We’ve heard it over and over as people lament the high price of housing in the city: that the theory of supply and demand doesn’t apply when it comes to the San Francisco real estate market.

Tell them that in South of Market.

SoMa, and particularly Mission Bay, have experienced dramatic development, adding thousands of units of new rental housing. And the result?

“It’s basically a tenants’ market right now,” says Climb Real Estate agent Elizabeth Kim, who says she has an unprecedented 20 vacant units she’s trying to rent. “Usually at this time of year we’re really busy. But now people are not snapping things up. We’re not getting the multiple offers.”

As my colleague, Kathleen Pender, wrote in June, there is an unmistakable softening of the rental market in SoMa, South Beach, Potrero Hill and Mission Bay, and large rental developers are bending over backward to attract renters. They have to, says Mark Choey, one of the founders of Climb Real Estate.

“Demand is probably the same, but supply has shot up dramatically,” he said. “There are hundreds, if not thousands, of empty units.”

Najmeh Habili, who works at eBay, is shopping the market. Habili lives in a Mission Bay high-rise, which she likes, but she says it’s 10 years old. Friday morning she was looking at the One Henry Adams building, which will have 241 units when construction is completed at the first of the year. A two-bedroom there rents for $4,750.

That appealed to Habili, who sees an opportunity to move into a unit that’s similar in size and price to the one she lives in now — but is brand new with major amenities.

“Some of them are offering up to six weeks of free rent,” she said. “And free parking and free storage.”

Kim says developers may insist they haven’t lowered their prices, but simple math says otherwise.

“Say they were renting for $3,000 a month. That’s $36,000 a year,” she says. “But with one month free, that’s $33,000 a year. It may be on the books at $36,000, but that’s not the real total.”

The complaint about this, of course, is that rent may be falling in this high-end rental area, but it isn’t touching other parts of the city.

But another potential renter at One Henry Adams said she and her husband decided to move to Mission Bay and gave their Richmond District landlord one-month’s notice.

“And when our landlady couldn’t get anyone to rent at our rate, she dropped our rent significantly,” she said.

The renter asked not to be identified because she was still negotiating with her original unit’s owner. It seems the landlord had second thoughts about lowering the rent by $400. But in this market, the renter has options and she’s shopping the SoMa area and preparing to move.

Another trend to watch is that of independent landlords getting out of the business of using their properties as rental income. Choey tells of such a property owner who had been getting $6,000 a month for a luxury two-bedroom SoMa unit — until his tenant moved out.

“He tried to rent it at $4,000 a month, but couldn’t get it,” Choey said. “So he’s decided to sell while prices are high. It could be that if they can’t get the rent they want, more landlords are going to sell.”

Back to Gallery Economic law finds new home in some S.F. neighborhoods 4 1 of 4 Photo: Liz Hafalia, The Chronicle 2 of 4 Photo: Liz Hafalia, The Chronicle 3 of 4 Photo: Liz Hafalia, The Chronicle 4 of 4 Photo: Liz Hafalia, The Chronicle







Which, if it happens, might put a lot of high-end units for sale on the market. That could have the effect of lowering local housing prices.

Now, no one is saying that this is the beginning of the answer to the affordable housing crunch. The southeast section of San Francisco still has the highest rents in the city, over $3,600 for a one-bedroom, according to the real estate blog Zumper. And although rents are coming down, they’re still sky-high for the person making less than $100,000.

Choey says there are simple geographic reasons why neighborhoods like the Mission, which added just 75 housing units in 2014, don’t see the effects of a big increase in supply.

“Most of San Francisco is supply constrained,” he said. “There are only a few units available in Noe Valley, for example, and they are not building any more.”

So, in places like SoMa lots of new housing was added and prices have come down, and in places like the Mission, where the new housing stock is low, prices are staying high.

Sounds, to me, like supply and demand.

C.W. Nevius is a San Francisco Chronicle columnist. His columns appear Tuesday, Thursday and Saturday. Email: cwnevius@sfchronicle.com Twitter: @cwnevius