Boy do owners have it good! Trying to find a rental in this market is difficult. Some of the reasons are obvious: Good weather, in fact great weather! Beautiful structures and a town that has a real sense of pride in how it looks and feels. No creative destruction here, things are preserved and whole sections of the city look as they did when originally built.

Its a very interesting time for San Francisco for a few reasons. We have wonderful old painted ladies, buildings never to be built again. that occupy much of the land available in this peninsula town and an entirely new part of the city being recaptured from blight, creating a kind of competition for the business that did reside in the old neighborhoods. Huge high rise condos have been built in the southern part of the city now known as South Beach. And now, we have a undeveloped area called the Mission Bay being built out as new ground for a Bio-Tech Industry and a new mediacl center being populated with new restaurants, and start up web 2.0 media companies.

The real estate sales market has been very active for so long and driving prices up for all the good reasons mentioned above plus a lot of speculation. Finally, things seem to be rationalizing and although prices havent dropped that much, sales have definitely slowed and I think there is more to come.

What does that do for rentals? Makes it tough for renters and great for owners.

We have a combination of:
1. Slowing sales translates into potential buyers renting rather than buying, soaking up available supply
2. Commute time to Silicon Valley becoming reasonable due to high speed trains and shuttles that are picking up workers in San Francisco and driving them back and forth
3. A tech industry on a hiring tear bringing in highly skilled and well paid workers from Boston to Berlin
4. Home buyers deciding to wait out the downturn for better prices and willing and able to afford high rents.
5. Much of the city is protected and cannot be torn down for multi family housing.
6. Earthquake limits on building heights means less units can be built

We have seen rents double and even triple in a year. These new industries pay well and San Francisco still has an aura as an exciting and tolerant place where all people can be who they want to be. People come into town looking for a place to live and quickly become parts of groups of thirty viewing an ordinary enough apartment...owners are able to ask for high rents and the competition is fierce.

For multi family apartment owners Cash flow is good and getting better. Multi family housing is still selling and looking better due to increasing cash flow. Even rent control is not putting much of a lid on rents. When a tenant moves out, landlords are able to raise the rent to market rates. So a rental studio going for $800 last year now has a market rent rate of $1500. This then becomes the new base rent, and any rent increase are then capped at low rates by the rent board, but the big leg up to market rate has been locked in.

The only downside for the city is when artists, students and older people get priced out, the loss of diversity concerns me because it enriches us all.