Experts see some rents drop, vacancy rate up in San Francisco

SAN FRANCISCO (KGO) -- Here's some surprising news - San Francisco rents are dropping. And the vacancy rate is up. Maybe it's time to go apartment hunting.

Those in the business tell us what we're seeing is a correction from the super high rents.

"Usually when a cycle like this starts, it goes out over a couple year period," said Janan New with the SF Apartment Association.

Sam Heft-Luthy arrived from Seattle three days ago. He's got a job here and now he and his friend are apartment hunting. He's shocked; the rents are still high, but not out of reach.

"The news stories I've seen with market stuff have been, you know, San Francisco with the highest housing market, worse than New York," he said.

But Heft-Luthy's timing is impeccable

"We've noticed the rental market over the past few months that rents have been dropping across the board," said New.

New heads the San Francisco Apartment Association.

"Especially in the higher end market," she said. "The larger market where apartments were going for $8,000 to $10,000 dollars, there's a high vacancy in those."

A 13 unit luxury apartment building in SoMa just opened up. A lot of new construction and high end apartments are competing for tenants.

Leasing agent Andrew Bryson with Berendt Properties even sees a softening in the lower end rentals.

"The studios below $2,500 around that price point or the one bedrooms around $3,200 we're definitely feeling a softening," he said. "Generally around five to 10 percent or so."

Housing is a commodity. The law of demand and supply applies.

"Companies have been consolidating and moving and developing out of the city," said New.

Bryson adds, "The hiring we're seeing is very slowed down if not halted as well as there's a lot of inventory that's coming on the market."

Is it good news? That depends on who you are - a landlord or a renter.