Over the past year, Bay Area rental prices have plummeted at a historic pace as people fled the ultra-pricey market during the pandemic. But data shows that many didn’t look too far away for their next home.
California’s capital region — the Sacramento area plus Stockton and Modesto — was the biggest draw by far for Bay Area residents in 2020 making inquiries on apartment listings website Zumper.
What’s more, renter interest in San Francisco and the Bay Area has rebounded, showing strong growth after sagging at the beginning of the pandemic, according to a new Zumper report.
The end-of-year review by the San Francisco company looked at trends across the U.S. rental market in this unprecedented year — including the interests and behaviors of typical Bay Area renters as well as price trends.
Interest in outward migration has followed an upward trend since the start of the year, and in November, the percentage of Bay Area renters searching outside the region reached a high of 41%.
Zumper analyst Neil Gerstein said one trend seen across the nation is that renters leaving expensive markets don’t move far. Looking at messages that Bay Area renters sent to listings outside the Bay Area on the Zumper website, the company found that the Sacramento/Stockton/Modesto area had the most interest by far, accounting for 34% of outbound messages sent from Bay Area renters in 2020.
“The Sacramento/Stockton/Modesto metro area is the closest large metropolitan area, and is significantly cheaper, so it was likely the most logical option for renters who wanted to leave the pricey Bay Area but wanted to stay close,” Gerstein said.
The top five areas of interest to Bay Area renters were all within California. Los Angeles was second with 8.6%, then Sonoma County at 6.8%, followed by Fresno/Visalia at 5.8% and Monterey/Salinas at 4.7%.
Gerstein said he doesn’t think renter interest in leaving the Bay Area will slow down anytime soon. Still, the Zumper report showed renter interest in moving to the Bay Area is also growing. The inbound message rate from prospective renters outside the region hit its lowest point this year in April, accounting for just over 35% of the Bay Area’s total, but saw a steep increase over the next couple of months, and from October to November was an uptick again.
“Despite a massive outflow of renters, there has also been a significant increase in new renters coming in to replace them, likely because Bay Area rental prices are at historic lows but not enough to stabilize prices yet,” Gerstein said.
The Sacramento/Stockton/Modesto area accounted for nearly the same percentage of inbound messages to Bay Area listings as it did outbound, at 33.4%. Los Angeles followed at 11.3%, then Sonoma County at 11%. Two large cities outside California took the fourth and fifth spots: New York at 10.7% and Philadelphia at 5.2%.
When the pandemic shut down large office buildings in the Bay Area, many renters newly able to work remotely sought larger, cheaper homes while sheltering in place. That spurred an exodus of renters from big cities in the Bay Area, the Zumper report said, causing supply to spike and rent to plunge.
San Francisco, still the country’s most expensive rental market, saw the most significant drop out of all big U.S. cities, down 22.6% from last year to a median one-bedroom price of $2,700. Rents also declined dramatically in other Bay Area markets, including Oakland and San Jose.
“The most interesting change to the Bay Area rental market has been an unprecedented price decline caused by a renter migration out of the area,” Gerstein said. “San Francisco and Oakland rank among the largest price drops in the country throughout 2020.”
Cities outside the Bay Area, including Sacramento and Fresno, saw big growth. Compared with last year, Fresno shot up 15 spots in one-bedroom median price rankings from Zumper’s national rent reports, while Sacramento moved up six spots.
According to the December report, Fresno saw an 18.9% increase in rent prices year-over-year for a one-bedroom, averaging $1,130, and a 15.3% increase year-over-year for a two-bedroom with a median rent of $1,360. Sacramento’s year-over-year increase for a one-bedroom was 15.9% with an average rent of $1,460. The median rent for a two-bedroom was $1,800 with a 24.1% year-over-year increase.
“Price growth in Sacramento and Fresno might not be entirely driven by increased migration, but migration is likely the dominant driver here,” Gerstein said. “Increased migration to an area typically has an upwards effect on rental prices because the rate at which people move in typically outpaces the construction or availability of new rental units to house them.”
Dramatic price shifts in individual cities aren’t necessarily felt at the state level. In California, for instance, rental prices have declined significantly throughout 2020 in major Bay Area cities and Los Angeles. But the big increases in places like Sacramento and Fresno have offset that. The result is a slight increase of 1.7% in the one-bedroom median price in California statewide, to $1,983.