San Francisco Housing Market Outlook by Norman Green.

San Francisco Housing Market Outlook: How safe is the market right now for buyers, sellers and investors?

By Norman Green

When you think about the San Francisco housing market, two things come to mind; skyrocketing housing prices resulting in one of the worst affordability crises the state has seen so far and the chronic lack of units for sale. By April 2020, the median listing price for homes in San Francisco was $1.3 million. This shows that the median home price in the Bay Area had risen 70 percent since 2012- inflation-adjusted. Fast forward to 2022, the median home values in San Francisco have grown to $1.5 million with a one-year appreciation rate of 7.3 percent. Additionally, our data shows that the number of new listings was down 27.8 percent with most homes staying on the market for an average of 14 days. The rent market has also been affected quite significantly. The median rent in San Francisco has grown 9.5 percent to $2,270.

one of the main factors that have been driving prices in this lucrative market is low mortgage rates that have had a direct impact on the buyer’s ability to afford a home in San Francisco. For more than a decade, the supply and demand forces have been growing out of balance reaching a tipping point in the last two years- again driven by the low mortgage rates. People came into the market in droves sending the house prices haywire.

Last year, the California Association of Realtors reported an uptick in demand for single-family homes in the suburbs some time mainly because many, people were relocating to the suburbs. While a good move, it hasn’t helped, in fact, it made things worse as property values in the suburbs skyrocketed.

While it may not seem like so, the San Francisco market began cooling down earlier than the rest of the nation. Signs of the reduced activity in the market were first seen in the mid-last year. The pandemic has increased migration out of major cities, and it appears that the majority of the relocation will be permanent. Some of the most significant pandemic-related disruptions have occurred in San Francisco.

But while that may be the case, purchasing a home in San Francisco will only get more expensive. In 2021, the market was hitting new highs each month, but because of the rising mortgage rates, the market will look very different this year. However, the San Francisco market is more of a ‘luxury’ market, with only the most affluent real estate investors likely to be able to afford San Francisco houses. By typical and average standards, the housing market in San Francisco is expensive for most people and will remain for years to come. However, this does not rule out the possibility of owning your ideal home in this hot market. Homeownership is easier than you think with the appropriate and trustworthy Realtor on your side.

SAN FRANCISCO REAL ESTATE INVESTMENT 2022

The real question becomes if it is right to invest in the San Francisco Bay Area real estate market. The median price of homes in San Francisco is staggering, and most average families won’t be able to afford it. Although we don’t hold the final say on investment choices, evidence shows that positive things are waiting in the San Francisco future. An investment into this market will not diminish in value over time. Although interest rates have been low and now rising, luxury buyers have stormed the market and will continue to do so in outpouring numbers. This is backed by examples of why buyers pay over $1 million more than the asking price. There is a one billion dollar investment made into the Bay Area housing market as announced by a Google report; this fund is expected to fund a 10year housing project in the area.

A wise investment in the San Francisco housing market could secure your future, and if you invest in areas with high population density and a high rate of employment growth, your investment will become very profitable. This is because these parts generally have a higher demand for housing. One of the best neighborhoods in San Francisco to consider for your investment is the Golden Fate Heights; it has more single-family homes and is relatively inexpensive, making it an absolute steal.