San Francisco is a unique region in California’s housing landscape. Here, home prices have far surpassed the pre-Millennium Boom years and jobs were recovered quickly following the 2008 recession due to the presence of the high-paying tech industry.

All the same, high prices and limited inventory have shut out many residents, causing a housing crisis for renters and homebuyers alike. Further, the region’s enviable jobs recovery from the 2008 recession has not shielded San Francisco residents from the hangover from the 2020 recession, induced by years of economic build-up, on top of the 2020 financial crash and the response to the global pandemic.

Expect to see San Francisco’s home prices continue the decline which began in Q3 2021 due to the recent expiration of the foreclosure moratorium, rising forbearance exits and the lifting of government support that has thus far propped up economic growth. Further, the remote work trend has caused an increasing number of San Francisco residents to flee the metro area for less expensive, nearby suburbs, reducing homebuyer competition in the city. The housing market will begin a more consistent recovery from the 2020 recession here in San Francisco and across the state around 2023-2024, the timing of which will largely depend of the existence of further government stimulus, especially regarding job creation.

View the charts below for current activity and forecasts for San Francisco’s housing market.

Updated January 19, 2022. Original copy posted March 2013.

Volatile home sales volume

Chart update 01/19/22

2021* 2020 2019 2004: Peak Year
San Francisco County home sales volume 7,500 5,200 5,400 8,100

*first tuesday’s forecast is based on monthly sales volume trends, as experienced so far this year, and economic conditions affecting the market.

Home sales volume in San Francisco County is volatile, but has tended to run a step ahead of the rest of the state in terms of trends. San Francisco home sales volume peaked in 2004 — a year before the statewide peak — before receding in 2005-2006. Home sales volume bumped along at a relatively level-to-down annual pace in 2012-2016, but fell significantly in 2017, a signal of the statewide downturn in sales taking place in 2018. But this decrease reversed course in 2018, with year-end totals up 12% from 2017. 2019 home sales volume ended the year with 2% fewer sales than in 2018 and 2020 sales volume ended the year down a slight 4% from the year prior.

As of November 2021, year-to-date (YTD) home sales volume was a volatile 45% above a year earlier. While this annual increase is steep, the rising trend has slowed, down from earlier in 2021 when YTD sales were a whopping 60% higher than a year earlier. This puts San Francisco on track to end the year just below 2004, its peak year for sales.

San Francisco, with its heavy concentration of high-paying tech jobs and depressingly low housing inventory, is almost an economy unto itself. Decreased economic expectations and still-high home prices in the region have caused homebuyer enthusiasm to wane sharply in 2020. As we continue to make our way through the hangover from the 2020 recession, look for home sales to fall back in 2022.

Turnover rates are mixed

Chart update 09/08/20

2018 2017 2016
San Francisco County homeowner turnover rate 6.6% 6.0% 9.0%

San Francisco County renter turnover rate

18.8% 19.5%

San Francisco’s renter turnover rate rose significantly in 2017 to nearly 20%, meaning one-in-five San Francisco renter households moved in 2017. On the other hand, the homeowner turnover rate (producing sales and relocating buyers) fell sharply in 2017 to just 6%. This low turnover rate is reflected in the steep drop in sales volume also experienced in 2017.

Renter and homeowner turnover rates indicate both the willingness and corresponding ability of renters and homeowners to move. With the loss of jobs and income during the Financial Crisis and 2008 Great Recession, turnover rates in San Francisco fell. However, both renter and homeowner turnover rates recovered more quickly in San Francisco than elsewhere in the state due to the region’s swift jobs recovery and high concentration of employers.

Following the recession, renters in particular regained a higher level of mobility, as the young professional class inhabiting San Francisco is often more inclined to rent than own. However, the significantly high rents in San Francisco are now swiftly pushing renters out of the city and into the nearby counties of Alameda and Contra Costa. Those with rent-controlled apartments strive to stay put which kills turnover and new construction.

Looking forward, turnover rates will likely be highest in 2022-2023, one year ahead of the rest of the state. These years will see the confluence of Generation Y (Gen Y) first-time homebuyers and retiring Baby Boomers (Boomers) hitting the home buying market at once.

Homeownership trends down

Chart update 01/19/22

Q3 2021
Q2 2021 Q3 2020
San Francisco County homeownership 52.9% 57.2% 53.0%

The homeownership rate in the Bay Area tends to vary more wildly than other parts of the state. However, the general trend from the end of the Millennium Boom until 2015 had been down. Since 2020, the homeownership rate in San Francisco has trended up, though it remains volatile from quarter-to-quarter. As of Q3 2021, the homeownership rate is 52.9%, below the statewide average of 54.4%.

Overall, the homeownership rate in San Francisco has not suffered quite as much as the rest of the state during this protracted recovery due to the job support delivered by its successful tech industry. All the same, due to the high cost of housing and the allure of city living, renting is often preferred in San Francisco.

