The future of Real Estate in San Francisco looks great, positive and flourishing, Says Hirav Shah.
Table of Contents
1. Future Of Residential Real Estate Markets in San Francisco
In 2020, residential real estate in the nation’s hottest real estate markets took a sudden dive. After years of growth, San Francisco saw a drop in transactions and property values. An exodus to the suburbs, especially among older millennials with children, largely accounted for the change.
In 2021, suburban growth seems likely to continue. Here, it is important to remember that even pre-pandemic, many young families were already bidding on larger suburban homes. But this doesn’t mean city living is over.
The urban exodus will likely slow, and by the third or fourth quarter, we may see increased transactions compared to 2020. As long as urban markets remain less competitive, we can also expect to see continued opportunities for buyers, including first-time buyers who may have previously found these markets out of reach. These buyers will also likely benefit from increased inventory.
Finally, whether one decides to compete for a home in the suburbs or search for inner-city discounts, interest rates seem likely to remain low in 2021. All of this is good news for residential buyers. Suburban sellers will also likely continue to benefit from soaring values on their properties.
2. Future Of Commercial Real Estate Markets in San Francisco
On the commercial side of the real estate market, 2021 promises to be a much rockier year. It also could be a great year for risk-tolerant investors.
At the beginning of the pandemic, many commercial owners took advantage of forbearance — i.e., forgiven loan payments. With concessions ending but remote work and restrictions on in-person activities continuing, the demand for commercial space remains low compared to this time last year and seems likely to remain low throughout 2021. This situation is bad news for commercial owners. It is also bound to create incredible opportunities for investors.
As more commercial spaces remain empty, a growing number of owners will be eager to liquidate and willing to do so at increasingly discounted prices. Lower leasing prices will also make holding on to commercial properties less attractive and potentially unviable.
For investors, 2021 could offer a once-in-a-lifetime opportunity to build up a strong commercial property portfolio. But this raises an obvious question: With demand for commercial spaces in decline, is this really a good time to invest? Is there an opportunity for commercial investors?
In real estate, the biggest winners are the true pioneers. They are people willing to move into territory no one wants or views as viable. In 2021, it may seem counterintuitive to purchase a vacant office building, but these empty spaces may be tomorrow’s gold, Opines Hirav.
Assuming that many companies go permanently remote, even post-pandemic, office spaces will remain in lower demand. Still, this is no reason to assume that office buildings will permanently lose their value. Many currently vacant office buildings are located in the country’s most highly valued real estate markets.
The real question is whether these buildings will reopen as office spaces or be reimagined from top to bottom.
Well Real Estate Business Strategist & Real Estate Astrologer, Hirav Shah predicts-
a.Many office spaces will be repurposed as multiple-use spaces. For example, an existing office building may be redesigned to house a combination of workspaces, gyms and restaurants.
Hirav Shah Opines – There is nothing new about “distributing spaces and services throughout one slice of real estate.” This has been happening in the hospitality industry for well over a decade — e.g., short-term commercial rentals. Post-pandemic, this trend seems likely to expand.
b. Hirav Shah also predicts that, at least some office buildings will be repurposed as residential buildings in a post-pandemic world. For office buildings to be repurposed for residential use or alternative business use, however, it will take more than the imagination of designers. City planners will also need to get on board and rethink existing zoning bylaws, which typically restrict how different types of buildings can be used in specific districts.
With a bit of ingenuity, municipal co- operation and investor risk-taking, the future of commercial real estate could be bright, Opines Shah.
Property Trends In San Francisco
1.Housing Market in San Francisco
San Francisco’s infamously hot real estate market seems to have cooled. People are moving out of the city and the demand in suburbs has increased. The suburban single-family homes are shooting up in value while the tech hubs have seen declines in rents and pricing. The recent market developments show that the market is bouncing back.
2.Rental Market in San Francisco
San Francisco holds the position of the priciest rental market. It is still number-1 among the top 5 rental markets in the US. The average rental income for traditional San Francisco investment properties is well above the national average. Like most of the Bay Area, the percentage of people renting in San Francisco is more than owners. San Francisco has around 56 percent of its residents living in rental homes.
3. Luxury Market in San Francisco
Although home prices are soaring,there is an influx of wealthy buyers. A relatively high percentage of the buyers in the city are all cash (Around 40 to 60 percent of them). Those that aren’t paying all cash are putting at least 20 percent down with the ability to close fast, even with a loan. In short, the luxury market is also showing an upward trend in San Francisco.
Best Places To Invest In Real Estate In San Francisco
The best neighborhood to buy property in San Francisco is Golden Gate Heights. This neighborhood has many homes with ocean view properties (under $1,000/Sq Ft), and some of the best schools in SF. Golden Gate Heights consists of mainly single-family homes instead of condos. As a result, the neighborhood is family-friendly and much less dense than other areas of San Francisco.
Other Good places for investment in properties in San Francisco are:
- Inner Parkside, Parkside
- Inner Sunset, Outer Sunset
- Inner Richmond, Outer Richmond
- Diamond Heights
Final Thoughts
No one could have predicted the events of 2020 and their impact on real estate markets.
So, now should you buy your home or rent it? For some, buying makes more sense, and for others, renting is the best fit. Whichever option you choose, of course, depends on where you live. San Francisco is considered to be one of the most desirable cities to rent or own property in the United States, Opines Hirav Shah.
After all, San Francisco is a city where people are never more abroad, than when they are at home…
