Rent Growth Rebounds in San Francisco

The metro’s average multifamily rent went up 2.7 percent year-over-year through June, to $2,645, while housing affordability dropped to its lowest level since 2008.
San Francisco rent evolution, click to enlarge

A surge in the Bay Area’s technology and health-care sectors has powered the region’s economic output past that of top-performing nations. This has echoed once again in the multifamily market, where rents went up 2.7 percent year-over-year through June, to $2,645. Housing affordability is at its lowest level since 2008, while home price appreciation continues to outpace wage growth.

Employment gains span sectors, with San Francisco adding 50,600 jobs in the 12 months ending in April, up 1.9 percent and 20 basis points above the U.S. rate. Professional and business services led growth, having generated 13,000 positions, as tech behemoths continue their expansion in the metro, either by leasing or by acquiring large office buildings. Meanwhile, venture capital firms invest massively into a wide range of startups. The construction sector is thriving, as the city has multiple large projects underway, including Oceanwide Center, 400 Folsom and Folsom Bay Tower.

Almost 2,200 units came online in the first half of 2018 and another 4,900 are slated for completion by year-end. Some $728 million in assets traded this year through June, many of them in the Oakland area, with per-unit prices rising to $338,360, more than double the U.S. average. Yardi Matrix expects rents to rise 3.0 percent in 2018.

Read the full Yardi Matrix report.