Jumbos and ARMs drive home prices

Chart update 01/19/22

Oct 2021 low-tier annual change Oct 2021 mid-tier annual change Oct 2021 high-tier annual change
San Francisco County home pricing index +17% +18% +19%

San Francisco home prices are characterized by rapid starts and stops, as viewed in the bumps in the chart above — particularly in the mid- and high-tiers. Pricing in Southern California markets form a smoother line. San Francisco’s low supply situation is partly to blame, creating a volatile home sales market. The city’s preference for low-density zoning restricts builders from meeting the ever-increasing demand for local housing.

As of October 2021, low-tier prices are a significant 17% higher than a year earlier, mid-tier prices are 18% higher and high-tier prices are 19% higher. These significant annual price jumps are atypical for the recovery from recession, and in-line with the average statewide increase. Beginning in Q3 2021, home prices in San Francisco began to level and decline on a monthly basis, reflecting the loss of support from interest rates and economic stimulus.

Accurate home price reports run about two months behind current events. Even when caught up, “sticky prices” tend to persist several months beyond the moment when home sales volume begins to slow. Starting in March 2020, economic volatility and shelter-in-place orders caused home sales volume to decline. However, historically low interest rates provided a boost for buyer purchasing power, which inflated home prices in 2020.

In the coming months, the rising number of forbearance exits will put downward pressure on home prices. Home prices will feel downward pressure in 2022-2023, the result of a long recovery from the historic job losses of 2020 and rising interest rates. But these natural economic forces will be complicated by a severe supply shortage, which only continues to worsen in the Bay Area as construction falls behind demand.

Multi-family construction gains

Chart update 01/19/22

2020 2019 2018
San Francisco County single family residential (SFR) starts 26 43 33

San Francisco County multi-family starts

2,900 5,100

Very few single family residences (SFRs) are built in San Francisco County each year, and this number has continued to decrease in recent years. Multi-family construction starts, on the other hand, have swung wildly from year-to-year, though the general trend has been up since their bottom in 2010, hitting a wall and reversing course in 2020. Multi-family construction continued to plunge in 2021. The long approval and permitting process in San Francisco holds down construction starts of all types, though legislative changes have continued an attempt to loosen the process and make it easier for builders to meet demand.

As jobs continue to be centered in San Francisco, multi-family construction may feel the benefits. San Francisco’s high-paying tech industry draws a younger population (members of Gen Y and Gen Z), who are most likely to reside in multi-family structures close to the urban amenities San Francisco offers.

However, archaic zoning limiting building height and the density of units in each structure will impair multi-family starts, population mobility and job growth going forward while driving up rents and causing employers to consider other communities.

Jobs recover slowly from 2020 losses

Chart update 01/19/22

Nov 2021 Nov 2020 annual change
San Francisco County employment 1,129,300 1,054,600 +7.1%

Unlike most of the state, San Francisco’s jobs market was well passed the point for recovery from the 2008 recession when the 2020 recession hit. Homeowners and renters require income (generally from employment) to make mortgage or rent payments. As a result, San Francisco’s housing market has grown more swiftly than the rest of the state due directly to its quick healing and expansion in the jobs market over the past decade.

Jobs have met and exceeded residents’ need for employment, even including San Francisco’s population increase of roughly 70,000 working-age individuals during the recovery from the 2008 Great Recession. By a statewide comparison, California just caught up to pre-recession levels in mid-2014, finally meeting the intervening population increase in 2019.

However, what was gained was quickly lost. The economic response to COVID-19 on top of the underlying recession has caused record job losses across the state, and San Francisco is no exception. San Francisco’s job numbers are 71,500 below the pre-recession peak as of November 2021. Expect to see these persistent job losses pull down prices in 2022 following the recent expiration of the foreclosure moratorium and rise in forbearance exits and those who are jobless with a mortgage find their bills come due.

Jobs by real estate industry

Chart update 01/19/22

Nov 2021 Nov 2020 Annual change


43,600 41,700

Real Estate

21,200 20,700

The number of people employed by each of San Francisco’s top employing industries has increased over the prior year. In particular, Professional and Business Services, which includes the technology and support industries, has added the most jobs during this economic recovery.

Employment in the real estate industry has well exceeded pre-recession levels. The construction industry suffered greatly during 2020, the result of shelter-in-place orders that have often been more restrictive in the Bay Area compared to the rest of the state. However, the dire need for more residential construction continues. Thus, construction will continue to see growth throughout this decade.

Per capita income has recovered

Chart update 03/03/20

2018 2017 Annual change
San Francisco County per capita income $130,700 $121,800 +7.3%
California per capita income $67,000 $63,900 +4.9%

Per capita income in San Francisco is nearly double that of California’s average income, having increased at a significantly quicker pace that most of California in recent years.

However, San Francisco residents spend on average a debilitating 41% of their income on housing expenses. Many more simply cannot afford to live in the city and are forced out to the suburbs, the only place where their paycheck qualifies them for housing.

If you’re looking for indications of where California’s housing market will be in two to three years, take a look at San Francisco County. Here, jobs and income have fully recovered. All the same, home sales volume remains stuck in its bumpy plateau — flat. Sales are likely to continue their fall back in 2020 due to too-high home prices relative to incomes and an unstable global economy. For, even though incomes here are higher than virtually anywhere else in the state, rising incomes still don’t keep up with the cost of housing.