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Increasing number of S.F. apartments offering ‘move in specials’

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[See image gallery at blog.ctnews.com]

We all know the San Francisco rental market is tough.

In recent years, it has presented challengers for renters, but now it seems to be getting tougher for landlords. If the number of “move in specials” is anything to go by, filling vacant units this fall isn’t as easy as it usually is.

Though hardly scientific research, a filter of “special” on apartments for rent in San Francisco via Craigslist turned up over 450 possibilities. And it’s not only the neighborhoods filled with luxury towers offering these specials. Yes, SoMa has many of them, but as the gallery above proves, there are deals in the Sunset, the Haight, Pacific Heights–really, most any corner of the city, and in both new buildings and old.

Is the market softening?

John Way, broker and owner of San Francisco’s Property Force property management, says that special deals aren’t always a sign of a weakened market.
For example, if the unit in question is rent controlled, “investors want to keep the rental rate as high as possible,” Way explained.
To illustrate, say a $3,000 unit drops its price to $2,500. “Then it would take seven to 10 years to get back to the $3,000 if the rent control increase was on average 2 percent a year.”
On the other hand, if the price stays at $3,000 with an incentive of a free month, the lost income is easily recouped.
“When you calculate $3,000 for the free month vs years of low rent costing you tens of thousands, it an easy decision to give a month or even two for free,” Way said.
In the newer towers, rent control is not the issue. But here’s what could be instead: competition.
The special offers captured in the gallery above could be, Way suggested “Simply an advertising tool used mostly with multi unit buildings with a lot of similar competition.”
Indeed. But in a city with historically low vacancy rate, any competition for tenants, as opposed to competition for apartments, is interesting.
The National Real Estate Investor reported in July that “It’s probably impossible to overbuild San Francisco at large…..But it is quite possible to overbuild the high-end of the market, and weak rents and rising concessions suggest that developers may have succeeded.”
Unrealistic pricing
Nutshell: the market isn’t at its hottest. John Way also noted this, saying, “Some owners are just stuck on a price–the highest price their home was every valued at– as the current market price.  Due to this, we have a number of rentals in the market that are currently overpriced and not moving, making it appear like we have a surplus; but what we really have is a market that has just not hit a point where its forced to make major rent rate decreases.”
Not major decreases, no; but rents are down. Reports of year-over-year rent decreases came out in April,  June of this year and again in August. Though the exact amount of the dip ranges, depending on from whom data are pulled, the downward arrow is in and of itself noteworthy.

So, S.F. tenants and prospective tenants, peruse the gallery above of apartments that seem to want you more than you want them. We hesitate to use the word “deal” with these rents, but “move in special” has its own kind of appeal.

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert


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