Top 3 Reasons SF Real Estate is Positioned for a Comeback
This was a tough year for residential real estate sales in San Francisco. The total number of transactions in 2023 was down by 31.4% from 2022, which was already down by 25.6% from the height of 2021. Anyone who lives in the city knows how wonderful it is, but the media has had a field day portraying the worst of San Francisco to the world with the average sales price down by 6.4% from 2022 (which actually isn't all that bad, considering!).
All that said, there’s a lot of excitement for a vastly different and more positive path forward in 2024 for this amazing city. Here are my top three reasons the San Francisco real estate market is positioned to be much better in 2024.
- The Fed is projected to cut rates 3 times over the next year and UBS analysts were predicting that rates could be hovering just under 5% before the end of 2024. This will put more buying power in the pockets of buyers, which could very well create more demand resulting in increased housing prices and more motivated sellers than we saw in 2023.
- Artificial Intelligence! Per sf.gov, San Francisco is the AI capital of the world right now with 22% of all AI job listings in San Francisco County, which is more than the second (Cupertino) and third (LA) highest ranked cities combined. On top of that, the AI real estate footprint of the City has grown 50% year over year, comprising 3.4 million gross square feet of office space. And finally, according to Price Waterhouse Cooper, AI could contribute up to $15.7 trillion to the world economy in 2030. That’s a lot of money and jobs that are going to be flooding this city, and 2024 is only the start!
- Remote work will look far different the further we get from the pandemic, and I suspect we'll see more people coming back into the office as upward mobility is awarded to those who show up in person! Don’t believe me? I recently chatted with a Global Head of Workplace for a Fortune 100 tech company headquartered in the Bay Area, and both patents and innovation were down year over year since the pandemic. Needless to say, that corporate real estate team is making improvements to a workplace culture that will be requiring workers to spend more time in the office. And, when workers are expected to come back to the office in San Francisco, they will be rethinking how much they are willing to spend on rent versus building equity in one of the most expensive cities in the world where real estate is more likely to appreciate than depreciate.
Timing the market is a game of luck, ALWAYS! And if you've timed a purchase or sale well, then consider yourself fortunate! Meanwhile, if you’ve been sitting on the sidelines waiting for interest rates to come down or waiting out the market for higher quality inventory, it’s highly likely we’re about to see a big shift. Who know's if the deals of yesteryear will still be around this year? But the only way to know for sure, is to dive in fully! I’m only a phone call, text or email away if you or anyone you know has any questions about the market or is ready to make that dive!
