Rents in San Francisco are nonetheless crazy-overpriced.
By Wolf Richter for WOLF STREET.
There are actually at the very least three elements which have plowed into the US housing market – and the rental market is reacting in near-real time to them: The unicorn-startup bust that started final yr and constructed up right into a crescendo this yr; the Pandemic-inspired transfer to work-from-home; and the oil-and-gas bust that took on particular vigor this spring when crude oil costs completely collapsed.
Individuals are bailing out of some locations and shifting elsewhere. In the most costly cities, rents are dropping, however in different cities – lots of them – rents are skyrocketing by the double-digits.
Loopy-overpriced San Francisco rents.
Rents in San Francisco plunged greater than in every other main market in June. That is nonetheless the most costly metropolis to lease in, although there are a couple of zip codes in Manhattan and in Los Angeles the place rents are dearer than in the most costly zip code in San Francisco. But it surely received inexpensive in June.
In June, the median asking lease for a one-bedroom residence dropped 2.Four% from Might, to $Three,280, down 11.Eight% from June final yr, which made the town the fastest-dropping rental market within the US.
The median asking lease for two-bedroom residences in June fell 1.Eight% from Might to $Four,340 and was down 9.6% year-over-year.
The nonetheless crazy-overpriced San Francisco market – it’s referred to as the “Housing Disaster” regionally – had hit a ceiling in October 2015, with the median asking lease for a 1-BR residence at $Three,670 and for a 2-BR at $5,000. Then rents declined by near 10% into 2017 earlier than choosing up once more. Whereas 1-BR rents eked out a brand new report in June final yr (by $50), 2-BR rents by no means received near their October 2015 report and are actually 13.2% beneath it.
These are median asking rents. “Median” means half the asking rents are greater, and half are decrease. “Asking lease” is the marketed lease. It is a measure of the present market in near-real time, like the value tag in a retailer that may be modified from day after day to draw buyers, relying on market circumstances. Asking lease is just not a measure of what tenants are presently paying on their current leases or below rent-control packages.
A sea of crimson within the 17 costliest rental markets.
The desk beneath reveals the 17 costliest main rental markets by median asking rents. The shaded space reveals their respective peaks and modifications from these peaks. Nearly all of them have declined from their peaks – with eight of them by the double digits, led by Chicago and Honolulu, the place rents have gotten crushed since their respective peaks in 2015.
Seattle is now solidly on the listing of double-digit decliners, reserving the third largest decline-from-peak in 2-BR rents (-15.1%), behind Chicago and Honolulu, and the ninth largest in 1-BR rents (-9.5%).
Denver, not way back one of many hottest rental markets within the US, has frozen over, with declines-from-peak within the -10% vary.
The rents we’re discussing listed here are for residences in residence buildings, together with new building. Not included are rents for single-family homes, condos for lease, rooms, effectivity residences, and residences with three or extra bedrooms. The info is collected by Zumper from over 1 million lively listings, together with A number of Listings Service (MLS) within the 100 largest markets.
The Cities with the largest %-declines in 1-BR rents.
The desk beneath reveals the 31 cities with the most important year-over-year lease declines in June for 1-BR residences, with San Francisco on the prime, adopted by Syracuse, NY, a school city now below siege from the Pandemic. Denver, with a 10% year-over-year decline, rounds out the double-digit decliners.
Then there are a bunch of cities within the Texas-Oklahoma-Louisiana oil-patch on this listing, together with Tulsa and Houston in fifth and sixth place. There are eight cities in Texas on this listing. Louisiana is represented by New Orleans (#18) and Baton Rouge (#31).
The oil patch is in deep trouble. The oil bust began in mid-2014, when the value of crude oil grade WTI started its lengthy decline from $100-plus per barrel to a low of $26 a barrel in early 2016. Then the value started to recuperate however by no means made it again to ranges the place the shale oil trade can survive long-term.
In January this yr, WTI began heading decrease once more, and this April hit a brand new low, when in some locations the value on the wellhead dropped to zero and when WTI futures briefly collapsed below zero for the primary time ever.
Lots of of oil-and-gas drillers have filed for chapter over the previous three years, and the pace and magnitude of these chapter filings is choosing up, with one of many biggies, Chesapeake, which relies in Oklahoma Metropolis, submitting for chapter on Sunday.
Houston is the middle of the US oil patch, and regardless of its huge and diversified financial system, the town has gotten slammed by the oil-and-gas bust in varied methods, together with by the very best workplace vacancy rates within the US, now at a catastrophic 24.5%.
