Note: Our market forecast includes both San Francisco data and data from its surroundings, including Oakland and Hayward.
Also known as "The Golden Gate City," San Francisco is considered by many to be the cultural and industrial hub of Northern California. Although the city covers only 46.9 square miles, it's home to nearly 882,000 residents, making it the 16th largest metropolitan statistical area in the United States.
However, in addition to the city's picturesque location and unique culture, San Francisco County is also known for having one of the highest per-capita incomes in the United States, which makes 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 greatly impacted by the coronavirus pandemic. With that in mind, we've created an overview of the major trends that you should be aware of if investing in the Bay Area.
Rental vacancies are up
The percentage of rental vacancies in San Francisco currently sits at 8.5%. a 5.5% increase year over year. This increase in vacancies can be linked to a high number of coronavirus cases, as well as a jump in the number of companies that have shifted to remote work as a result of the pandemic.
However, as the vaccine rollout continues to escalate, it's looking like this will be a short-term issue. As more companies begin to require workers to return to the office, the percentage of rental vacancies should subside. That said, in the meantime, landlords may need to offer open units at a lower price point to fill some of their inventory. For its part, the median rent price is also down 8.1% year over year.
The housing supply is holding its own
While San Francisco currently only has a 2.1-month housing supply, it's actually doing better than the rest of the nation, which reported a mere 1.6-month supply in January 2021. In addition, there were 410 new single-family detached housing permits issued in February 2021, nearly 100 more permits than forecasted, which should also continue to help ease the low inventory burden.
The unemployment rate is making a comeback
As of January 2021, the unemployment rate in San Francisco is 6.7%, which is just above the national average of 6.3%. While that number is still higher than normal, it's important to note it has been on a downward trend since it hit a high of 13.2% at the height of the pandemic. For investors, this decline is an indication that the rental vacancy issues they're facing are likely to be a short-term problem. As more renters begin to secure jobs in the Bay Area, they will once again need to sign leases.
San Francisco housing demand indicators
All data and charts supplied by Housing Tides by EnergyLogic
Housing demand in San Francisco has experienced some ups and downs amid the coronavirus pandemic.
As a rule of thumb, San Francisco's unemployment rate is typically lower than the national average and, though joblessness did spike in 2020 as a result of the coronavirus pandemic, that statement still holds true. Despite the region's tourism industry taking a major hit during the pandemic, its position as one of the nation's top technological hubs has kept it better insulated than other metros.