More on San Francisco’s post-recovery market
Yesterday we began a discussion of how San Francisco’s real estate market is looking three years into the recovery from recession. Today let’s continue that discussion, using as our base Paragon’s report on the matter.
Looking at new construction in the city, Paragon has pulled together two charts from its San Francisco Development Report. One accompanies this article. Nearly 7,000 residential units (sale, rental and social-project) as well as several million square feet of new commercial space are currently in the pipeline in the city, with many more coming in the next few years. We project that adding large quantities of new inventory will eventually affect the recent high-appreciation dynamic that has hit both rental and sale markets in the city – however, thus far, supply has been outpaced by population as well as employment, wealth and buyer demand.
In addition, most of new-home construction that is for sale is for high-end, ultra-modern condos that cost $1000 (and sometimes far more) per square foot. That means that we’re not yet clear on how the inventory surge will affect other segments of the city’s market.
Now let’s look at inventory. In a nutshell, low inventory is still a big deal. The year typically kicks off with the lowest number of listings, which then gradually increases into the spring season. Over the past three years, buyers have come into the season far more quickly than sellers, setting the stage for early spring market frenzies in 2012, 2013 and 2014. We’re not yet 100 percent sure what 2015 has in store for the market in terms of inventory, but that should become clearer soon.
Finally, mortgage interest rates are a huge factor that underlies market strength, particularly when they’re as low as they have been. At the start of this year, they remained incredibly low at below 4 percent.
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email firstname.lastname@example.org. www.ceceblase.com