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Why did rents dip in SF but plunge in New York?

2016 saw rents decline coast to coast, but fate bestowed the best benefits back east

The giant bow and arrow art piece (Cupid’s Span) on the San Francisco waterfront.
Yes, the arrows all point down.

Anyone who asked Santa for slightly lower citywide rents saw their oddly specific holiday wish come true last month.

While the rental site Zumper did record a slight 0.6 percent creep in the price of a one bedroom citywide and an even smaller 0.2 blip for two bedrooms, that’s all pretty marginal.

Year over year, Zumper’s figures are still down about four percent citywide. Competitor ApartmentList has city prices down 2.5 percent from last year and dead flat month over month.

Both sites price a one bedroom home on their platform at at about $3,345/month. RENTCafe agrees, pricing the city median at almost the exact same figure, minus two dollars.

(Note that RENTCafe lingers a few weeks behind the other sites and so is still providing November numbers, but also draws its data from an independent research group rather than just its own listings.)

Michael Warwick

In short, not much changed, which is more or less good news.

One thing of note, however: San Francisco is once again the most expensive rental market on every popular rent platform.

It was a big moment last year when we finally dipped below New York City again by at least one rubric.

It turned out ApartmentList measures all of New York only via super-pricey Manhattan and that was the reason for the anomaly, but at least it was something.

But now even Manhattan prices have slipped a tiny bit year over year, dropping it below San Francisco once again.

This is due in part to the fact that rents plunged all across the Empire City last year. Zumper alone records a decline of nearly 10 percent.

New York traditionally struggles with many of the same pressures of demand, economic booms, and limited space as we do. What did they do last year that we didn’t?

Naturally, some writers, like those at Slate, wondered whether that city’s decline presages a price crash.

Outlets like the Wall Street Journal, on the other hand, framed declines in San Francisco, San Jose, and New York together into one larger trend of overall declines in big cities, treating them as simply different points on the same graph.

But Curbed New York has a simple explanation, albeit one some San Franciscans may not like: That city simply has higher supply.

“A strong economy and more affordable properties are driving the demand from renters,” Emily Nonko wrote on Curbed NY back in September. “But because inventory is still rising faster, it’s keeping price growth in check.”

Perhaps surprisingly, right now at least we have more housing per capita than New York does: One home per every 2.2 people in San Francisco, versus one per 2.5 over there.

But in Brooklyn, which many point to as the anchor dragging citywide medians down the hardest, predictions of “saturation” and even “glut” appear to have come true, and prices have indeed dropped.

A supply-side solution to San Francisco’s housing problem is always going to be controversial with the flank of city politics skeptical of development. And New York is just one other city with a lot of factors in play.

Still, putting their graph next to ours last year is pretty startling.