Wednesday, March 12, 2014
Driven by Technology, the San Francisco Housing Market Heats Up
Perched for a second year atop the annual "Markets To Watch" list published by the Urban Land Institute and PricewaterhouseCoopers, the San Francisco real estate market is the hottest in the nation. Limited housing availability, a strong economy driven by the technology sector and booming net migration are expected to further drive up housing prices in 2014. Housing shortages in San Francisco date back to the 1970s, when city regulations limited new building opportunities, but the low inventory has been further reduced recently by the city's booming tech industry and resulting influx of workers. Efforts by Mayor Edwin M. Lee to lure tech companies to San Francisco have had great success; the city's unemployment rate sits at a record low of 4.8 percent, and analysts predict a 5.5 percent increase in the Millennial population (20- to 34-years old) in the metro area before 2019.
The median price for homes for sale in San Francisco in December 2013 was $548,500, up 23.9 percent from a year earlier. With the nation's highest rents -- $3,250 for a two-bedroom apartment -- San Francisco's rental market offers no affordable alternatives for housing. The San Francisco home seller is firmly in the driver's seat in the current market, and FSBO (for sale by owner) sellers listing their homes without the services of a real estate agent will further benefit, saving the agent's 6 percent commission, an average of $32,910 in the San Francisco market.
The most important features driving a purchase for home buyers in the San Francisco, Oakland and San Jose markets are in the areas of home amenities, according to a 2014 Survey of Home Buyers and Sellers conducted on behalf of ForSaleByOwner.com. A garage or carport tops the buyers' list of important features, a requirement for more than half of buyers surveyed. A house in move-in condition, followed closely by a new or renovated kitchen, is next on the list. Natural light is a key feature for more than a third of home buyers in the San Francisco market, and a single-level home rounds out the top five important features. The most common deal breakers for home buyers are a lack of garage or carport, a multi-level home, a home not in move-in condition and a lack of natural light.
Popular residential neighborhoods in the San Francisco area include Cole Valley, a community with scenic views and some of the area's best restaurants; Noe Valley, a quiet neighborhood with artsy cafes, boutiques and coffeehouses; and Potrero Hill, a sunny nook next to the bay. Family-friendly Sunset features many single-family homes, and the Panhandle neighborhood has boutique shops, small restaurants and beautifully restored Victorian and Edwardian homes. Haight-Ashbury, famous for its '60s hippie culture, is also home to unique Victorian houses, including the colorful "Painted Ladies" of the late 1800s. On the luxury end of the San Francisco housing market are such upscale communities as Pacific Heights and Sea Cliff, which feature grand mansions, elegant parks and sweeping views of the city and the bay.
Up next: Washington, DC, a housing market that made solid gains in 2013 but is weathering a downturn in the market caused in part by the federal government's October shutdown.
See what other cities made our Top Real Estate Markets list.