If you’re situated in the San Francisco Bay Area, or are looking to reside there in the coming months, this Remoov Housing Guide is for you.
Today, we’re looking at current housing trends in San Francisco to gain a window into the opportunities and challenges that define one of the most dynamic cities in the United States. How has housing developed these past few months? How is demand doing versus supply? Let’s dive in and see how living in San Francisco looks nowadays.
San Francisco Bay Area Housing Supply: Lower than Current Demand
As the summer season gave way to fall, housing in San Francisco has also experienced some changes, revealed Danielle Lazier, real estate broker and owner of Vivre Real Estate:
Interest rates continued climbing in October, and the stock market has seen its ups and downs. Adding to the unpredictability is the market’s tendency to react more to anticipated federal reserve actions, than to actual economic news. In other words, good job support = prepare for a rate hike.
She adds that these fluctuations are bringing about an unpredictable economic landscape. Despite that, Danielle reassures homeowners that there is not much cause for panic:
I would like to point out that most local San Francisco homebuyers are securing interest rates about 1-2 percentage points lower than the average you hear about on the news… It’s not as bad in the backend as you might expect.
Still, according to research done by Vivre’s real estate agents, housing supply is forecast to stay below normal, especially with a 6% mortgage rate projection. This trend brought in heightened competition among buyers, with houses growing more in-demand than condos.
Short-Term Challenges vs Long-Term Housing Demand Dynamics
These developments also tie in to research from DealPath, a real estate investment management platform. According to their article, multifamily housing demand continues to remain resilient despite tailwinds thwarting other housing sectors:
…Experts anticipate approximately 500k to 750k annualized new multifamily units will be delivered between now and the end of Q2 2025. These units are in various phases of the development pipeline today, but will all be new and available for occupancy during the next 6-8 quarters.
This current pipeline is projected to add another 5-10% to the total inventory. Furthermore, they add that this new supply burst will put more pressure on the rental market and its rates.
Pricing Trends in San Francisco Bay Area: Rising Costs
Housing prices in the SF Bay Area remain high – in fact, across all five major regions in California, the San Francisco Bay Area achieved the most significant annual gain, with a median price increase of 6.6%, according to Norada. And while variations exist county-wise, the overall trend is an increase in home prices.
But why is housing so expensive in San Francisco? Here are a couple of factors and reasons Remoov has discovered:
- Robust economy – Home to Silicon Valley and numerous tech companies, the Bay Area is one giant tech hub. High-income professionals work and own spaces there, which increases housing demand and prices.
- Insufficient housing supply meets expensive land – Despite the strong economy, zoning regulation constraints and geographical limitations hamper construction and land development in San Francisco. Furthermore, the land itself is expensive, and developers are forced to pass these costs on to renters and homebuyers, lest they suffer negative profit. Growing demand + scarce supply + expensive land acquisition = sky-high housing costs.
- Intense competition – Developers are also competing to acquire available properties due to geographical constraints – case in point: three sides of the SF Bay Area hemmed in by bodies of water, which makes urban expansion a massive challenge.
- Foreign investments and quality of life – San Francisco’s cultural and natural attractions, as well as the quality of life, continues to fuel the region’s desirability. And it’s not just the local companies – foreign and international investors are putting more money into their SF properties. This, in turn, continues to drive up living costs.
Looking to Buy SF Bay Area Properties? Here Are Some Considerations
Many such factors are influencing these upward pricing trends, so if you’re looking to buy a property in California, here are a couple of things you might want to consider first:
- Does it align with your investment horizon?
Note that housing market forecasts indicate a potential uptick in home values despite the current slight decline.
- Are you prepared for bidding wars?
The housing market in SF remains ever competitive, as is apparent with the high percentage of sales over list price. If you’re prepared for potential bidding wars and making swift decisions, then this might be worth looking into.
- Are the interest rates to your liking?
Always include prevailing interest rates in your market research – they significantly influence borrowing costs, and can make or break your bank. Relatively low rates will greatly benefit you.
- What are your long-term goals?
Do not forget to include your long-term goals when evaluating your buying plans. Purchasing a home can be worth the investment if you’re planning to settle or stay for a considerable period in California.
Pro Tip: Save Up on Housing Costs with Pre-Loved Furnishings
San Francisco Bay Area housing has its fair share of opportunities and challenges at the moment. But though housing prices are high right now, many Californians find ways to compensate.
One such way for Bay Area residents is to purchase pre-loved furniture pieces and appliances from stores like The Local Flea. Used but in great condition, items in The Local Flea store in SF Bay Area are from homeowners who resold, donated, or disposed of their unwanted items to speed up and reduce the costs of moving and property resale process.
So, if you are moving or already live in the San Francisco Bay Area, check out the largest selection of quality preloved items and furniture for your home and save up on your living expenses. Visit The Local Flea here!
Stay updated on evolving housing dynamics in the coming months.
Remoov (www.remoovit.com) is the all-in-one decluttering service. The company picks up everything that a household or company wants to resell, donate or dispose – making the process of moving, downsizing, redecorating or selling an estate faster, less costly and more sustainable.