Demand for Rental Housing is UP in some Key Cities

Although there have been many reports, surveys, audits, and comments on rental costs for apartments, many of which have indicated that the rental rates have remained steady or have declined somewhat in many areas of the US, there are a few exceptions.

Recently the Wall St Journal reported (3/12/2026), with other real estate reporting, that contrary to most parts of the US, rent for apartments in the San Francisco area have witnessed huge increases in many parts of the City.

As mentioned in the WSJ article, there is a “bruising race to Rent in SF.” 

With two extremes hitting the market at the same time, viz., a lack of housing available in the SF market and faced with very high average salaries for professionals (and others) in the area, rents have exploded.

To try and gain one of these sought after rentals, proposed tenants have tried to encourage real estate agents and others in control of rentals by plying them with gifts, such as wine and other treats.

In the WSJ article it was noted that:

“In less than two years, the average asking rent across the San Francisco metropolitan area has risen 18% to reach $3,728 a month, according to the real-estate data firm CoStar, surpassing the New York City metro area this year for the first time since 2019. San Francisco has reclaimed the crown for the highest average rent in the U.S.”

With these increasing rents, there are now many bidding wars among potential tenants seeking the rental property in question.  This approach of many parties seeking the same property had generally, in the US, been restricted to purchases of homes.  However, the desire to obtain leasable living quarters in certain key areas is producing these bidding wars on rental properties for tenants.

Although rents fell dramatically during Covid, those days seem to be over.  And the reverse is true.  With the advent of AI, heavily involved in the San Francisco area, and offering large salaries to workers, the demand for well located rental dwellings has mushroomed. 

With the continued pressure for AI developments and related activity, such as Data Centers, look to see demand for housing in these key AI areas to continue the upward trend in the leasing market.

Mark Lee Levine, Professor, University of Denver.