A new report from RentCafe and Yardi Matrix shows San Francisco rents stabilizing this winter season, even as they remain one of the highest in the country.
The rent cool-down was immediately apparent in San Francisco’s month-over-month growth, which was only 0.2% this November. However, this contrasts sharply with other California urban areas, such as San Diego (+1.1%) or Hollywood (+1%).
It was even more apparent in the City’s year-over-year rental growth, which was just 1.1%. National rents grew twice as fast as San Francisco’s, driven by outrageous growth in oil and gas towns in Texas. Odessa, TX, for instance, saw rents increase by more than 33% in just the last year.
Locally, it was the Bay Area suburbs that took the hardest hit. Hurt by scarce rental supply and even scarcer construction, cities like Fairfield saw their rents increase more than 7% in the last year. Silicon Valley suburb Sunnyvale saw its rents increased by 5%, and even Daly City saw an increase of 4%.
Surprisingly, rents across a number of urban neighborhoods dropped in 2017. Even Brooklyn and Manhattan, world-renowned for their sky-high costs of living, dropped their rents by almost 2%. Despite the rumors of San Franciscans fleeing to Portland and driving up the Oregon cost of living, rents in Portland dropped 1.2% this year.
Yardi-Matrix notes that this urban rent plateau seen in much of the country was driven by one of the largest housing development pipelines in several decades. “300,000 apartment units are expected to come online for 2017 and 360,000 in 2018. This amount of new supply exceeds previous national levels over the last twenty years,” said Yardi Matrix Senior Analyst Doug Ressler.
Most of that inventory, however, will be directed at the East Coast. Over 43% of new housing units will be built in the South Atlantic or Northeast regions, with only 25% expected to go up on the West Coast.
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