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August 18th, 2019 by Marco Santarelli
How is The San Francisco Real Estate Market 2019?
If you are looking at buying a house in San Francisco real estate market as a potential investment opportunity, you must read till the end. San Francisco, California rivals New York in terms of rental rates and the overall price of real estate. San Francisco seems to be making the news for all the wrong reasons.
The homeless problem and associated public hygiene problem are so bad there is literally an app for that, the reporting of public defecation. This is why the San Francisco housing market resembles New York City of the 1970s, a buying opportunity for those willing to take the chance that the market will soar once the region recovers, though that may require a chance in leadership.
San Francisco is home to nearly 900,000 people. It is the hub of the San Jose-San Francisco-Oakland area; this larger metro area is home to nearly nine million people. It consistently ranks among the most expensive real estate markets in the world, and it is one of the most densely populated cities in the U.S.
The city alternately makes the news for people paying incredibly high rents to live in boxes, the homeless problem, and the tech industry. This makes many wonder why or how anyone could live there. Others would think why you’d want to buy a property now in such an over-valued real estate market.
Yet we can give you ten positive signs about the San Francisco housing market 2019. San Francisco has a track record of being one of the best long term real estate investments in the United States through the last ten years. Let us now discuss the latest market trends and find out what are the overall prospects of San Francisco real estate investment in 2019.
Hottest Bay Area Real Estate Market News 2019
In a report published by Google, it announced $1B, 10-year plan to add thousands of homes to Bay Area. The company would be making this major investment in what it believes is the most important social issue in the bay area real estate market.
This proposition by Google will add thousands of new homes to the Bay Area real estate market over the period of next ten years. About $750 million would be used for repurposing Google’s own commercial real estate for residential purposes.
This will allow for 15,000 new homes at all income levels in the Bay area. Another $250 million investment fund would be utilized to provide incentives to enable developers to build at least 5,000 affordable housing units across the Bay area housing market.
As a move to support affordable housing initiative these investments will help Goolge plans to give $50 million in grants through Google.org to nonprofits focused on the issues of homelessness and displacement of citizens.
The company also plans to fund community spaces that provide free access to co-working areas for nonprofits, improving transit options for the community and supporting programs for career development, education and local businesses.
San Francisco Real Estate Market Forecasts 2019 & 2020
According to Zillow, the median home value in San Francisco is $1,351,900. San Francisco home values have gone up 0.5% over the past year and Zillow’s San Francisco real estate market prediction is that the prices will rise 0.7% within the next year.
The median list price per square foot in San Francisco is $1,084, which is higher than the San Francisco-Oakland-Hayward Metro average of $498. The median price of homes currently listed in San Francisco is $1,299,000.
The median rent price in San Francisco is $4,600, which is higher than the San Francisco-Oakland-Hayward Metro median of $3,500. Here is the San Francisco real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 0.7% till July 2020.
San Francisco Housing Market Forecast 2019 – 2021
The San Francisco housing market forecast for the 3 years ending with the 3rd Quarter of 2021 is also positive. The accuracy of the San Francisco housing market trend prediction is 77%. Accordingly, LittleBigHomes.com estimates that the probability for rising home prices in San Francisco is 77% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the San Francisco Real Estate Market Forecast.
San Francisco Real Estate Market Trends
San Francisco real estate market trends indicate an increase of $49,000 (4%) in median home sales and a 0% rise in median rent per month over the past year. The average price per square foot for this same period rose to $1,157, up from $1,146.
The median sales price for homes in San Francisco for May 1 to Jul 31 was $1,399,000 based on 1,155 home sales. Average price per square foot for San Francisco was $1,157, an increase of 1% compared to the same period last year. The median rent per month for apartments in San Francisco for Jul 6 to Aug 6 was $4,200.
Data by Redfin.com shows that the San Francisco housing market is most competitive. Homes in San Francisco receive 2 offers on average and sell in around 17 days. The average sale price of a home in San Francisco was $1.44M last month, up 3.0% since last year.
The average sale price per square foot in San Francisco is $1.08K, up 1.7% since last year. Homes typically receive 2 offers. Homes sell for about 8% above list price and go pending in around 17 days. Hot Homes can sell for about 17% above list price and go pending in around 12 days.
San Francisco Housing Market Statistics
There are 1,320 homes for sale in San Francisco, ranging from $95K to $45M on Realtor.com. 158 of which were newly listed within the last week. Additionally, there are 654 San Francisco rental properties, with a range of $800to $200.3K per month. In February 2019 the housing market in San Francisco, CA was a balanced market, which means there was a healthy balance of buyers and sellers in the market.
