San Francisco's housing market is so dire that renters are paying $1,100 a month to live in converted living rooms

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HomeShare, a startup based in San Francisco, converts living rooms in above-market-rate buildings into bedrooms so tenants can save on rent.
The company pockets a cut of the rent, like a finder's fee.
Each of HomeShare's customers gets their own bedroom, a closet, and a private or shared bathroom. Prices start at $1,125 a month.

In San Francisco, desperate renters are finding their real-estate bliss in converted living rooms that lease for as little as $1,125 a month. Because elbow room is an overrated amenity.

HomeShare is a startup that leases apartments in expensive new buildings and splices them into additional units, so more tenants can split the rent for less per person. A two-bedroom becomes fit for three after HomeShare installs an upholstered partition in the den.

Founded in 2016, the startup has partnered with 10 properties across San Francisco, Silicon Valley, and New York City and put hundreds of renters into homes that they couldn't otherwise afford. It also provides roommate-matching for city transplants and other users.

Jeff Pang, founder and CEO of HomeShare, declined to share more specific user numbers but said the company has received 30,000 applications in the Bay Area alone since 2016.

homeshare converted living room apartment

Pang, previously an early employee at Uber, is of the unpopular opinion that San Francisco does not have a housing shortage. "There's plenty of housing," Pang said, "it's just all in this luxury segment."

As millennials continue to migrate to high-priced urban areas, startups are cropping up to meet demand for affordable housing. Companies like Common, HubHaus, and WeLive — a spinoff of coworking giant WeWork — lease or buy buildings and fill them with amenities. Community is a core offering of these self-described "coliving" dwellings. In some places, residents pay a premium (starting at $3,050 a month) for the privilege of having a dozen or more roommates.

HomeShare takes a slightly different approach by trimming away the excess roommates and amenities like free internet and maid service, which brings down the cost of rent. Many of the buildings already have pools, fitness centers, and, most importantly, proximity to downtown.

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In San Francisco, prices start at $1,125 for a converted room, $1,500 for a private room, and $1,700 for a room with a private bath. Pang estimated that HomeShare customers spend less than half of what its buildings charge in rent for studios. HomeShare takes a cut of the rent.

In 2017, San Francisco renters paid an average price of more than $3,000 a month.

"People come here for opportunity, not to spend tons of money," Pang said. About half of HomeShare customers are recent transplants who are "shell-shocked" by the rent prices. And the converted living rooms are the most commonly requested units because they're the cheapest, according to Pang.

Homeshare will expand to new markets in 2018, which Pang declined to name.

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