San Francisco has recently been adding approximately 10,000 – 12,000 new residents per year. New construction is booming again in the city, and tens of thousands of new housing units are now somewhere in the planning and construction pipeline.
Thousands of new condos and apartments (mostly at the high end of prices) hitting the market have been affecting the supply and demand dynamic, with both condo prices and apartment rents ticking down from 2015 highs – especially in those districts where new construction is concentrated.
In the long run, higher employment and population will increase the demand for housing, leading to an overall increase in San Francisco property values. However, this increase will not be experienced consistently throughout the city. Single family homes will go up in value faster than condos, as homes continue to become more rare and therefore more valuable. Charming Victorian and Edwardian condos in established neighborhoods will appreciate faster than cookie-cutter condos. Moreover, the construction of newer, sexier condo buildings will slow down the appreciation of condos in the same neighborhood that compete directly with the new housing.
It will be interesting to see how influx continues to affect the market as more inventory arrives. There is no question that the city continues to suffer from a grievous lack of more affordable housing.