In Bay Area, rents have been falling since March

High prices, remote work are driving tenants away

High costs, remote work and shuttered bars, restaurants and shops have taken a toll on city living in the Bay Area.

And during the COVID-19 pandemic, it’s showing up in plummeting Bay Area rents since March, according to a new study by Apartment List. Monthly rent dropped 17.8% in San Francisco, the steepest decline in the nation, 9.5% in San Jose, 7.9% in Oakland and 6.3% in Fremont.

The four Bay Area cities were among the top 10 cities in the country with declining rents. They also remain atop the list of most expensive cities in the U.S., according to Apartment List.

“The short answer is coronavirus,” said Igor Popov, chief economist at Apartment List. But he added that other factors, including the recession and remote work, have driven down demand and prices in the Bay Area and other cities with tech hubs.

Overall since March, rents are down in 41 of the 100 largest U.S. cities, according to Apartment List. Other cities that have seen big drops are New York (down 11.6%), Seattle (off 9.9%) and Washington, D.C. (down 8%).

Remote work has reduced the need for apartments near tech and professional offices and increased demand for more home space for video conferencing and the everelusive balance between job and home. The recession has hurt service workers and others unable to work from home, causing some to leave the Bay Area to move back with family or cheaper spaces.

Bay Area rents remain high. The median price for an apartment in San Francisco is $2,590, while the median is $2,170 in San Jose and $2,090 in Oakland.

Many Bay Area apartments are offering discounts, including periods of free rent or first-month reductions to fill vacant units, agents and public listings show.

For example, a vacant two-bedroom, two-bathroom unit near the Panhandle in San Francisco was initially listed on Zillow in June for $4,490 and was relisted in September for $500 less. A two-bedroom walk-up in Hayes Valley listed for $3,600 in August 2019 is now being offered for $2,795 with a $1,000 discount on the first month’s rent.

The Rosewalk Apartments, a 450-unit complex in San Jose, is offering a $1,500 move-in discount.

Omar Maissen, an agent at FM Partners in San Francisco, said sales of apartment buildings and investment condos have fallen as pandemic movers have searched for more space. Small apartment buildings, he added, are “getting crushed.”

Some of the movers from San Francisco are looking to buy in the suburbs, Maissen said. “Some people were priced out and are seeing this as an opportunity,” he said.

Apartment List has seen a strong demand to remain in the Bay Area through an analysis of its search data, Popov said. But fewer outsiders are looking at moving into the area. Silicon Valley apartment hunters are also looking to Sacramento — a cheaper housing alternative but still within striking range for an occasional commute to the office.

The prices of apartments in smaller, more affordable cities have risen during the pandemic. Boise, Idaho; Reno, Nevada, and North Las Vegas have all seen jumps.

Popov expects cities to regain their vibrancy as the health crisis recedes and restaurants and shops reopen to pre-coronavirus levels. But most tech companies and major employers have not made permanent decisions on remote work.

“Ultimately,” he said, “it feels like a bit of a moving target.”