The San Francisco Residential 2-4 Unit Building Market & the Coronavirus April 2020, Q1 Report

SF Market Scoop

April 15, 2020

The San Francisco Residential 2-4 Unit Building Market & the Coronavirus April 2020, Q1 Report

The San Francisco residential income market has seen a number of new challenges in recent years pertaining to rent and eviction control, and the process for selling buildings of 3+ units. Now, the coronavirus is having an exponentially greater, negative effect on the economy, employment, rental income, evictions and sales. We do not know how the crisis will ultimately play out, depending as it does on so many, rapidly changing, socio-economic and political factors, however some analysts believe the San Francisco and California residential and commercial markets will be affected less than other regions – which isn’t really of much comfort now in these extremely difficult times. Please let us know if you think we can be of any assistance.

The first thing to remember regarding the statistics in this report is that there is a time lag – usually 4 to 8+ weeks – between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all the sales data we have, as of the first week of April, still reflects the market BEFORE the crisis hit. We are in a similar position regarding rental income and rent payment issues. However, we do have a limited amount of weekly supply and demand data illustrating the plunge in market activity.

Median Quarterly Values – SF 2-Unit Buildings

Only the market for 2-unit buildings sees enough sales on a quarterly basis to be meaningful for value trend analysis. These 2 charts reflect the strong market that prevailed before the crisis hit.

The Coronavirus Effect on Market Activity

Across all segments of the real estate market, activity has plunged over the past 4 weeks.

Normal Market Seasonality Trends

The second quarter is typically a very active selling season. The effects of the crisis began to show up in Q1 numbers.

Population Growth, Employment and Rent Trends

After years of steady growth, the population of San Francisco has been leveling off, while employment figures remained extraordinarily strong (up until the virus hit). How badly the crisis will affect employment and possibly population numbers, and how those 2 huge factors will affect rent rates is yet unknown. These next 3 charts give some historical perspective.

The following table and chart reflects 2019 values and sales. There were not enough Q1 sales for reliable analysis, and, in any case, the first quarter did not see substantial changes in market conditions before the crisis hit.

SF Multi-Family Sales by Broker –
Over the Past 5 Quarters