A San Francisco loft renting for $7,000 a month.
In a slight departure from the DC real estate world on this rainy Friday, UrbanTurf decided to head 3,000 miles west, and take a closer look at San Francisco’s much buzzed about rental market.
“$3000 per month, 1 bedroom in the Mission. Ridiculous? Yes. Make an offer, let’s talk.”
This language was part of a Craigslist posting that recently made the rounds on blogs in San Francisco.
The ad, which displayed pictures of a run-down, 600-square foot unit, goes on to outline demands from prospective tenants, such as “your elevator-pitch resume” and most shockingly — and illegally — an “offer of a signing bonus.” Outlandish as it sounds, apartment ads demanding concessions, in addition to sky-high rent, are becoming the norm in San Francisco.
“This was my life a few weeks ago,” a commenter on one blog wrote. “S*** is no joke. Highway robbery.”
It is no secret that rents in major U.S. cities (including this one) have been steadily increasing over the past year. However, in San Francisco the jumps are jaw-dropping. In June, Trulia’s Rent Monitor found that rent prices in San Francisco were 14.7 percent higher than they were 12 months earlier, a percentage that creeps higher every month and that is well above the rate of increase in any other city. With Facebook’s recent IPO (and subsequent population of new millionaires) and a new tech boom drawing in well-paid new residents, landlords all over the city are cashing in.
“San Francisco has strong job growth, expensive home prices, and relatively little new construction,” Jed Kolko, Trulia’s Chief Economist, told UrbanTurf. “The high cost of housing means many people have no choice but to rent, and the limited new construction – thanks to both geography and regulations – means that there’s little new housing to match growing demand.
UrbanTurf spoke with a few San Francisco residents who said that even if you have the money, the rental market is so competitive that landlords can afford to be extremely picky, forcing hopeful renters to embark on elaborate means of distinguishing themselves from the crowd. Love letters, an occasional occurrence in the for-sale market, are now one of the many tools used by desperate renters in San Francisco. Open houses attract throngs of people, and many come ready with all required documentation in order to sign on the spot. Savvy renters also manage to coordinate a viewing before open houses and fill emails with ample details about their stable income and relationships.
“I’ve heard stories about prospective tenants showing up with champagne and fruit baskets,” said Anne Dahlgren, who moved to San Francisco two years ago and is hoping to move out of her current one-bedroom. “Once I tried to beat the crowd by showing up to an 8am open house on a weekday,” said Dahlgren. “There were already 25 other people waiting outside when I arrived — for a basement studio going for $2,900!” Though Dahlgren was ready to submit an application that morning, the landlord had already received so many offers that she was only accepting bids above the asking rent.
The city’s escalating rents are not only frustrating the city’s new residents. Those who want to upgrade to a better unit are finding that rents have shot up and availability has decreased in just the last two years.
Divya Bhat and her husband currently live in a two-bedroom apartment in Noe Valley (similar to perhaps Cleveland Park) with their two young children and pay $2,900 a month, a rent they locked in 16 months ago. They are now trying to upgrade to a unit with parking, a laundry area and maybe a few more amenities, but a third bedroom is out of reach: for even an improved two-bedroom in a similar neighborhood, they have found that rents are hovering in the $4,200 range.
“When we move out,” Bhat said. “I bet our landlord will re-list our unit at $3,800.”
This article originally published at http://dc.urbanturf.com/articles/blog/champagne_and_signing_bonuses_welcome_to_san_frans_rental_market/5776
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