How San Francisco Real Estate Got So Expensive And Why SF Real Estate Values Hold

San Francisco is infamous for consistently high housing prices; both purchase prices and monthly rental costs are among the highest in the country. While it's easy to say that San Francisco real estate prices are a simple matter of supply and demand, a closer look shows that the issue is more complex than that. Keep reading for more information!

Building Up Is Not An Option

You may not have thought about it from this perspective, but San Francisco is one of the "shortest" major cities in the country. San Francisco is a peninsula. That's one of the reasons we love the city so much, but it makes development difficult. Once the city was built-out at the ground level, the only way to add more housing density (i.e. supply) is to build up. However, zoning restrictions have limited the height of San Francisco buildings to just 40 feet in most areas of the city. That means the city is full of buildings that are just one to three stories in height. While the restrictions were intended to help protect all the things we love about the city – the views, the sunset/sunrise, the historic feel – it had the unintended consequence of limiting housing supply and, as a result, driving up the cost of housing.

A side benefit is that most areas of the city have views of the water, especially given that the city is surrounded by water on 3 sides!

Anti-Growth and Development Policies

Exacerbating the problem of inadequate housing supply is a very strong anti-growth and development culture among residents and elected officials. The height limitation is just one example of this. People move to San Francisco because it is a different kind of city. It's a city that doesn’t feel too much like a city and residents want to preserve that feel. This has led to very restrictive development regulations and processes. It's not uncommon for new developments or redevelopment projects to spend several years going through the approvals stage before the green light is given and construction starts. During that time, residents have plenty of opportunities to oppose or appeal to the project and they very often succeed in derailing development. Again, this lack of development equates to fewer housing units and higher prices. 

The Tech Effect 

It's almost a local pastime to blame the tech industry for driving up San Francisco real estate prices and there is some truth it, but the tech industry can't bear all the blame. Yes, the industry boom created a huge influx of highly skilled and highly paid white-collar workers who could afford to pay sky-high prices, but if there were more stock available, those workers wouldn’t have had to compete with one another for housing and drive up prices as a result. The fact is, San Francisco is home to major tech employers who pay their people well. Those same people want to live convenient to work and can afford to outbid competitors. 

Because of COVID19, only the future will tell how the impact of working from home affects real estate prices in Silicon Valley, particularly San Francisco. We’re seeing many large tech companies offering employees the choice to work from home indefinitely.

Lack of Supply and Steady Demand Keep San Francisco Real Estate Values Stable

As a realtor, I have to say it: It's all about location. San Francisco has always been an in-demand place to live. It's full of history and culture. It’s inclusive and diverse. It's a gorgeous Northern California location on the coast. You have easy access to the wineries of Napa Valley, the sunny beaches of Southern California, snow covered mountains of Tahoe, and more! It has all of the amenities of a city but doesn't feel too city-like from the family neighborhoods. It also has a limited amount of housing and a strong local economy. All of these factors and more combine to hold home values steady in San Francisco. 

When there is a consistent steady demand for housing, but a limited amount of housing available, prices naturally stabilize or even increase as has been the case with San Francisco real estate. That's good news for anyone who currently owns a home in San Francisco. If the past is any indication, your home will maintain its value or increase in value over time. If you're trying to move into the city, it can be problematic as prices can be expected to remain high as long as demand is there – and demand is always there.

Are you in the market for San Francisco real estate? There are some steals on the market right now and I've love to get you into your dream home! Call me at (415) 854-2224 or email me at crystle@ckwproperties.com to get the process started!

LINKS TO OTHER BLOG ARTICLES

QUICK GUIDE TO BUYING A HOUSE IN SAN FRANCISCO

THINGS YOU CAN DO WHILE QUARANTINED AT HOME

HOW TO BUY A HOME DURING COVID-19

GOVERNOR GAVIN NEWSOM’S EXECUTIVE ORDER EFFECTS ON REAL ESTATE

TO BUY OR NOT TO BUY IN SAN FRANCISCO DURING SHELTER-IN-PLACE

WHAT THE CARES ACT MEANS FOR YOU (CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT)

CONSTRUCTION UPDATES FOR SHELTER-IN-PLACE

CONFIRMING WITH THE IRS WHERE TO SEND YOUR STIMULS $$$

SAN FRANCISCO: IS NOW A GOOD TIME TO SELL A HOUSE?

ABOUT OUR FOUNDER, CRYSTLE WONG

As the CEO of a San Francisco founded, global tech startup, Crystle understands from experience what it takes to succeed. Her real estate experience spans from successfully managing multiple properties over the last 10 years including residential, commercial, and mixed-use, as well as her time spent actively investing in flipping properties, tax liens, tax deeds, and other property types. As a native born and raised in San Francisco, you can trust that you’re in good hands of a local who can help you navigate the micro neighborhoods of San Francisco. Crystle invests in relationships and you can count on her to walk with you through the process of buying or selling your property.

You might ask yourself, “What does a tech startup have to do with real estate?”

Good question! Everything about Crystle exudes intention. Her ultimate goal is to grow her tech company so that she can utilize its philanthropic arm to fund micro-housing for the homeless in partnership with key, long standing and successful social services organizations in San Francisco. Real Estate gives her the ability to network and learn about developing land to purchase in the future to develop the micro housing. Her time serving on boards for these non profits gives her the knowledge of what these organizations really need to be able to get more people off the streets for good.

The same cornerstones that drive success in her tech company are the same cornerstones that make her the best real estate agent to work with: honesty, transparency, integrity, and a relationship- focused mindset toward life.

Crystle was born and raised in San Francisco’s Inner Richmond district and continues to choose to establish her future life in San Francisco as well. She is a woman of her word. She not only financially supports several not-for-profits, but also regularly serves in her community helping the homeless, youth, and those in poverty.

In her spare time, she is an active and current member of the Board of Directors of Lutheran Social Services of Northern California, the APA Heritage Foundation Committee of San Francisco, and volunteer for Mobilize Love. She has previously and faithfully served on the Board of Directors for Zion Lutheran Church and School of San Francisco, the Board of Directors for Designing a Difference, the Board of Directors for APAPA San Francisco, a member of the Friends of Smuin Ballet, and as a Co-Chair for the Princess Project.