Leaving San Francisco

Outside of deep blue cities like New York and San Francisco, American real estate is booming. Properties are being bought up as soon as they hit the market. After all, the stock market is having a major bull run, and those who are not keeping their money in the market, waiting for the inevitable collapse, are buying real estate-- outside of New York and San Francisco.

So, we can now report that rental prices in San Francisco are in freefall. Anyone who can leave town is leaving town. I am not aware of the comparable numbers for New York City, but a brief glance at some of the real estate ads suggests that they are seriously declining.

In New York City, one of the primary reasons for the exodus involves the gross ineptitude of state and local government. One assumes that the same condition applies in San Francisco.

Zero Hedge has the story:

The median rent for a studio apartment in San Francisco plunged 35% in November from a year earlier, to $2,100, while costs for one-bedrooms slumped 27% to $2,716, according to Bloomberg, citing a new report from Realtor.com. 

Declining rents is more confirmation of the exodus from the Bay Area (as we've noted: here & here) as remote working allows city dwellers to leave the metro area for suburbs, Lake Tahoe, and elsewhere. 

If the stock market declined by 35% we would be in a depression-- and the Federal Reserve would be pumping money faster than you can say Hunter Biden.

Office rental rates are also declining in San Francisco, though not as fast as residential real estate:

Real estate firm CBRE said San Francisco's office vacancy rate has doubled this year to 8.3%, resulting in office rents dropping by at least 9%. 

Companies that can are picking up and leaving:

According to Bloomberg, Pinterest Inc. paid a $90 million penalty to terminate a lease at an office building in the downtown area because it wanted to "rethink where future employees could be based."

Other companies like Hewlett Packard Enterprise Co. and Charles Schwab Corp. are leaving California for lower-cost states.

And, of course, Elon Musk, who recently chose to build a Tesla factory in Austin,TX has just announced that he has moved out of California, to Texas.