While the pandemic has suddenly driven down rents across most of the Bay Area, a housing expert expected prices will begin to rise again in 2021 as hope for COVID-19 vaccine builds and companies adjust their remote work expectations.

Chris Salviati, a housing economist with online rental website ApartmentList, acknowledged the depths to which the pandemic has sickened the local housing market — with San Francisco’s rents dropping by 25% from the year prior and prices in San Mateo dipping by 14%.

But as affordability rates have increased with spiking vacancy rates, Salviati shared some expectation that the bottom of the market has been reached and that prices may begin to rebound in the coming months.

“The market seems to have at least taken the shock of the pandemic into account and it is starting to level out a bit more,” he said, noting price drops have not been as precipitous in recent months as they were in earlier parts of the year.

Rental website Zumper details the degree to which rents have fallen in San Francisco, with the average cost of a one-bedroom in December last year diving from $3,500 to $2,600 this year. Similarly, rental website RentCafe said monthly rates dipped in San Mateo from $3,300 in March when the pandemic started peaking to $2,900 in November.

For his part, Salviati said more expensive parts of the Bay Area have seen the steepest declines in pricing and some of the traditionally more affordable areas are actually experienced rising rents. He attributed this inverse trend to migration patterns of people leaving pricey, urban centers for more economical, remote locales.

Remote work allowances are a key driver in this movement because employees historically linked to office requirements have been granted more flexibility to do their job from home.

While most companies have managed to maintain their productivity through the transition, Salviati said decisions whether to continue offering remote work opportunities for employees through 2021 will be critical in setting the housing market.

“The question around when and if companies return to the office will really be the X factor for the housing market,” said Salviati.

Where offices of big employers are located will have some influence as well, he said, recognizing that major employers like Hewlett Packard Enterprise and Oracle recently announced plans to relocate headquarters outside of California.

“If the Bay Area is no longer as attractive to employers because of the costs and the fact that their work force is remote so they don’t necessarily need to have that centrally-located office hub, that could have some downward pressure on the market as well,” he said.

The largest lingering uncertainty, however, surrounds when broad access for a COVID-19 vaccine will be available, and how companies and workers respond once public health conditions improve, said Salviati.

“The big question will be what happens with the pandemic itself and vaccine distribution and at what point will we have enough distribution to be able to get back closer to what would be considered normal,” he said.

Regarding cost of living, Salviati expressed some confidence that prices would recover locally because people largely starved for social engagement throughout 2020 will likely seek those opportunities once it is safe again.

“The vibrancy and livelihood of city life will come back, so there is some reason to think that a shift away from downtown areas will rebound to a certain extent,” he said.

But until a cure is distributed broadly, Salviati acknowledged price projections are largely speculative during a uniquely challenging and unprecedented period.

“We are in wait-and-see mode,” he said.

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