Rental war wages on in San Francisco
This probably isn't news to anyone living in San Francisco, but our City by the Bay has the highest rent in the country, and the competition out there for an apartment is fierce. San Francisco rents have gone up about 15.8 percent from a year ago while rents in other parts of the country are rising with a rate of inflation of about 2.7 percent. While some argue that owners are taking advantage of the tech bubble to hike up the market value of their properties, but there are owners who resist the urge to cash in on the rental wars.
Darlene Portillo is the owner of a Noe Valley building in San Francisco. She’s just had a tenant move out, and that means she can offer the apartment at market price, which works out in her favor. In this three-story building with sixteen units, all but three are rent controlled; tenants there pay between $400 to $700 per month. But Darlene's apartment is going for $1300, which she says is very reasonable.
If today's rental market were a war zone, the frontline is most certainly the open house. Darlene's preparing for her open house today and she's confident she'll get about 50 applicants in the one hour she's allotted.
"It's going to be utter mayhem," she says, "with applications, credit reports… It will definitely get rented today."
The open house has officially begun and a crowd of people is gathered at the front door. Many are dressed as they would be for a job interview – women wearing colorful silk skirts, and pumps; the men wearing clean t-shirts and tennis shoes instead of flip-flops.
Most seemed to be under 30. I asked several of them to give me a sense of what it takes to be succeed in today’s rental market. Many expressed how prepared they were, with applications, credit reports, check stubs, and copies of their drivers’ licenses. They eye each other, some with resumes in hand.
"If you know you want it, be prepared. Competition is so crazy,” says a young woman waiting for a chance to meet Darlene. “There’s an open house and a decision is made the next day."
One by one, applicants file into the tiny apartment unit, cramming into the bathroom to inspect the drawers, and pointing out how they would arrange their furniture.
I squeeze into the kitchen with the building owner, Darlene. A line has formed in front of her that wraps along the wall, out the kitchen door and down the hallway to the front door of the apartment. Applicants wait for a chance to shake her hand – to make some sort of impression or even offer more money.
I asked Darlene how many people have asked to pay over what she was asking for the apartment.
"Eight people," she answers. "In addition to two people they asked to pre-pay it for a year and I said no."
The open house continues as they pull out their resumes and fire off their credentials: Linkedin and Paypal employees; Stanford graduates; and more.
In the stairwell, a young applicant sits with her mother and nervously goes back into the apartment to add something to her application. Her brother has just arrived. He's come as backup and hopes that he can put in a few good words about his sister.
"I think that’s the owner over there," he says, pointing to Darlene. “If I can talk to her and let her know what I can do to help my sister get this place. I’m concerned for her safety and well-being and I’m doing whatever I can.”
After an hour, the flurry of anxiety, eagerness and the awkwardness of the open house is over. The apartment once again has a vacant echo and the lights are turned off, cabinets closed.
At $1300, most of the applicants left thinking this was a great deal. The city doesn't regulate how much a property owner can charge, just how much they can raise the rent each year once a lease is signed; the market value really is left up to comparing prices on Craigslist postings.
As for Darlene, she says the open house was a lot like speed dating: “It is a dating game, each personality is different. If they’re going to be high maintenance walking in, they’ll be high maintenance as a tenant."
These 50 people will all be anxiously waiting for her call, but minutes after the open house is over, she's pretty sure she's found her match. Darlene decided to offer it to the young lady who brought her family. Like dating, it boils down to a gut feeling. And this landlord said she was sold by the whole package: her steady job, family values, and her ability to pick up the bill.
This story originally aired on September 17, 2012.