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San Francisco New Housing Development Report

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San Francisco & Bay Area
New Home Construction Trends

Details & Context behind
the Current Construction Boom

Paragon Real Estate

San Francisco New Home Construction by Year

San Francisco New Housing Projects Authorized

San Francisco New Housing by Neighborhood

Bay Area Housing Construction by County

Bay Area Housing Construction since 1967

San Francisco Affordable Housing Construction

San Francisco Housing Breakdown

Many of the charts included herein are based on the San Francisco Planning Department's 2016 & 2017 Housing Inventory reports. One of the developments in recent years has been the shift to building more rental units than market rate condos intended for sale.

As of the 2017 report, the city's housing stock totals just over 392,000 units of all kinds.

Numbers in different charts below will not always agree: This is due to the vagaries of how and when condos and other housing units are counted as filed, authorized, permitted or completed by the different agencies who compile this data. As far as the real estate market is concerned, the situation is complicated by the fact that new construction condos are often marketed and "sold" (offers accepted) well before they finish construction, i.e. market dynamics of supply and demand may be significantly affected by units that do not yet exist.

The politics of new home development in San Francisco are not for the weak of heart. There are vociferous disagreements between neighborhood and homeowner associations, developers, affordable housing advocates, tenant's rights groups, business groups, and pro-, slow- or no-growth advocates regarding how it should best proceed (or not proceed). The battles are non-stop in every political or legal venue available.

As a bit of context to the subject of new housing construction, the 2 charts below illustrate the growth in employment and population in San Francisco, especially in the last 7 years or so. What ultimately underpins new housing construction is demand. San Francisco has been experiencing surging population, employment and new wealth creation, that has so far been outpacing new housing supply. This is a major component of the dynamics behind our sale and rental markets.

San Francisco Employment Growth by Year

San Francisco Population Growth by Year

These next 2 overview charts are based up analyses of the SF Planning Department's Pipeline Report performed by the SF Business Times and by Socketsite. Very generally speaking, there are now about 65,000 housing units, of all kinds - in various states of filing, review, permitting and construction - in the pipeline, though a few huge projects that may take decades to complete constitute about 30,000 of those. New projects are constantly being added, and existing projects changed significantly or even abandoned.

Comparing total inventory (illustrated above) to annual sales reveals that condos and TICs turnover about twice as often as houses in San Francisco. Less than 2% of all SF houses are now sold each year, an extremely low turnover rate, which has exacerbated the city's inadequate, house-listing inventory situation. For condos, turnover runs in the 4.5% to 5% range, which is roughly in line with national averages for home sales, and for TICs, turnover is in the 5% to 6% range. These are all very general approximations. Since condos and TICs are typically smaller than houses, and often purchased by younger buyers and/or smaller households - singles, couples, beginning families - it's not surprising they sell more often than houses, whose owners are often older, more settled in life, and have larger households. It is actually a national trend that homeowners are now selling their homes much less frequently.

The process of application and review, public hearings (and sometimes ballot proposals), revisions, entitlement, permitting, construction, inspection and completion is complex and lengthy. Housing units are being planned and built, and existing units are being altered and removed. And there are many housing types: rental or sale units, market rate or affordable, social-project housing or luxury condominiums.

The new-housing landscape in San Francisco is in constant flux: new projects, developer plan changes, city plan changes, and shifts in economic and political realities. The basic fact is that the city, after its recent 2008-2012 new-construction slump, is now in the midst of a huge building boom. However, it should be noted that booms can slow dramatically or even come to a screeching halt if economic circumstances significantly change.

An interesting development is the recent surge in accessory dwelling unit construction in existing SF apartment buildings, which is described in this article. More information can be found on the Planning Dept's website: https://sf-planning.org/accessory-dwelling-units (copy and paste this URL into your search bar as we cannot link to it directly)

A detailed 12-page report on SF construction costs - according to the report, we have the second highest costs in the world after New York - was just released by the Terner Center at UC Berkeley: Terner Center Report

SF New Home Construction by Decade

San Francisco Condo construction trends

Condo inventory in San Francisco


Residential Development by City District

San Francisco New Housing by Neighborhood

New construction has been concentrated in a few specific districts of the city, mostly where there are commercial lots able to be converted to residential use and where higher density housing projects are most viable. The ability to take under-utilized commercial property sites and turn them into multi-unit or even high-rise residential projects is particularly prized. Generally speaking this describes the quadrant of San Francisco around and to the southeast of the Market Street corridor (from South Beach through Mission Bay, SoMa and Inner Mission to Potrero Hill, Dogpatch and Hunter's Point), and the Van Ness Avenue corridor.


