San Francisco Apartment Experts believe Rental Market 'will stagnate for a while.'
While rents in San Francisco are not going down, but they also aren't moving up the way they were a year ago. Those in the apartment industry say they have started to see a dip in demand, with less applications coming in for each new listing.
"A year or more ago it wouldn't be unusual to get a dozen for a decent unit, but now we see three or four," Eric Andresen, president of West Coast Property Management Company, told the SFGate.
Just six months ago, Andresen used to get personal letters from tenants explaining why owners should choose them over all the other candidates, along with bank account information, check stubs and other financial information. But those personal appeals have dropped off along with demand, he said.
Joanne Fazzino, a leasing agent with J. Wavro Associates, said she is also noticing a slowdown, but that she still gets letters from applicants sometimes. Typically these only occur in roommate situations where the prospective tenants want to let the owner know how long they have known each other, she said.
She believes the biggest trend in the market currently is the number of single people applying for apartments. Roommates are even submitting applications for large, single-family homes that in the past would more typically have provided family housing.
"I have two single-family homes on the rental market in the Sunset right now and only students or singles are calling — no families," she said. "That's unusual."
She attributes the change to the fact that several opportunities bringing people to the Bay Area are mostly filled with younger people. Jobs in tech and the financial sector are the two most common forms of employment she sees on applications lately.
Andresen thinks that a potential job market slowdown in these areas will cool demand even further.
"A slowing economy, coupled with proposed taxes on start-ups, will likely mean reduced job opportunities and thus a further slowing of the rental market," he explained. "Add to this the fact that new units are still coming on the market, although not quite as rapidly as in the past few years, and I would expect that the market will stagnate for a while."
Yet most in the apartment industry have begun to accommodate for the lack of demand, spending more time and resources on the digital marketing campaigns that target this younger generation of renters.
"Most owners and managers have adjusted to the change, realizing that the double-digit increases we were getting for a few years were unrealistic and unsupportable," Andresen said. "Many of us are learning to live in a more digital age, too, so units that go on the market with impressive online information — photographs, details, video — are moving more quickly, although at similar rents to units that are marketed the 'old-fashioned' way."
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