List Yourself

ABOUT THE SAN FRANCISCO
BAY AREA RENTAL MARKET

The State of the Rental Market

As the for-sale housing market continues its slowing trend, the Bay Area rental market will remain a "landlord's market" according to experts. Rents have increased an average of 7% in each of the past two years with occupancy at over 97% (compared to an average of 90% nationwide). The for-sale market has slowed down in part due to major reform in the mortgage industry which has made it more difficult for many consumers (including first-time buyers) to qualify for a loan. Mid to high-end condominium units, rather than apartments, dominate properties currently under construction in the Bay Area and the inventory of apartments continues to be reduced by condominium conversions. These factors combined with a healthy job market has kept the demand for rentals high. This trend of high demand for rentals is expected to continue as San Francisco remains a highly desirable place to live.

How Did Rentals Become So Expensive in the Bay Area?

When it comes to the San Francisco rental market the simple law of supply and demand applies - San Francisco is a highly desirable place to live where many people compete for few units. Without new building (though some relief has come in this form), prices will remain higher than the rest of the nation.

Housing got tight toward the end of the decade when a booming local economy lured a flood of newcomers to the Bay Area, straining the already scarce supply of rental housing. Though some people left the Bay Area after the "bust", purchase prices for a home remain out of reach for most (almost two-thirds of the households in San Francisco rent).

What Should I Expect to Pay for a Rental?

Rents in the Bay Area the last Quarter of 2007 went up an average of 9.4% to $1,562 from the last Quarter of 2006. Rents are going up not just in San Francisco they are also climbing up in the East Bay and the South Bay. In Alameda the average rents climbed 5.4% to $1,443. The biggest increases are San Francisco, up 14.5% to $2,285; and Santa Clara, up 13.3% to $1,794.

Here is a sample of average rentals based on advertisements in our bi-weekly Rental Guide Magazine over the past six months.

District Studio 1 Bedroom 2 Bedrooms
Castro / Eureka Valley
$1,161
$2,236
$2,795
Civic Center / Cathedral Hill
$1,239
$1,770
$2,566
Downtown / Union Square
$1,061
$1,891
$2,730
Marina District
$1,837
$2,470
$2,800
Mission District / Outer Mission
$1,695
$1,845
$2,062
Nob Hill
$2,414
$3,761
$3,875
Noe Valley
$1,433
$1,686
$2,848
Pacific Heights
$2,072
$2,501
$3,451
Potrero Hill
$1,462
$1,881
$2,445
Richmond District
$1,100
$1,500
$1,934
Sunset District
$1,295
$1,524
$1,950
*Last Updated March 2008 Source: RentalGuide.com

How Much of Your Paycheck Goes to Rent?

The latest statistics show that nearly a quarter of renters spend more than 50% of their income on rent. The recommended ratio is 25-30%. Most landlords require a household income of three times the monthly rent2.

What is the Best Way to Secure a Rental?

RentalGuide.com is a great place to start. Remember - landlords want a qualified tenant but there are plenty out there. Here are some helpful hints, based on our 15 years of experience working with landlords, that will prepare you to stand out as a star candidate:

• Check RentalGuide.com for new listings on a daily basis. If a listing meets your criteria, call immediately. Remember, it is time consuming for a landlord to show an apartment (not to mention that they are losing rent for every day the unit sits vacant) so they want to fill a unit quickly. Be first in line for a showing- the early bird gets the apartment!

• When leaving a recorded phone message for a landlord, speak clearly and slowly. In order for a landlord to return your call he / she must understand your phone number. Don't just rely on leaving a message - call back and try to get a live person!

• Be persistent and aggressive without being annoying. Follow up on your showing. Ask the landlord when he / she will be making a decision, if he / she needs any additional information or a deposit. Bring your checkbook! Prospective renters who leave a deposit with their application are one step ahead of the game! Be so bold as to ask for the apartment- i.e. close the deal!

• Make a great first impression. Treat your apartment search as you would a job search- be courteous and professional.

• Know what you will qualify for based on your income (see note above). Don't waste your time (or a landlord's) on units that are out of your price range. While you can try to negotiate down a rental price, you should be reasonable - landlords know what their properties are worth and aren't likely to drastically revise their asking price. Set your sights on a unit that is within your budget.

• Make the landlord's job easy. Go to your interview / rental showing prepared - fill out and print our online application and get a copy of your credit report.

• Get to know the area - where you do and don't want to live - but be open-minded to all your options. We'd all like a cute one bedroom with hardwood floors and a view of the Golden Gate Bridge. If you need a rental now you can't be too picky.

• If you have a pet, write a "pet resume" and attach it to your application. Only 28% of landlords say they take dogs, 40% take cats. Be prepared to pay extra deposits and possibly more rent per month to have a pet.

• Dress for success. Your personal appearance is a reflection on how well you will maintain a landlord's property.

• Make a list of the amenities that you must have (parking, elevator, etc.), keep it short to have as many units to choose from as possible. Save time by asking "qualifying" questions over the phone (i.e. Does the rental meet my most basic criteria?).

• Alert your references that they might be contacted.

• Do a complete walkthrough on any unit you're serious about, and ask about repairs now. Use our rental checklist to inspect your future rental unit. Make your showing productive. Will things fit? Measure your furnishings and take along a tape measure to the units you are considering.

• Comparison shop, check out lots of places to see what your budget will get you. But again, don't be too picky or wait too long to accept a unit if it is offered to you.

Sources:
1: M/PF Research
2:M/PF Research

This Year's Allowable Rent Increase Amount

ALLOWABLE INCREASE FOR 2009-2010 - 2.2%
& Capital Improvement Imputed Interest Rates
January 2009

Effective March 1, 2009 through February 28, 2010 the allowable annual increase amount is 2.2%. This amount is based on 60% of the increase in the Consumer Price Index for All Urban Consumers in the Bay Area, which was 2.5% as posted in November 2006 by the Bureau of Labor Statistics.