Recently, we released our State of the U.S. Tenant Report for 2020, which surveyed over 14,000 of our users, and this article delves deeper into the behaviors and thoughts behind the typical Bay Area tenant this year. year as well as general rental market trends.
A year of unprecedented price cuts
The San Francisco Bay Area has seen historic price declines over the past year. In November 2020, the median price for a bedroom in San Francisco was down 22.6% from a year ago. In Oakland and San Jose, that median price fell 19.0% and 14.7%, respectively. The declines have slowed somewhat these past few months compared to summer and fall, but there is no reason at this time to believe the declines will not continue in the near term.
Both inward and outward migration flows tend to increase
There has been a mass exodus of tenants out of the Bay Area in 2020, but there has also been growing interest in new tenants moving in to replace them. Rental prices are strongly correlated with short-term migration rates as migration is primarily demand-driven and rental housing supply is slow to change (due to time and cost of building new units). Renters have likely started to abandon the Bay Area due to lifestyle changes brought on by the COVID-19 pandemic, which has caused prices to drop dramatically. As Bay Area Awards decreases, there was one increase new tenants interested in moving in. These new tenants likely considered the Bay Area too expensive before these historic declines, but are considering moving in now that rents are reduced. There are still likely far more tenants leaving the Bay Area than newcomers to replace them, as prices continue to drop, but if enough new tenants start moving in, the drops will stop rents.
Where bay area tenants move to and from
There has been an unprecedented migration of tenants out of the Bay Area in 2020, but where are they moving? According to Zumper migration data, renters in the Bay Area are largely interested in moving to nearby, somewhat cheaper locations. Metro Sacramento-Stockton-Modesto, Calif., Accounted for 34% of outbound messages sent by Bay Area renters in 2020, so this location was by far the most popular destination for area renters. the Bay.
The popularity of other metropolitan areas declines considerably after Sacramento-Stockton-Modesto, but these locations still provide information. For example, 6 of the top 10 destination subways are in California, and the top 5 are all in California. Of the other 4, 2 of them – Reno and Las Vegas – are just outside of California. So it appears that tenants who have abandoned the Bay Area are not moving very much far. In fact, the only top 10 destinations far removed from the Bay Area are New York, New York and the Province of Ontario, Canada, which are the 6th and 8th most popular destinations, respectively, for outgoing renters from the bay area.
When it comes to the influx of new tenants interested in moving to the Bay Area, many of them are coming again from nearby places, but there are some differences from the departure list. The Sacramento-Stockton-Modesto metro was by far the main location from which incoming tenants came to the Bay Area. This metro represents roughly the same share of incoming messages to the Bay Area as it does to outgoing messages to the Bay Area. This implies that there is a very large tenant migration between the Bay Area and the Sacramento-Stockton-Modesto metro. This is to be expected given that Sacramento-Stockton-Modesto is the closest metro to the Bay Area of significant size, but what is interesting is that this migration flow is not unilateral; many tenants move between these areas in both ways.
As for the other metropolitan areas from which tenants move into the Bay Area, the share of inbound messages drops dramatically after Sacramento-Stockton-Modesto, and many are in California – features that are both shared with the list of departures. However, there are a few incoming subways that are far away, namely: New York, NY; Philadelphia, PA; Seattle-Tacoma, WA; and Greenville-New Bern-Washington, North Carolina. The only subway on this list that also appears on the departures list is New York, NY. This means that tenants who come to the Bay Area from further afield come from places other than where current Bay Area tenants are interested in moving.
How do Bay Area renters differ from the rest of the country?
Renters in the Bay Area differed from renters in the rest of the country in 2020 in several ways. The most significant difference is probably in the roommate situations of Bay Area tenants. Renters in the Bay Area reported higher rates than renters nationally, both for living with their parents and for living with roommates in general (top graph). This is likely a testament to the exorbitant cost of rent in the Bay Area, which has forced tenants to find ways to save money, such as moving in with family or sharing a living space with more people. Renters in the Bay Area also reported living with a spouse or significant other at a lower rate than renters nationwide, which may be influenced by the region’s generally younger and more transient population. from the bay.
Another significant difference between Bay Area renters and renters nationwide is how much they save. In general, renters in the Bay Area reported saving higher percentages of their pre-tax income than renters nationally (bottom graph). This may be surprising given the high level of rental prices in the Bay Area, but renters also have much higher incomes than renters nationwide, which could explain this phenomenon.
In terms of homeownership, Bay Area renters reported a slightly lower rate of believing it to be part of the American Dream, which could be a reflection of sky-high house prices in the Bay Area. bay. Finally, Bay Area renters reported moving at a slightly slower pace than renters nationwide, which is consistent with the net exits or renters leaving the Bay Area that have taken place. in 2020.
The state of renters in the San Francisco Bay Area has changed dramatically during the year 2020. There is no other rental market that has taken on such success in terms of price, and few have seen a similar number of tenants abandon it. While rental prices are at their lowest since Zumper began tracking rental price data in 2014, Bay Area towns still include some of the most expensive rental markets in the country. Renter behavior in 2020 clearly reflects the high prices in the Bay Area. After the COVID-19 pandemic took effect in the United States in March 2020, many Bay Area tenants likely couldn’t afford or justify the price they were paying and opted for less locations. dear, often neighbors.