San Francisco County Housing Market Trends
Tech hubs like San Francisco and San Jose have drawn substantial homebuyer demand over the last two years but San Francisco’s infamously hot real estate market saw an outward migration due to the pandemic. People were leaving the city, increasing demand in the suburbs. The value of suburban single-family homes is skyrocketing, while rents and pricing in tech hubs are falling.
- In September 2022, the existing single-family home sales growth was negative in SF county.
- The closed sales were down by 25.8% from the previous year and 5.4% from the previous month, according to C.A.R.
- The median price for a single-family home in San Francisco County was $1,650,000, down 5.7% YTY but up 0.9% MTM.
- The previous month's median price in San Francisco was $1,635,000.
- Last year's median price in San Francisco was $1,750,000.
In California, San Francisco and Los Angeles are the top markets for outward migration, for both permanent and temporary moves during the pandemic. Rents and condominium prices are expected to grow over the next twelve months, according to most analysts. Lesser-known areas with greater space, such as the Richmond, Sunset, and West Portal, are becoming increasingly popular for single-family homes.
Rents were falling in many major cities across the country due to the pandemic, but the drop was most pronounced in San Francisco, one of the nation's priciest housing markets. After the pandemic began in March 2020, rent went into free fall in almost every major city on either coast as well.
When the vaccine rollout began in January 2021, cities on the East Coast saw rents rise back to where they were before the pandemic. But on the West Coast, prices have only increased incrementally, leaving the Bay Area and Seattle still well below where they were before the pandemic began. After a prolonged slump, San Francisco rents are slowly climbing to pre-pandemic levels. The median one-bedroom rent in the city is now $2,999, a 7% increase compared to the previous year. (source: Zumper)
San Francisco Condo Housing Market Shows Drop in Sales
The high inventory levels for condos and townhomes in San Francisco county have made it favorable for condo buyers. The current unsold condo inventory index is 5.4 months and the sustained supply is finally lowering the median prices of condos. People simply no longer wish to live in densely populated areas, especially apartment buildings where they have to share common areas. They want enough space for a home office or two and their own outdoor space as well.
The current median price for a condo in San Francisco County is $1,170,000, which is a decrease of 2.5% from last year. The price is up 17.6% from the last month's median price of $995,000. Due to the pandemic lower prices of SF condos were driving more sales. In December 2021, condo sales increased by almost 44.4% year-over-year. However, in January 2022, the rate of sales growth declined as buyers seem to be pulling out for a while. Condo sales in SF county decreased by 29.5% as compared to January of last year.
As of September 2022, condo sales declined by 25.2% YoY. It is a drop of 11.7% from sales registered in August 2022. San Francisco County is seeing higher levels of inventory with a significantly larger jump than in the surrounding suburbs. San Francisco had an unusually low inventory relative to other large cities before the pandemic. You can expect more condo listings in the second half of 2022. Hence, it could be an opportunity for those that have been wanting to buy a condo for a while and were previously priced out.
San Francisco Housing Market Forecast
Let us look at the price trends recorded by Zillow over the past few years. Since the last decade (September 2012), the San Francisco County home values have appreciated by nearly 100% — Zillow Home Value Index. The current typical value of homes in San Francisco County is $1,487,764 (September 2022).
It indicates that 50 percent of all housing stock in the area is worth more than $1,487,764 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). San Francisco County home values have gone up 0.1% over the last twelve months.
In the last ten years, San Francisco has seen some of the highest property appreciation rates in the country. San Francisco's real estate has risen 111.65% in the last ten years, with an annual home appreciation rate of 7.79%, putting the city in the top 20% of the country for real estate appreciation.
However, over the last year, San Francisco's appreciation rates have lagged behind the rest of the country. San Francisco's appreciation rate during the last year has been 11.66% (2021 Q2 – 2022 Q2), which is lower than the rate in most American cities. According to NeighborhoodScout statistics, house appreciation rates in San Francisco were 2.67% in the most recent quarter (2022 Q1 – 2022 Q2) tracked by them.
What Are Average Rent Prices in San Francisco?
As of October 27, 2022, the average rent for a 1-bedroom apartment in San Francisco, CA is $2,999. This is a 7% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Francisco remained flat. The average rent for a 1-bedroom apartment decreased by -3% to $2,999, and the average rent for a 2-bedroom apartment decreased by -4% to $4,000.
- The average rent for a 2-bedroom apartment in San Francisco, CA is currently $4,000. This is a 4% increase compared to the previous year.
- The average rent for a 3-bedroom apartment in San Francisco, CA is currently $4,995. This is a 5% increase compared to the previous year.
- The average rent for a 4-bedroom apartment in San Francisco, CA is currently $6,075. This is an 8% increase compared to the previous year.
Average Rent in San Francisco Neighborhoods
According to data by Apartmentlist, San Francisco rents have increased by 0.7% compared to last month, and are up by 12.08% compared to last year. The most expensive neighborhoods in San Francisco are Pacific Heights ($3,799), Mission Bay ($3,708), and Northern Waterfront ($3,606). The most affordable neighborhoods in San Francisco are Nob Hill ($3,393), Lower Nob Hill ($2,892), and Tenderloin ($2,515).
|Neighborhood||Average 1- Bedroom Rent|
|South of Market||$3,453|
|Lower Nob Hill||$2,892|
Why is Rent So High in San Francisco?
The high cost of living in San Francisco is attributable to the city's thriving tech industry and proximity to Silicon Valley. Given the high number of tech businesses likely to go public this year, the Bay Area could become even more pricey. Rent soared by more than 50 percent by the 1990s as the city's economy advanced due to increased tourism, the surge of innovative computer companies, and insufficient new home creation.
