Relocating back to San Francisco? No problem. Rising rents and lack of availability are relics of the past in San Francisco and renters now have the upper hand. With soaring unemployment rates and massive layoffs, people are moving out of the city in search of less expensive digs. Renters are also filing out of the city in droves towards the suburbs, leaving vacancies aplenty in the city.
When foreclosures began pushing people out of their homes, rents quickly increased. Add layoffs to the housing crisis and you get a growing number of people abandoning the high cost of the city. An increasing number of ads on Craigslists state that layoffs are the reason for moving. While the rents rapidly rose due to foreclosures and the resulting demand for rentals, the sky-high prices of the rental market have quickly shifted to a “renters” market because of the exodus from the city. Many apartments have been vacant for a number of months. Landlords are resorting to “first month rent free”offers or reducing monthly rent altogether.
This is not unlike the fall of the dot-com industry in 2001 when San Francisco renters saw overly inflated prices soon return to “normal”, although normal San Francisco housing prices were among the highest in the country. Back then, renters fled the city and landlords were slashing rents, scrambling to hold on to tenants. Soon greed for the housing market gripped the nation. People from all over were scraping up money to buy houses for the purpose of “flipping” them, not only in San Francisco, but all over the country, in hopes of doubling their profits. Mortgages were being handed out like candy, just another part of the greedy puzzle, everyone was getting what they wanted: a chance to live the “American Dream”. While a lot of people enjoyed a hefty profit with good timing on their investments, for many, that “American Dream” soon turned into a nightmare. People were forced into foreclosure after their low adjustable interest rate mortgages adjusted up.
While San Francisco residents are leaving the city, new residents are few and far between. For example, empy-nesters (who were dupped into thinking that their fresh-out-of-college kids, who should be on their way to getting a good job and nice apartment) are finding that their nest’s aren’t so empty anymore as the kids take up their old familiar residences. After all, with limited job prospects, there’s little money for the luxury of apartment living. So, to all of you parents out there, if you haven’t already converted your kid’s room into that “art studio,” don’t bother. With this crumbling economy, it may be a while.
What do the housing collapse, massive layoffs, and apartment vacancies in San Francisco mean to you? It means that San Francisco’s existing lease holders now have the upper hand to renegotiate their lease terms, and new renters are in the position to negotiate lower monthly lease rates with landlords. With so many layoffs in the city, landlords can’t afford to be inflexible about shedding a few dollars off the monthly rent. That said, you must go into these negotiations armed with knowledge. For example, check out comparable apartments with lower rents in your desired neighborhood. Another bargaining tool is to tack on more time to your lease in exchange for a lower monthly rent. If you have a good track record for being a good tenant and paying your rent on time, then your bargaining power increases.
If you have time on your side, such as a few months before you need to make a decision, then you can keep tabs on which rentals have been sitting. Gone are the days of presenting your paystubs for the last five years, at least ten references, and an 857 point credit rating as you compete with thirty people – all vying for the same apartment. While it’s much easier to find vacancies in San Francisco, you should still arrive well prepared with a reference from your last landlord, a pay stub or verification of employment letter, and a printout of your most current credit score. Of course you want to be ready when you walk into your refurbished dream apartment loaded with all of the amenities you want such as: parking, laundry, a deck, a fireplace, and hardwood floors, all on the top floor with a stunning view of the city in your favorite neighborhood.
If there is one good thing about this bad economy, it is the power to negotiate. For new tenants and old, a little haggling could possibly shave a couple hundred dollars off of your lease rate. You could use all the help you can get to survive this economic crisis, and landlords in San Francisco are responding with lower rental rates. The power has shifted in San Francisco. Are you ready to take advantage of it?
