This week at our sales meeting we had our ace rental agent, Laura Gray give us an overview of the rental market. Here are her observations:

Rents are up 10-15% from a year ago. According to Craigslist, most one-bedrooms rent in the $1500-3000 range, ( some can go up to $4,000), with the average being around $2500.    Two-bedroom go up to $6,000, with many  right in the $3200 range.

A CraigsList snapshot for the day offered this much in inventory:  206 units  for rent in Pacific Heights,  308 in SOMA/South Beach and 31 in the Hayes Valley.

Units on the North side of town (PacHeights, Marina, Telegraph/Russian/Nob Hill, North Beach) command the highest rents. They also go faster and attract the highest quality tenants.

SOMA/South Beach takes a little longer to rent.

Hayes Valley is hot. Laura has a good sense of the market in this neighborhood because she handles a number of rentals in larger buildings there.

Competition is fierce for units offered below $2500/month. Units at this price point usually go quickly and easily, with multiple applications.

In the $2500-3500 range renters are expecting a better location and/or luxury building. Units renting in this range will sit a little longer before renting.

Above $3500 requires some patience– if your place is worth that much, it will eventually rent, but it may take some time.  

Premiums are paid if your rental is the ‘quintessential San Francisco home’– and has updates. I.E. period architecture with remodeled baths and kitchens. Laura used 1839 Filbert as an example.

Lofts go fast– especially if they’re in North of Market locations (this is a rare commodity).

The relo market isn’t nearly as hot as it used to be. In previous years, transferees were a big segment of the rental market. Now, not so much.

Many of Laura’s tenants can afford to buy but are choosing not to.  To them, it still seems more reasonable to rent a great place for $3500/month instead of shelling out $5000/month to own it. I’m sure they understand that the after-tax costs are much lower, but we won’t go there in this post.  

 I’ve been working with investor clients lately, and have called Laura a few times to get estimates of rental values for specific units. Generally she’s quoted me premium rents for the properties I inquire about, probably because they’re high quality condominiums.

An executive studio at The Montgomery, for instance should rent for $1800-2000. A two-bedroom in the same building should go for $3400-3600. 

I also asked her about rental values for a couple of large  two-bedroom condominiums in prime Pacific Heights.  These were both in period buildings and had a lot of charm.  She estimated that they could command upwards of $4,000– and maybe go as high as $5,000. Both of these places had parking.

Two great links to learn more about the rental market in San Francisco:

Laura’s Rental Listings on the Paragon website - fun eye candy and a great way to get a sense of what nicer places rent for.

CraigsList Rental Stats - God bless the guy that runs this site. It slices and dices CraigsList rental data for San Francisco in a bunch of different ways.  It’s a great way to see how much you’ll get where in the City at different price points.  

An article from Investment News analyzes how the strength of the rental market is related to the housing crisis.

This entry was posted on Friday, June 6th, 2008 at 5:49 pm and is filed under Investors. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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