Part Two: What’s up with San Francisco’s apartment-building market?
Yesterday we started to look at Paragon’s recently released report on the San Francisco Bay Area apartment-building market. Let’s continue that discussion today, shall we?
In the third quarter of last year, we saw the San Francisco market for apartment buildings hit a sudden stop due to how the controversial Proposition G, which sought to limit the amount of speculation that could occur on residential properties in the city. Nearly 54 percent of voters vetoed the proposition, which included a transfer tax on short-term flips of residential real estate. After that, the fourth quarter saw a dramatic surge in sales, followed by another slowdown in the first quarter of this year. We’re seeing listings for sale, new listings and listings accepting offers at their lowest numbers in more than three years – and due to the fact that economic factors haven’t seen significant change, we at Paragon are assuming that this is merely reflective of an unusually busy preceding quarter. We’ll likely have more data soon since the spring sales season is typically the most active of the year.
The Bay Area is the strongest employment market in the country. The San Francisco Business Times reports that in March there were 8,600 unfilled software engineer positions in the city listed on just one recruitment site, with these jobs typically starting out at more than $100,000 even before you add in signing bonuses and stock options. Bottom line: these people need a place to live.
Unfortunately, the Bay Area has not been as strong at adding new housing over the past three decades. According to research from the California Legislative Analyst’s Office, this has been a real issue, with a new construction boom underway in the city that is still marginalizing those in need of affordable housing. We’ve got 3,500 net new units of all types that were added in 2014. While this is a huge jump from the previous five years, keep in mind that it will take years for them to actually hit the market … if indeed they are all completed.
Tomorrow we’ll finish our discussion of this report.
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