San Francisco Real Estate Market Analysis

Located in Northern California, San Francisco sits at the tip of a peninsula bordered by the Pacific Ocean and San Francisco Bay. The city is home to over 880,000 people making it the 4th most populous city in the State of California and the 13th most populated in the United States. The rate of population growth is forecast to be near the national rate in the next year, and with this growth comes more tenants, which is great news for current and future San Francisco real estate investors. In fact, more than 63% of residents in the city live in rental properties as opposed to owning their own homes, according to NeighborhoodScout.

Not only has the San Francisco rental market been leading the nation for years, but its economy has also made a mark on the nation and the world. The city is located at the halfway point between London and Tokyo, making it a world economic center. Because of this, a major part of the local economy is shipping and trade. The city is also a major banking and financing hub as it is home to some of the largest banks in the US as well as over 30 international financial institutions. San Francisco is known as a major tech center. The neighborhood of South Park, specifically, is home to many rising tech companies. Other leading industries include tourism, apparel manufacturing, healthcare, and education.

Even though the city currently boasts a strong and growing economy, the San Francisco real estate market and its affordability could have a negative impact on its health. San Francisco real estate properties are notoriously known for being expensive, and some experts see the continuing appreciation as being detrimental to the growth of the economy. This issue is further exacerbated by the shortage in housing inventory which has lead to a serious imbalance between supply and demand. This can be attributed to the rising costs of construction as well as stringent regulations. Not only has this caused an increase in property prices, but local rental rates continue to rise as well. However, according to the annual real estate report put out by the PWC, there are some solutions on the horizon. With new construction processes planned for implementation in the San Francisco housing market as well as an increase in urbanized suburban developments, the real estate forecast points to some breathing room in the near future.

According to the same report, San Francisco ranks in the top 10 US markets in the Pacific Region for overall real estate prospects. Essentially, if you can afford to buy a San Francisco investment property, then the market can be a great place to invest in real estate.