According to Apartmentlist, using the 30% rule, you can approximate the wage required to rent an apartment in San Francisco.
- If you are renting an average-priced studio apartment in San Francisco, your annual salary should be around $99,440 or higher.
- If you are renting an average-priced 1-bedroom apartment in San Francisco, your annual salary should be around $135,480 or higher.
- If you are renting an average-priced 2-bedroom apartment in San Francisco, your annual salary should be around $181,440 or higher.
- If you are renting an average-priced 3-bedroom apartment in San Francisco, your annual salary should be around $217,080 or higher.
Where To Invest In San Francisco Real Estate Market?
California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. The San Francisco 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.
Good cash flow from San Francisco investment property 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 the best investment property in San Francisco in a growing neighborhood would be 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 is 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.
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. San Francisco home prices are not only among the most expensive in the state of California but they are also some of the most expensive in all of the United States. According to Realtor.com, Dolores Heights has a median listing price of $2.5M, making it the most expensive neighborhood.
Some of the popular neighborhoods in and around San Francisco are South Beach, Pacific Heights, Mission District, Presidio Heights, Excelsior, St. Francis Wood, North Beach, West Portal, Outer Sunset, Hayes Valley, Portola, Dogpatch, Bernal Heights, Noe Valley, and Russian Hill.
According to Financialsamurai.com, the best neighborhood to buy property in San Francisco is Golden Gate Heights. This neighborhood has many homes with ocean-view properties (under $1,000/Sq Ft), and some of the best schools in SF. Golden Gate Heights consists of mainly single-family homes instead of condos. As a result, the neighborhood is family-friendly and much less dense than other areas of San Francisco. The neighborhood is relatively inexpensive. At an average price per square foot of $850 – $980, Golden Gate Heights is an absolute steal compared to other neighborhoods in San Francisco.
Other best neighborhoods to buy investment properties in San Francisco are:
- Inner Parkside, Parkside
- Inner Sunset, Outer Sunset
- Inner Richmond, Outer Richmond
- Diamond Heights
All of these neighborhoods are safe, relatively inexpensive, and offer single-family homes for working-class people in the SF Bay Area. Single-family homes are defensive during downturns and tend to outperform during upturns.
Bernal Heights is considered an ideally located yet still moderately affordable place to raise a family. It’s on the south side of San Francisco, so it’s very easy to commute. The typical home value in Bernal Heights is $1,684,994. Bernal Heights home values have gone up 7.5% over the past year and this neighborhood will continue to rise in value.
Tenderloin is an affordable neighborhood for those who can afford to buy a home in the median price range of $679K, trending up 26% year-over-year. As of October 2021, the Tenderloin is a balanced real estate market, which means there is a healthy balance of buyers and sellers in the market. When housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
Bayview is one of the most affordable neighborhoods, with a median listing price of $850K (on Realtor.com). Bayview saw an astounding 136% appreciation from 2000 to 2006, followed by a huge 50% drop from 2006 to 2010/2011. From 2012 onward the recovery has been consistent. The median listing home price in Bayview was $850K in October 2021, trending down -10.5% year-over-year. The median listing home price per square foot was $664. The median home sold price was $920K.
Median housing prices in Bayview are also still among the lowest of any neighborhood in the city, which attracts buyers looking to get a foothold in the rapidly appreciating Bay Area housing market. The markets in Bayview and nearby neighborhoods are quite strong because they contain the most affordable houses in the city. It has one of the highest appreciation rates in the SF Bay Area region. During the downturn, its housing market became dominated by distressed sales and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic.
Stoneridge Park is a neighborhood in Pleasanton, California. It lies in Alameda County—one of the nine counties of the Bay Area region. According to Niche.com, it is a family-friendly neighborhood and one of the best places to live in California. Living in Stoneridge Park offers residents an urban-suburban mix feel and most residents own their homes. In Stoneridge Park, there are a lot of restaurants, coffee shops, and parks. The public schools in Stoneridge Park are highly rated (A+). The median home value is $911,000 and the median rent is $2,572.
Parkside receives an overall grade of A from Niche.com. It is a neighborhood in San Francisco County and is also considered one of California's best places to live. Living here offers residents an urban-suburban mix feel and most residents own their homes. The public schools in Parkside are highly rated. It is an expensive neighborhood with a typical home value of $1,631,675. Parkside home values have gone up 14.1% over the past year and they will continue to rise over the next twelve months.
Here are the top neighborhoods in San Francisco having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Presidio Heights
- Pacific Heights
- Sea Cliff
- Pacific Heights West
- Cow Hollow West
- Inner Richmond Northeast
- Laurel Heights
- Cow Hollow
- Pacific Heights Southeast
- Noe Valley North
Apart from San Francisco, you can also invest in many other real estate markets in California. California's real estate market is the focus of many U.S. and foreign real estate investors.
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 have 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 in 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, which you could buy now and hold until it sells. If that doesn’t happen, you could still turn it into a co-working space.
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.
Another expensive market like San Francisco is LA. 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.
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.
For most investors, buying or selling real estate 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 areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in San Francisco.
Consult with one of the investment counselors who can help build you a custom portfolio of San Francisco turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete San Francisco turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Please do not make any real estate or financial decisions based solely on the information found within this article. This page includes third-party content from references. Norada Real Estate Investments does not represent, warrant, or guarantee that the information such as market data and forecast is accurate, reliable, or current, even though it is thought to be reliable. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.