Falling rents, a result of pandemic, lure bargain hunters back to S.F.

J.K. DineenNov. 13, 2020 Updated: Nov. 13, 2020 8:32 a.m

Even as thousands of Bay Area residents flooded Lake Tahoe resort communities in search of rustic lodgings to escape the pandemic over the past eight months, Truckee resident Scott Ehlert was up to something very different.

He was plotting a return to San Francisco, scouring the internet for spacious live-work lofts on Potrero Hill and in Dogpatch, places that would have been out of his price range were it not for the mass exodus of people whose jobs dried up because of the pandemic. Suddenly, lofts that were listed for $5,000 a month before the coronavirus hit were going for $3,200 or $3,500 and rents were continuing to tumble.

Ehlert has become increasingly optimistic. Every time he checks real estate listings rents are lower.

“We left San Francisco in 2009 and we have been chasing that urban, walkable feel ever since,” said Ehlert, who owns a sustainable housing development company focused on using mass timber. “Everything is negotiable in San Francisco right now.”

To be clear, Ehlert is still the exception and the flight from San Francisco is still very much happening. A San Francisco Apartment Association survey of landlords taken during September and October found that more than 20% of tenants have broken their leases since the start of the pandemic. While some of those leases were taken over by roommates and some of the units re-leased, association members are reporting a 15% vacancy rate, up from under 3% before the pandemic exploded in March.

Meanwhile the city’s workforce seems likely to shrink. Data from the jobs site Indeed.com found postings in San Francisco dropped by 38.5% from last year, more than New York City, which decreased 36.4%. From April to June, the city’s sales tax revenue dropped to $30.8 million, down 43% from the previous year, according to the city. Restaurant and bar sales were down 65% as indoor dining was prohibited, while food and drug store sales were down 8%.

But for opportunistic urbanists, especially former city residents who have been priced out in recent years, the out-migration is an opportunity to get into San Francisco on the cheap.

Over the past seven months, Christopher Beale and Reagan Rockzsfforde watched with interest as San Francisco’s rents fell. The couple was living in Oakland’s Uptown, paying $3,800 for a 650-square-foot one-bedroom with two parking spots and a storage space.

By October, they realized that they could get a better deal in San Francisco, where Rockzsfforde used to live and Beale had always wanted to live. They ended up paying $3,243 for a 1,000-square-foot, two-bedroom, two-bathroom unit in a fairly new building at Polk and Hayes streets. They moved into their fifth-floor pad in November.

They were able to give up their cars — Rockzsfforde, a policy analyst at the California Public Utilities Commission, is two blocks from his office, and Beale, a freelance broadcast journalist, mostly works from home.

Beale said he thinks the city could be “on the edge of a new day, where it gets back to it’s Bohemian roots.”

“It’s a cliche, but Reagan and I are cognizant that we can’t be here to sit back and watch San Francisco evolve into whatever it’s going to be,” he said. “We are actively looking for ways to be involved in our community. San Francisco can be whatever right now — it’s up to the people. The slate has been wiped clean in a way.”

Oakland resident Scott Simmons, who works in tech, also started thinking about moving back to the city a few months into the pandemic. Recently divorced, he has watched many of his friends leaving for more suburban locales and realized that he longed for a life that was more urban, not less so.

“My friends are coupling up, having kids, and getting out of the city,” he said. “As a single person, I’m looking around and saying ‘I don’t want to move out to the suburbs. I want to be somewhere where I can meet people.’”

Simmons has checked out a few apartments in Hayes Valley, where $2,100 a month will get him a studio in a neighborhood that retains much of its vitality despite losing a number of businesses.

“It seems like a renters’ market. There are a lot of good options,” he said. “Hayes Valley seems like a good place for a single person to live. There are so many bars and restaurants and things to do.”

Salim Damerdji moved from Los Altos to the Inner Sunset in September. He said he has long been looking to relocate to Oakland or San Francisco and jumped at the chance when the rents started dropping. He and a roommate were able to find a two-bedroom for $2,560 a block from Golden Gate Park. While the tech company he works for is in the South Bay, it has a San Francisco office he can work from when or if his work-from-home arrangement ends.

“It’s amazing,” he said. “It’s awesome compared to living in a suburb. The park is basically across the street. You can walk anywhere — flower shops, bookstores, bakeries, restaurants. It’s so lively.”

The temporary decline and inevitable rebirth of cities is nothing new. From the 1854 cholera outbreak in London to the riots across the United States in the 1960s, cities have long endured periods when residents were driven out by the notion that “maybe cities are more dangerous or less humane than we thought,” said Alex Krieger, an urban design professor at Harvard. But those periods rarely last long.

San Francisco is going through a tough period right now — homeless encampments have proliferated and property crime has risen. That may temporarily increase the attraction of quieter suburbs and small towns where those problems are less pronounced. But in the long run, Krieger said, humans are social creatures and the need for “propinquity” — kinship — will outweigh “the fear of disease or fire or crime that pop up periodically as disincentives to urban life.”

While he doubts that rents and home values will tumble enough to be affordable to the majority of the Bay Area workforce, the reshuffling of live-work requirements could mean some of the more affluent residents won’t return, “making room for others to flow back into a city like San Francisco.”

“It might recalibrate things a little toward a more just city,” he said.

Ehlert, who founded a startup focused on building infill housing with mass timber — a building material made of solid wood panels nailed or glued together that can replace steel or concrete — said he is excited to return to the city. He moved to Los Angeles in 2009 but left after three years, frustrated that he was spending hours a day in his car. In 2012, he moved to Truckee, where he was able to buy a house, but always considered it a temporary move.

He still finds himself driving hundreds of miles a week, shuttling his kids around and shopping. And he said it has been difficult to grow his business because he’s had trouble attracting talent or finding like-minded entrepreneurs in Truckee.

He expects a move back to the city will help solve that problem. He is looking for a space with a roll-up door large enough to accommodate the computer-aided manufacturing tools he needs.

“San Francisco is one of the best places in the country to live a low-carbon life, and combine that with the startup culture baked into the city, it’s hard to beat,” he said.

He also loves the pandemic-inspired trends he sees flourishing in big cities — the parklets, outdoor dining, streets closed to automobile traffic.

“Everybody is talking about the urban exodus, but the reclamation of the urban street for people? I think that will have a longer-term impact compared to the momentary shift of people out of the city,” he said.

He said several of his friends are also checking San Francisco real estate listings.

“I personally know a dozen people who have left San Francisco begrudgingly over the last decade,” he said. “More and more of them are saying that if the market keeps going down they would happily move back.”

J.K. Dineen is a San Francisco Chronicle staff writer.

Email: jdineen@sfchronicle.com

Twitter: @sfjkdineen