
The San Francisco metro area recently experienced significant year-over-year increases in new-home pending sales.
The metro was among the markets that slowed most dramatically last year. Sales have since stabilized, and the effect of 2022's low levels has caused the recent significant year-over-year gains.
The East Bay has been the bright spot for job growth due to health care, education, and government, while San Francisco-San Mateo lost jobs in recent months due to retail, hospitality, and tech. Despite slowing month over month, annual job growth is still stable.
Strengths
Resale listings are down sharply year over year and down about 30% from 2019. San Francisco is the No. 1 artificial intelligence (AI) city in the world, with eight of the top 20 Al companies. Some experts believe office vacancies will peak next year, and Al could usher in a new era of economic vitality.
Weaknesses
It is one of several markets nationwide limited by land and lot availability. The attached active project count is down year over year. Many 20-to-40-year-olds are leaving due to the difficulty of finding a decent starter home under $1 million. Most starter homes are condos.
Supply
Quarterly housing starts decreased 31.2% from a year ago, while the number of available vacant developed lots sits at 2,916, down 10.6% from the same quarter last year. In terms of supply/demand balance, the market area is 6% undersupplied.
Sales
New-home sales in the San Francisco-Oakland-Berkeley metropolitan area decreased 26.2% year over year to an annualized rate of 2,519 units in August. Existing-home closings for the 12 months ending in July posted a year-over-year decline of 34.7% to an annualized rate of 35,710 units. The average list price for a new detached home in the metro increased 27.4% from 2022 to $1,262,790 in September, while the average list price for a new attached home increased 7.8% over the same period to $1,271,240. The new-home affordability ratio for a detached house reached 28.5% in July.
Economy
TotaI nonfarm employment in the area increased 2.4% from the same period last year to 2,535,600 payrolls in July, with approximately 1,700 more jobs compared with the previous month. The local unemployment rate increased to 3.5% in July compared with 3.4% in June. July's jobless rate is higher than it was this time last year when it stood at 2.7%. Zonda forecasts the region's unemployment rate will finish the year at 3.4%.
Community
The current population of the area is approximately 4,660,460 people and is projected to increase by 0.4% this year. There are approximately 1,699,030 households in the region, which is up 0.9% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 2% for 2028. Incomes rose by 5.7% from the previous year to $127,446.