Additionally on this listing are Silicon Valley (San Jose), Southern California (Los Angeles, Anaheim, Santa Ana), and three markets in Florida, amongst others.
|Greatest Declines, in %
||1 BR Hire||Y/Y %|
|1||San Francisco, CA||$Three,280||-11.Eight%|
|9||San Jose, CA||$2,300||-Eight.Zero%|
|16||Fort Price, TX||$1,100||-Four.Three%|
|17||Los Angeles, CA||$2,150||-Three.6%|
|18||New Orleans, LA||$1,380||-Three.5%|
|19||Santa Ana, CA||$1,720||-Three.Four%|
|23||Corpus Christi, TX||$830||-2.Four%|
|25||San Antonio, TX||$880||-2.2%|
|26||Salt Lake Metropolis, UT||$1,050||-1.9%|
|28||New York, NY||$2,890||-1.7%|
|31||Baton Rouge, LA||$820||-1.2%|
The Cities with greatest %-increases in 1-BR rents.
OK, prepare. Among the many 100 largest rental markets are 9 cities the place rents skyrocketed by over 15% year-over-year in June. And aside from Philadelphia, all of them sport median asking rents for 1-BR residences which might be nicely beneath the nationwide median ($1,229 based on Zumper). Which means these cities with these large lease will increase are nonetheless deep within the decrease half of the rental spectrum. In complete, there are 20 cities with double-digit lease will increase:
|Greatest Will increase, in %||1 BR Hire||Y/Y %|
|Eight||St Louis, MO||$910||15.2%|
|12||Des Moines, IA||$930||14.Eight%|
|18||St Petersburg, FL||$1,230||11.Eight%|
|28||Colorado Springs, CO||$990||7.6%|
Among the many prime 100 cities, 59 cities skilled year-over-year will increase within the median asking lease in June. In eight cities, there was no change in rents. And in 33 cities, asking rents declined, together with in most of the largest cities within the US.
The highest 100 rental markets, from costliest to least costly.
The listing goes from San Francisco to Tulsa, with asking rents for 1-BR and 2-BR residences, so as of 1-BR rents, from $Three,280 in San Francisco (-11.Eight%) to $590 in Tulsa (-9.2%).
These rents which might be dropping in some markets and surging in others present two issues:
- Rental markets are native, and the median nationwide lease is irrelevant on the native degree.
- Huge shifts are underway in housing, and the rental market is declaring the weaknesses in demand the place it exists in near-real time.
Markets the place rents are growing 10% or 15% a yr are asking for hassle except they’ve a booming job market with surging wages – this was the case in San Francisco, Seattle, and different scorching markets. But when they don’t have surging wages, many renters, who’re already tapped out, will run out of cash. And it’s renters that maintain the present going.
You possibly can search the listing listing through the search field in your browser. In case your smartphone clips this 6-column desk on the best, maintain your machine in panorama place:
|1-BR lease||Y/Y %||2-BR lease||Y/Y %|
|1||San Francisco, CA||$Three,280||-11.Eight%||$Four,340||-9.6%|
|2||New York, NY||$2,890||-1.7%||$Three,210||-5.Zero%|
|Four||San Jose, CA||$2,300||-Eight.Zero%||$2,860||-Four.7%|
|7||Los Angeles, CA||$2,150||-Three.6%||$2,960||-5.1%|
|10||San Diego, CA||$1,750||-Zero.6%||$2,300||-Four.2%|
|11||Santa Ana, CA||$1,720||-Three.Four%||$2,310||6.Zero%|
|13||Fort Lauderdale, FL||$1,650||Three.1%||$2,200||Four.Eight%|
|14||Lengthy Seashore, CA||$1,600||Three.2%||$2,Zero10||Zero.5%|
|24||New Orleans, LA||$1,380||-Three.5%||$1,610||5.2%|
|32||St Petersburg, FL||$1,230||11.Eight%||$1,600||Three.9%|
|40||Fort Price, TX||$1,100||-Four.Three%||$1,360||1.5%|
|50||Salt Lake Metropolis, UT||$1,050||-1.9%||$1,300||-5.1%|
|50||Virginia Seashore, VA||$1,050||Zero.Zero%||$1,250||1.6%|
|56||Las Vegas, NV||$1,000||1.Zero%||$1,200||Four.Three%|
|58||Colorado Springs, CO||$990||7.6%||$1,250||7.Eight%|
|60||Kansas Metropolis, MO||$960||Zero.Zero%||$1,120||Zero.9%|
|64||Des Moines, IA||$930||14.Eight%||$990||15.1%|
|66||St Louis, MO||$910||15.2%||$1,290||12.2%|
|70||San Antonio, TX||$880||-2.2%||$1,100||-1.Eight%|
|78||Corpus Christi, TX||$830||-2.Four%||$1,050||-Zero.9%|
|79||Baton Rouge, LA||$820||-1.2%||$940||1.1%|
|83||Winston Salem, NC||$800||Three.9%||$880||6.Zero%|
|89||Oklahoma Metropolis, OK||$750||Four.2%||$880||Zero.Zero%|
|96||El Paso, TX||$680||Four.6%||$800||Zero.Zero%|
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