San Francisco is notorious for sky-high rental prices, and while that situation won’t likely change in the near future, there are signs the San Francisco rental market is finally (finally!) softening.
San Francisco rental growth has slowed significantly over the last 12 months, according to the latest data from Zillow, the online real estate database company, which indicates San Francisco city rents climbed 5.5% year-over-year this June, versus a whopping 16.4% for June 2015.
“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.
Chalk part of that up to an apparent slowdown in tech hiring. Tech layoffs more than doubled during the first four months this year compared to the same period in 2015, according to the San Jose Mercury News. Raising funds isn’t as easy as it once was, when seemingly any entrepreneur with a half-baked idea — another Snapchat clone, the 20th food delivery startup — could raise a few million before slowly puttering their way into irrelevance.
Then there’s the huge surplus of the available units up for rent. The Dallas, Tex.-based housing research firm Axiometrics estimates 12,300 new units will glut San Francisco, Oakland and San Jose this year, up from about 7,000 units in 2015 and 6,700 units in 2014.
This has forced many landlords to get more creative to fill units, doling out incentives not seen since 2009, according to Hwang.
For more attractive deals, look no further than Craigslist, where “1 month free” is a popular tagline in listings spanning from San Francisco proper and Oakland to San Jose and Cupertino.
“Welcome Home!! 1 Month Free!! No App Fees!! $500 Deposit!!” reads one listing for an 845-square-foot one-bedroom in San Jose. “Love where you live! 1 month free – $500 [Visa] gift card!” another listing declares for a 679-square-foot one-bedroom in Redwood City. Still others are dangling a $1,000 “look and lease” special: Lease an apartment the same day you view it, and the landlord slashes $1,000 off the deposit or one month’s rent.
The fact, of course, remains that no matter how many incentives Bay Area landlords dole out, renters will still end up paying more for a one-bedroom than most Americans pay for the mortgage of their multi-bedroom homes. San Francisco, after all, continues to outrank New York City as the most expensive city to rent an apartment, according to the June national rent report from apartment website Zumper.
But if ever there were a time for well-salaried tech workers to rent the apartment of their dreams, that time is now. For everyone else? Let’s hope the San Francisco rental market softens even more.
JP Mangalindan is senior correspondent for Yahoo Finance covering the intersection of tech and business.