Jan 31, 2023 - Real Estate

San Francisco area rents still steep amid high demand

Change in average asking rent for apartments in select markets
Data: Moody's Analytics; Table: Kavya Beheraj/Axios

The average asking rent in the San Francisco metro area was up 9.5% at the end of 2022 from the previous year as rising mortgage rates led to an increase in demand for rental apartments, according to a new report.

Why it matters: The San Francisco area has a well-known housing crisis and high rents compound those challenges.

By the numbers: The average rent in San Francisco's metro area was $3,224 at the end of last year, according to economic research firm Moody's Analytics.

  • San Francisco's metro area is the ninth-highest rent-to-income area, with its residents forced to spend nearly 30% of their income on rent, according to Moody's.

The big picture: For the first time in over two decades, households nationwide now have to spend about 30% of their income on rent, according to the report.

  • In San Francisco, only tenants who live in buildings built before June 1979 are protected by local rent control laws. There are only a couple of exceptions to that rule.

Meanwhile, last year's interest rate hikes contributed to some potential homebuyers choosing to keep renting.

  • Of note: Higher rents make it harder for aspiring homeowners to save money to put toward a down payment.

What they're saying: Roisin Isner, director of activism and operations at the San Francisco Tenants Union, told Axios via email that the increase in asking rent "has been catastrophic, compounding the COVID economic crisis that's hit working people the hardest."

What we're watching: San Francisco is on track to meet today's deadline to submit a state-mandated plan to create a little more than 82,000 new housing units over the next eight years. It also mandates that nearly 46,600 of those units be for low- and moderate-income households.

  • Yes, but: District 5 Supervisor Dean Preston previously told Axios the city will not come close to hitting its goals if the state doesn't give San Francisco more funding.
  • Preston also criticized the fact that the mayor's office hasn't spent the money city supervisors have already allocated toward affordable housing.

This story has been corrected to note that the data refers to the San Francisco metro area, not just San Francisco.

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