present, it has sunk 16 inches and is projected to sink another 15 inches.  It's also tilting 2 inches to one side.  The first lawsuit has been filed against both the developer and the transbay project by a disgruntled condo owner.  A quick look at listings for these condos shows prices currently between $1 million and $3.5 million.

Antifaschistische's picture

bed....rock, bed....rock. there's a reason why "rock" is in that word.

nc551's picture

It goes to show how out of touch their young upstart techie rental base is if all those sales gimmicks are working.

robertocarlos's picture

San Francisco eh. Did you drove or did you flew?

silverer's picture

The real problem is that the rent collectors count on that level of income after a while, and raise their spending levels up, sometimes by taking on more loans. They now are dependent on that rental income. A conservative person would just sock it away, but human nature has people usually living to the edge of their means. So the longer the rent levels are too high, the more locked in things get dependent on that income. So the unravel show gets a lot better. Keep your popcorn handy.