In February 2019, the median list price of homes in San Francisco, CA was $1.4M, trending up 4.7% year-over-year. The median listing price per square foot was $926. The median sale price was $1.3M. Homes in San Francisco, CA sold for 3.01% above asking price on average in February 2019. On average, homes in San Francisco, CA sell after 36 days on the market. The trend for median days on market in San Francisco, CA is flat since last month, and flat since last year.
The median list price in San Francisco, CA is $1,388,500 on Movoto.com. The median list price in San Francisco went down 7% from July to August. San Francisco’s home resale inventories is 522, which decreased 12 percent since July 2019. The median list price per square foot in San Francisco is $1,059. July 2019 was $1,098. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in August.
San Francisco, CA Single Family And Multi-Family Homes
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.
Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. As per the data from the real estate company called Neigborhoodscout.com, the median house price in San Francisco is $1,304,885, which indicates that home prices in San Francisco are well above the national average for all cities and towns.
In fact, San Francisco home prices are some of the most expensive in all of the U.S. Large apartment complexes or high rise apartments are the single most common housing type in San Francisco, accounting for 46.68% of the city’s housing units.
Other types of housing that are prevalent in San Francisco include duplexes, homes converted to apartments or other small apartment buildings ( 21.33%), single family detached homes ( 19.97%), and a few row houses and other attached homes ( 11.81%).
This particular housing mix is relatively uncommon and characteristic of cities that are compact and walkable, and which often have a lively downtown. People in San Francisco primarily live in small (one, two or no bedroom) units, chiefly found in large apartment complexes or high rise apartments. San Francisco has a mixture of owner-occupied and renter-occupied housing.
Currently, there are 222 single family homes for sale in San Francisco, CA on Zillow. Additionally, there are 282 single family homes for rent in San Francisco, CA. Under potential listings, there are about 2 Foreclosed and 125 Pre-Foreclosure homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
San Francisco, CA Foreclosures And Bank Owned Homes 2019
According to Zillow, in San Francisco 0.1 homes are foreclosed (per 10,000). This is the same as the San Francisco-Oakland-Hayward Metro value of 0.1 and also lower than the national value of 1.2. The percent of delinquent mortgages in San Francisco is 0.2%, which is lower than the national value of 1.1%.
With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth.
The percent of San Francisco homeowners underwater on their mortgage is 2.6%, which is lower than San Francisco-Oakland-Hayward Metro at 2.7%.
There are currently 165 properties in San Francisco, CA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 201. In July 2019, the number of properties that received a foreclosure filing in San Francisco, CA was 130% higher than the previous month and 35% higher than the same time last year.
San Francisco Home Prices And Real Estate Appreciation 2019
San Francisco real estate appreciated 93.56% over the last ten years, which is an average annual home appreciation rate of 6.83%, putting San Francisco in the top 10% nationally for real estate appreciation.
San Francisco real estate appreciation rates are so strong that despite a nationwide downturn in the housing market, San Francisco real estate has continued to appreciate in value faster than most communities.
Looking at just the latest twelve months, San Francisco appreciation rates continue to be some of the highest in the U.S., at 13.02%, which is higher than appreciation rates in 99.05% of the cities and towns in the nation. San Francisco real estate appreciation rates in the latest quarter were at 2.20%, which equates to an annual appreciation rate of 9.08%.
The above statistics on real estate appreciation in San Francisco were taken from NeighborhoodScout.com. You can visit their page for more information. Relative to California, their data shows that San Francisco’s latest annual real estate appreciation rate is higher than 90% of the other cities and towns in California.
Best Places To Buy Real Estate In San Francisco, CA
When looking to invest in San Francisco real estate, you need to find places where the expected property appreciation forecast is positive. The running costs for owning and managing an San Francisco investment property should be low. The neighborhoods in San Francisco must be safe to live in and should have a low crime rate.
The neighborhoods should be close to basic amenities, public services and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties. There are 290 schools in San Francisco, CA. There are 82 elementary schools, 33 middle schools, 31 high schools and 144 private & charter schools.
There are 103 neighborhoods in San Francisco. Some of the best neighborhoods in or around San Francisco, CA to invest in real estate are South Beach, Pacific Heights and Outer Sunset.
Marina District has a median listing price of $2.8M, making it the most expensive neighborhood. Lower Nob Hill is the most affordable neighborhood in San Francisco, with a median listing price of $749,000.
