Cost of housing high in San Francisco
So you’ve been offered a job in San Francisco -- but can you afford to live there? San Francisco may be one of the most vibrant cities in the U.S., but it’s also among the most expensive, mainly because of the high cost of housing.
Although the cost of groceries, utilities, transportation and health care in San Francisco is only slightly higher than the national average, the city weighs in at a whopping 195 percent above average for housing costs, according to The Council for Community and Economic Research.
Why so high?
“Low inventory, high demand,” says Diane Wagner, of Mary & Diane Team, a team of three real estate agents with Pacific Union International who handle real estate in San Francisco and Marin County.
According to figures from Housing Tracker, there were about 6,397 single family and condo homes listed for sale in San Francisco as of March 18, with a median asking price of approximately $625,000. Compared to the same time a year earlier, the inventory of homes for sale decreased by 48.3 percent while the median price increased by 43.7 percent.
As in many cities, the real estate market in San Francisco has been tightened by reluctant-to-sell homeowners who have been under water (owing more on the mortgage than the property’s market value) at a time when demand is being fueled by historically low mortgage interest rates. Add to that the overall desirability of living in San Francisco and the result is a seller's market and ever higher prices.
Rent first, buy later?
If you move for a job, your new employer may provide for temporary housing for 30 to 60 days, according to Molly Dick, director of Crossroads Relocation, a San Francisco-based real estate consulting firm. This will give you some breathing room as you secure your new home.
Determine whether you should buy or rent -- take a good look at both scenarios, from a financial as well as a lifestyle option. Dick says many people are renting today because their current home in another city hasn’t sold. Keep in mind, however, that San Francisco rents are also high and the demand is equally stratospheric. “Rent is equivalent to paying a mortgage in San Francisco,” says Sarah Wagner Rayburn of Mary & Diane Team.
Popular San Francisco neighborhoods
San Francisco is a city of distinct neighborhoods, each with its own character and vibe. “You want a neighborhood, we’ve got it -- right down to the type of weather," Dick says. "People are fascinated by our microclimates.” Due to a combination of its hilly topography and proximity to the Pacific Ocean and its own bay, San Francisco is a city in which average temperatures can vary by 10 degrees Fahrenheit from one neighborhood to the next.
Among the high-demand neighborhoods are Noe Valley, Mission Bay, the Marina and -- hottest of the hot -- NoPa (North of the Panhandle). One of the more affordable areas for families is Bernal Heights, often off the radar for relocators not familiar with the city.
Noe Valley – an area popular with families and young professionals. Housing stock is typical of San Francisco architecture: Victorians, Edwardians and multi-unit condo buildings. Prices range from the high $900,000s to several million. Zillow expects Noe Valley prices to rise 13 percent next year, compared to a 9.6 percent increase in San Francisco as a whole.
Mission Bay – a popular new high-rise condo area near AT&T Park, new UCSF research campus and biotech companies. Properties range in price from the mid-$300,000s to $1 million-plus. Lower-priced condos are typically in pre-foreclosure.
Marina – an immensely popular neighborhood near the bay for singles and young families, with Mediterranean, Victorian, Marina-style homes and multi-unit condo buildings. “First-time buyers are being priced out of the Marina,” says Wagner Rayburn, where most properties come attached with a $1 million-plus price tag.
NoPa – a rapidly gentrifying neighborhood near Golden Gate Park where prices are escalating as well. The housing stock ranges from Victorians to Edwardians to condos. You can expect to pay anywhere from $450,000 for a one-bedroom/one bath tenant-in-common to $1,495,000 for a two-level Victorian condo.
Bernal Heights – a small, community-feel neighborhood located a short distance from downtown but close to freeways. It's perfect for families due to the abundance of single-family homes, cottages and condos. Prices run the gamut, with some smaller properties (two bedroom, one bath) available at around the $500,000 to $600,000 mark. Prices rise from there to the higher end of the scale similar to other million-dollar neighborhoods.
Other factors to consider
“Looking in your price range is important," says Wagner Rayburn, "but you also need to look in the neighborhood that matches your ‘want’ list. Are you willing to give up an extra bath, or extra yard space, to live in that neighborhood?”
Also consider your transportation needs. If you own a car (or two), does your house, condo or apartment come with parking? Street parking is limited, which results in a mad scramble daily. Garage space can add an extra $200 to $250 to your monthly expenses, Dick says.
If you decide to look for housing outside of the city proper, be aware that many of the highly desirable communities in Marin County, the East Bay and the Peninsula come with a downside for drivers: a long commute. According to the Census Bureau, “Bay Area drivers have the worst of the worst commutes in America,” meaning it has “the highest percentage of full-time workers who are mega-commuters, with morning commutes of at least 50 miles and 90 minutes.” The closer the community is to downtown San Francisco, the higher the price tag.
“The inventory is moving really fast,” says Wagner Rayburn. She says a house typically goes on the market on a Thursday or Friday, has an open house Saturday and Sunday followed by broker tours on Tuesday. There may be one or two “twilight” showings (5:30-7:30 evenings), with a date for offers set the following Thursday or Friday — in all, a two-week time frame. And now, in the latest wrinkle of this market madness, some agents are making pre-emptive offers on desirable properties -- offers tendered before the offer deadline.
Weigh all your options, but don’t be discouraged -- it is possible to find a home you’ll love in San Francisco. Working with an experienced real estate expert can help you navigate the city’s super-hot market.