(KRON) — San Francisco and other Bay Area cities are seeing apartment rent prices fall once again.
This comes as some major tech companies are laying off thousands of workers. According to a Zillow senior economist, Orphe Divounguy, rent prices are decreasing because the demand for houses have also decreased.
Divounguy said it is too early to tell if tech layoffs will play a part in the market but also said apartment prices tend to follow housing prices. “The slowdown due to higher interest rates and affordability challenges is definitely the number one factor here for why rents are also starting to slow down,” said Divounguy.
He said even before the major tech layoffs, Bay Area housing was facing immense pressure. Over the last couple of years, there was an exodus from San Francisco and during the pandemic people simply wanted more space.
Affordability is also likely making the Bay Area less attractive. “In the Bay Area, income, stock market wealth and population growth are headed in a trajectory that would act to push down home values,” said Divounguy.
Data from online marketplace Apartment List shows the Bay Area has been the slowest market to recover since the pandemic. San Francisco and San Jose are the only two large metros where the median rent is cheaper than it was at the beginning of the pandemic.
KRON On is streaming news live now
“It’s not a doom and gloom story. The big constraint is always going to be on the inventory side. Some of these places were really expensive to start with because there wasn’t enough building in those markets,” said Divounguy.
He said this time of year is also pretty slow for renters and some should expect the prices to climb in the spring and summer months.