2021 San Francisco Actual Property Market Investing Forecast
Note: Our market forecast includes data from both San Francisco and the surrounding area including Oakland and Hayward.
San Francisco, also known as “The Golden Gate City”, is considered by many to be the cultural and industrial center of Northern California. Although the city is only 46.9 square miles, it has nearly 882,000 residents, making it the 16th largest statistical metropolitan area in the United States.
In addition to the city’s scenic location and unique culture, San Francisco County is also known for having one of the highest per capita incomes in the US, making it a very lucrative area for investors.
The state of the market
Like most other major cities, the real estate market in San Francisco has been heavily impacted by the coronavirus pandemic. With that in mind, we’ve put together a rundown of the top trends to consider when investing in the Bay Area.
The vacancies are rented
The proportion of rental vacancies in San Francisco is currently 8.5%. an increase of 5.5% compared to the previous year. This increase in job vacancies can be linked to high numbers of coronavirus cases, as well as an increase in the number of companies that have switched to remote working as a result of the pandemic.
However, as the vaccine roll-out continues to escalate, this appears to be a short-term problem. As more companies require workers to return to the office, the percentage of vacancies should decline. In the meantime, landlords may need to offer open units at a lower price to fill some of their inventory. The average rental price has also fallen by 8.1% compared to the previous year.
The housing supply holds its own
While San Francisco currently only has a 2.1-month housing supply, it is actually better than the rest of the country, which only reported a 1.6-month supply in January 2021. In addition, 410 new single-family homes were issued in February 2021, almost 100 more permits than forecast, which should also continue to help reduce the low level of existing pollution.
The unemployment rate is making a comeback
As of January 2021, the unemployment rate in San Francisco is 6.7%, just above the national average of 6.3%. While this number is still higher than normal, it should be noted that it is on a downward trend as it peaked at 13.2% at the height of the pandemic. For investors, that decline is an indication that the rental vacancy issues they are facing are likely to be a short-term issue. As more tenants start securing jobs in the Bay Area, they will have to sign leases again.
Indicators of demand for residential property in San Francisco
All data and graphs are from Housing Tides by EnergyLogic
The demand for housing in San Francisco has seen some ups and downs during the coronavirus pandemic.
Unemployment trends
As a rule of thumb, the unemployment rate in San Francisco is typically below the national average, and although unemployment rose in 2020 as a result of the coronavirus pandemic, that statement still holds true. Although the region’s tourism industry suffered a major blow during the pandemic, its position as one of the country’s key technology centers makes it more isolated than other metropolitan areas.
