What’s been happening in the first quarter?

It may not come as a surprise to you that the Bay Area – and San Francisco in particular – continued its boom back toward solidity in the first quarter of 2014. Named by the Urban Land Institute as the number-one investment real estate market in the country for the second year in a row, San Francisco’s real estate market is powered by an economy that is slated to add jobs at the rate of 2 percent this year.

With rents soaring and a surge in new construction making itself felt, we can expect a more-than-decent apartment supply in our future. That said, demand for living in San Francisco far outstrips its inventory – and vacancy rates are expected to remain at rock-bottom levels through 2017.

Paragon has produced its SF Bay Apartment Market Report – and it’s more than worth a look. Here are some of our findings:

  • San Francisco County’s appreciation trends over the past three years have seen a 50 percent surge in dollar-per-square-foot values from the post-2008 market crash’s bottom. With greater economic confidence, historically low interest rates, skyrocketing rents and higher buyer demand as well as low inventory, this may well be expected to continue.
  • Median cap rates vary widely across the Bay Area, but San Francisco County cap rates are amongst the lowest in the country, particularly in the most affluent neighborhoods.
  • With location the greatest determinant of value, it’s not surprising that San Francisco is up in the stratosphere in terms of dollar per square foot. Typically speaking, the smaller the building, the higher the dollar per square foot cost and the lower the ROI.
  • In the past 13 months through January 2014, agents currently at Paragon have closed over $435 million in multi-unit residential investment and commercial property sales.

See the full report for more details.

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 cblase@paragon-re.com. www.ceceblase.com

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