Here are the 10 best neighborhoods in San Francisco to invest in real estate because they have the highest appreciation rates (List by Neigborhoodscout.com).
Should You Invest in San Francisco Real Estate in 2019?
Is it worth buying a house in San Francisco, CA? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a property in San Francisco is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
We have already discussed the San Francisco housing market 2019 forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for San Francisco but we have collected ten evidence based positive things for those who are keen to invest in the San Francisco real estate in 2019.
Investing in San Francisco real estate will fetch you good returns in the long term as the home prices in San Francisco have been trending up year-over-year. Let’s take a look at the number of positive things going on in the San Francisco real estate market which can help investors who are keen to buy an investment property in this city.
1. The Job Market
Why doesn’t everyone just move out of the San Francisco housing market? Some do move, but they have a one and a half to two hour commute each way to work because they still want to work there. They just can’t afford to live there.
Moreover, it is the high tech job market that draws so many people to San Francisco and leaves many others struggling to pay the bills.
The predicted 2020 job market slowdown won’t result in layoffs, just a drop in job growth to 1.5 to 2 percent a year. Note that the area already has an unemployment rate 1.2 percent below the national average.
2. The Geography
San Francisco sits on a peninsula, surrounded on three sides by water. They cannot build out to meet housing demand. The surrounding cities are densely built up, as well.
The only way the San Francisco real estate market could meet demand is by ripping out large swaths of two and three story buildings to build condo towers, but that’s almost impossible given local regulations.
The ability to build up is limited in the surrounding suburbs because of the mountains.
3. The Zoning Restrictions
The San Francisco real estate market is, for better or for worse, beholden to a number of competing interest groups. For those with money that own their homes and have the most influence, “not in my backyard” or NIMBY means that voters fight any proposal to replace a 2 or 3 story warehouse with a 20 story apartment or condo building.
They want to protect the look and feel of the community, though high rise construction could start to alieve the overcrowding in the San Francisco real estate market.
The horrific stories of developers going through four years of red tape to build multi-family San Francisco rental properties deters others from even trying.
Ironically, this creates significant returns for those who buy up San Francisco rental properties and can convert them to multi-family housing.
4. The Environmental Movement
The environmentalist movement and California are intertwined in the public’s mind and for good reason. This is best demonstration of its impact is Marin County. An estimated 85 percent of the county is off-limits to development. This doesn’t mean there are no homes here.
It means that there are large estates that cannot be turned into tract homes. Neighbors fight any such project. This is why George Lucas had to threaten to build hundreds of homes on Skywalker Ranch when they wouldn’t let him expand his studios there.
This also explains why the San Francisco real estate market cannot solve its affordable housing crisis by building in the relatively open lands in Marin County.
5. The Redevelopment Opportunities
Warehouses and factories have been converted to lofts in large, established cities around the world. They offer open spaces, high ceilings and proximity to public transit and downtown amenities. San Francisco is no exception to this trend.
The difference is the growth in high-density San Francisco rental properties as can only be found in co-living spaces. These can be considered high-end dorms.
People may rent a bunk bed and storage space for their possessions, gaining access to laundry, kitchen and workout facilities.
Several people may share a bedroom that rivals a cramped college dorm room. These facilities are booming because they cater to the new college graduates already used to living this way and willing to continue to do so in order to work for Big Tech firms in San Francisco.
6. The Opportunity in the Exodus
The high cost of real estate in San Francisco is impossible for most families to manage. The only reason the housing market hasn’t collapsed due to their exodus is due to all the singles and couples moving in.
This provides San Francisco real estate investors the opportunity to buy up single family homes by people leaving the city or the state altogether to rent out to groups of individuals instead.
Convert a three bedroom home into three efficiency apartments and charge comparable rents.
7. The Smaller, Secondary Opportunities
The “Yes in My Backyard” faction is advocating for more granny flats, mother-in-law suites and other add-ons to existing housing that could bring tens of thousands of new units to the market. Hunt for properties where this could be built when the regulations change, and you could build and rent out such a unit immediately.
8. The Landlord Unfriendliness
California is on the whole unfriendly to landlords. It is challenging to evict people. It can take a long time to evict someone who occasionally pays the rent. Taxes are high. What does this do to the San Francisco housing market?
It leaves open the possibility that you could snap up San Francisco rental properties at a relative bargain price by people who just want to quit, whether they want to sell the properties or leave the state.
For example, the laws governing the San Francisco real estate market allow you to buy San Francisco rental properties and evict the tenants to turn the units into condos for sale.