New Housing Construction by Bay Area County

Alameda and Santa Clara, both counties with much larger populations (and, of course, areas) are at the top of the Bay Area table for new construction authorized in recent years. One of the most distinctive features of the SF building boom is how little role house construction plays - it is 99% multi-unit building construction, with a preponderance of very big, multi-unit projects such as highrises. The scarcity and expense of land to build on makes house building rare. SF is the only county where condo sales make up the greatest portion of the home market. The boom in Alameda started a couple steps behind the city, but is now gaining speed very quickly: Part of the reason for this is a much lower cost of construction.

Bay Area Housing Construction by County


Affordable Housing Construction

San Francisco New Affordable Housing

San Francisco Affordable Housing Construction

Very generally speaking, the city requires that new home developers either dedicate 15% to 20% of their units to affordable housing, which could be built on-site or on another city site, or contribute to the city's affordable housing fund in lieu of building the units themselves. (The rules are more complicated than that, and have changed recently.) There are few subjects more difficult and politically charged in San Francisco than affordable housing: how much should be built where and who should be responsible for the costs.

Affordable housing units are allocated, rented and sold under rules and formulas pertaining to social and economic circumstances and housing cost. Large projects are also built on an ongoing basis by private-public social organizations for dedicated purposes such as senior housing.

Bay Area Housing Affordability Trends

Bay Area Housing Affordability Report


San Francisco Housing Units Demolished,
Merged and Removed

Housing units are gained by additions to existing housing structures, conversions to residential use, and legalization of illegal units (which, along with new unit creation within existing buildings, have been increasing rapidly in 2017 due to changes in the city's Accessory Dwelling Unit legislation). Dwelling units are lost by merging separate units into larger units, by conversion to commercial use, or by the removal of illegal units.


New Commercial Development Pipeline

The boom in commercial construction is just as big, if not bigger, than the boom in new housing construction. This chart is based upon an analysis by the SF Business Times.

San Francisco Housing Stock Breakdown
A Fascinating 2014 Analysis by the San Francisco Controller's Office


Insufficient Housing = Increasing Prices & Rents

Below are two of our charts illustrating the rental and sale markets in San Francisco. There has recently been the biggest surge of rental apartment construction in over 60 years, which along with some fluctuation in high-tech hiring caused rents to drop from a peak in 2015 - however, they are still the highest in the nation.


Condo Values by Era of Construction

The first golden age of SF apartment buildings, many of which were later turned into condos, was in the period of 1920 to 1940: The units in these buildings are large, light, gracious and filled with elegant detail. Pacific Heights and Marina are filled with these buildings. Though there are beautiful condos built in other eras (Edwardian flats, Art Deco apartments), the second golden age really arrived with the latest burst of new-condo construction, built for an increasingly affluent population: These units are ultra-modern, high-tech and feature highest quality finishes and amenities. They are exemplified by the new, luxury high-rises of the greater South Beach-Yerba Buena area, though variations on this theme, in non-high-rise form, have been springing up all over the city.

The units in these newer buildings command a premium both when rented or sold. This is the major motivator for developers today, many of whom are now concentrating on luxury or what might be called ultra-luxury condo construction. There is a question as to whether the luxury segment is being overbuilt considering the size of the buyer pool for such expensive units.


Housing Unit Construction by Bedroom Count

We haven't found an easy place for construction data by unit size, so this first chart above is extrapolated from SF MLS sales of condos built 2001 -2015. It may not apply perfectly to units built as apartment rentals or affordable housing. However, 2-bedroom condos are indeed the dominant home sale type in the city of San Francisco.

Typically, the smaller the unit, the higher the dollar per square foot value on sale or rental, however in San Francisco, 3+ bedroom condos are often high-floor units with spectacular views that sell for extraordinary sums, but these would be outliers to the general rule.


Below are links to the SF Planning Department Pipeline and Housing Inventory report webpages.

2016 SF Planning Department Housing Inventory Report, Issued November 2017

San Francisco Planning Department New Construction Pipeline Report

This report was created in good faith and is based on data from sources deemed reliable, but may contain inadvertent errors and misrepresentations, and is subject to revision. All numbers should be considered approximate.

© 2018 Paragon Real Estate Group