Rental prices in the city of SF are out of control (San Francisco: real estate, 2013)

[caligirl2009]

I just read the following article.

What $3,000/Month Can Rent You Around San Francisco - Curbed Comparisons - Curbed SF

I am really shocked and disgusted that the average price to rent a one bedroom in SF is $2800. And that doesn't guarantee in-unit w/d, dishwasher, or parking in most cases. This is out of control. I've heard the rental market here is actually worse than NYC now. Bay area salaries don't justify these prices.

Why won't the city do anything about it? How long can this be sustained, how bad will it get, and when do you think it will bust? The next recession?

[AngusHsu]

The fewer people that are willing to pay 3000 to live in a shoebox, the lower the price will be in the future. Econ 101. Most of the neighborhoods where the units are located in the article are upper middle or upper class such as Russian Hill.

The city doesn't care because the politicians don't understand the noxious effects of rent control, even though it's rather soft and applied to pre-1979 buildings. I predict things will go bust for two reasons whenever they happen:

1. The Fed raises interest rates, driving down equities and raising mortgage rates
2. The tech sector implodes

[adam405]

Vote with your feet. Move to Seattle, Austin, Las Vegas, etc. Let other fools make their landlords rich, and support the California welfare state. This trend is caused by a lot of tech kids who have no life experience spending a huge % of their take home salaries on rent. The tech market doesn't have to implode (and I don't think it will...there will always be opportunities in CA and it will always be more expensive than the rest of the country), this generation just has to realize that you can't spend 55% of your take home pay to rent a 1 bedroom and ever hope to save money, buy a house, or raise a family. Once that happens then people will move and prices will float back to some stable equilibrium (still high enough for most people to complain about). Watch for the next round of Federal tax reform -- if they limit or eliminate the ability to deduct state income taxes from federal income taxes, then you have an effective 4-5% tax increase for almost all tech workers. That's my vote as to when the dam starts to break. As talented developers leave, companies will follow them, first with satellite offices and then with HQs as they become confident in the depth of talent pools in other cities.

As an aside, I moved out of SF not because I couldn't afford it - I was fortunate in the tech lottery - but because I didn't like the atmosphere that such a high COL created. It's the epitome of a rich vs poor, totally economically stratified society (which liberals claim to hate). Solidly middle class people were living in really poor conditions. Over time I came to see this as one of the ugliest forms of discrimination. And now I find myself MUCH more comfortable in a city with an affordable COL and a healthy middle class (go figure).

[zdg]

She doesn't want to vote with her feet.
She really wants to live in San Francisco.
Just like everyone else.
Which is why the rents are what they are.
Lousy free market economics.

[clongirl]

Not everyone can afford San Francisco. If you can't afford it, then leave. Nobody has a right to live exactly where they want...otherwise I'd be in London or Paris in a mansion overlooking a river. There's nothing "the City" can do about it. Landlords can charge whatever folks are willing to pay.

It will be like this until mass layoffs in the tech sector/gaming industries happen. This happened back in the very late 90's/2000's already- Tons of vacancies, falling rents.

[Obamadon1]

Originally Posted by zdg

She doesn't want to vote with her feet.
She really wants to live in San Francisco.
Just like everyone else.
Which is why the rents are what they are.
Lousy free market economics.

That's not really the full story. If it were free market economics, there would be a lot more construction and the price of housing would fall. Many more people could live in the city. It's free market demand and limited market supply.

[ruckerz]

I think the title is misleading.. I thought there was still rent control in SF?

[ccm123]

The rents are high because people are paying them. If nobody could or would pay for them, they would drop until someone could afford them. Free market economics.

Once the economy goes into another recession (I hope not, because I don't believe that we really ever came out of "The Great Recession"), the rents should fall.

Lots of money flowing around the Bay Area right now into the technology sector, which is driving up demand for rentals and real estate.

[roadwarrior101]

Originally Posted by clongirl

It will be like this until mass layoffs in the tech sector/gaming industries happen. This happened back in the very late 90's/2000's already- Tons of vacancies, falling rents.

Don't bet on it. There may be small blips, but the general trend is up, up, up. SF has no room to build out, remains a desirable city, has a large economic base and a socialist city council that greatly restricts development and allows for rent control. Yep, this is the recipe for out of control rental (and home) prices.

[ccm123]

I agree. There may be a few "blips" (5-10% decline in rental prices), but the general trend will be up.
San Francisco and The Bay Area has a knowledge based economy. They are well educated, well paid and can afford these rental prices.

Originally Posted by roadwarrior101

Don't bet on it. There may be small blips, but the general trend is up, up, up. SF has no room to build out, remains a desirable city, has a large economic base and a socialist city council that greatly restricts development and allows for rent control. Yep, this is the recipe for out of control rental (and home) prices.