9. The Fact that It Isn’t Oregon
You may read about the growth of Portland and other Pacific Northwest cities as talent and businesses flea the expensive San Francisco real estate market. That’s hardly impacted the San Francisco housing market, though.
However, San Francisco has several advantages over its Oregon rivals, and that’s the fact that you aren’t in Oregon. Oregon passed a state-wide rent control law in 2019. This is in addition to many city regulations regarding affordable housing. In Oregon, your ability to raise rents is limited by the state.
Making matters worse, there are many more renters than property owners, so they’ll tighten the allowable rental increases and continue to hamper owners until they’re losing money. And then there is California.
You can find a variety of rent control laws in the San Francisco housing market, because every city takes their own approach to the problem.
This means that you can find suburban San Francisco rental properties where you could raise rental rates to match the market. Furthermore, rent control laws typically don’t apply to newer single family homes.
10. The Luxury Market
There are new units being built in the San Francisco housing market. They mostly consist of luxury condos and mega-mansions built for the elite of the Big Tech workforce.
Another unintended side effect of regulations on San Francisco rental properties is that it incentivizes the construction of high-end units.
Investors could invest in these projects or buy properties in the hopes that they are torn down and redeveloped. This is why burned out husks can sell for hundreds of thousands of dollars and ones with demolition permits can sell for a million or more.
San Francisco Real Estate Investment
Maybe you have done a bit of real estate investing in San Francisco, CA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold.
A good cash flow means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt.
Therefore, finding a good San Francisco real estate investment opportunity would be a key to your success. If you invest wisely in San Francisco real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.
The less expensive the San Francisco investment property is, the lower your ongoing expenses will be. Roughly a $150,000 property is what some experts recommend starting with. However, that could be a bit difficult in the San Francisco market.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments in San Francisco, you should focus on neighborhoods with relatively high population density and employment growth.
Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like San Francisco, CA. This market is expensive, but that doesn’t mean it is overpriced. There are opportunities, though they come with risks. If the city had better leadership and more people willing to allow redevelopment on a large scale, the city could blossom.
Buying an investment property is different from buying an owner-occupied home. Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor in San Francisco, CA is your ability to find great real estate investments in that area.
According to real estate experts, buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process.
They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in San Francisco real estate in 2019. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Best Places in California To Invest in Real Estate
1. San Jose Real Estate Market in California
Another market to buy rental properties in California is San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing tech firms has driven up the cost of real estate. But what about the San Jose housing market itself?
San Jose is the third largest city in California, home to roughly a million people. It has the highest cost of living of any area in the U.S., and it is one of the most expensive housing markets in the country.
If you want to invest in the San Jose rental properties, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, you could buy now and hold until it sells. If that doesn’t happen, you could still turn it into co-working space.
2. San Diego Real Estate Market in California
The San Diego real estate market offers an ideal mix of limited supply, high demand and excellent income potential. If you’re going to invest in California, it needs to be in San Diego.
The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities.
This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 by 2050, adding tens of thousands each year.
3. Los Angeles Real Estate Market in California
The numbers may not make sense for many investors but if you ask savvy investors based in LA they would like to bet anytime on this expensive real estate market. The Los Angeles real estate market has many points in its favor beyond its sheer size.
The strong market fundamentals make the Los Angeles housing market a good place to invest if you’re looking at buying real estate in California.
Los Angeles has an unemployment rate of around 4%. What makes Los Angeles unique is the employment market. Want to work in Hollywood? Move to L.A. Want to work for a production company or in fashion?
Come to L.A. If rent is too high, share an apartment or single family home with friends. The Los Angeles housing market has seen a bump in residential construction.
This has helped to satisfy some demand from renters. However, due to increasing demand, the new supply hasn’t brought prices down.
4. Oakland Real Estate Market in California
The Oakland real estate market is a cheaper version of the San Francisco real estate market with similar rental rates and a slightly friendly legal climate.
It presents a good opportunity for real estate investors. The Oakland real estate market is second only to San Francisco in terms of rental rates. It is rivaling New York City, Boston and San Francisco in terms of rental prices.
One bedroom apartments are averaging $2400 a month. Yet Oakland housing units remain two hundred to five hundred thousand dollars cheaper than San Francisco properties. This means you’ll see far better ROI on Oakland rental properties than San Francisco properties.
Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here.
One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Environmental / zoning
Zoning restrictions https://reason.com/2018/02/21/san-francisco-man-has-spent-4-years-1-mi
Rent control /Not Oregon
Exodus of families
Market Data, Trends and Statistics
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