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Rents creep up alongside new construction, says report

“Appreciation is faster among two- and three-bedroom rentals, especially in areas with more new apartment construction”

Photo by Alexey Ulashchick

Summer brings a chill to the San Francisco Bay Area, but Zillow-owned rental site Hot Pads may provoked some heated arguments with its second quarterly report (both second of the year and second ever) about rental trends in the city.

Just like Hot Pads’ first-quarter report earlier this year, the San Francisco-based company’s latest look at its own numbers reveals rent figures on an upward arch despite recent construction.

“We found that rent appreciation is faster among two- and three-bedroom rentals, especially in areas with more new apartment construction, including the city of San Francisco,” Hot Pads’ spokesperson Lauren Thompson tells Curbed SF.

Does the trend bear out? Here’s what popular rental sites have to report as of the beginning of July:

  • First things first, Hot Pads reports that a single-bedroom SF apartment rents for a median price of $3,520/month—the same as this time last year. But two-bedroom apartments on Hot Pads are up two percent year over year to $4,140/month.
  • Zumper largely concurs, recording a single-bedroom median SF rent of $3,500/month, which is up 1.4 percent from last year. The two-bedroom price is $4,680/month, a leap of four percent year over year.
  • Apartment List, on the other hand, disagrees. Over there, the shakeout is $2,440/month for a one-bedroom apartment and $3,066 for a two-bedroom apartment; both figures are around $30 more than the same time last year. In this case, single beds are actually up a bit more.
  • Competitor Abodo breaks with Hot Pads as well. Adobo’s July figures are $3,440/month for one bedrooms, up 6.17 percent year over year, and $4,523/month for two, which is just 3.66 percent.
  • Finally, Rent Cafe hasn’t yet released new figures; its latest report still reflecting that site’s average on the final day of May. It also doesn’t break down data by bedroom count and instead offers a median citywide rent in general—$3,453/month in San Francisco.

What’s the explanation for the Hot Pads trend? One possibility is that there is no trend and that one of the other sites has more accurately measured the current rental market.

On the other hand, Thompson highlights a fairly straightforward notion on the Hot Pads blog: “New apartment construction tends to focus on studios and one-bedrooms. [...] Renters looking for a larger apartment or home should expect faster rent growth this year.”

The Planning Department’s most recent Housing Inventory Report does not break down the city’s net housing gain on a per bedroom basis.

But it does record that two-bedroom rents in the city actually declined between 2016 and 2017, and were down even from 2014.