Not surprisingly, SF rent market expected to keep sizzling 

The bombastic talk in San Francisco of “surging” rents and “skyrocketing” demand looks like it will be sticking around in 2014.

“The high-tech boom is supercharging San Francisco residential and commercial rental markets with ferocious demand,” reads the Paragon Real Estate Group’s recently released first-quarter market update, which specifically highlighted the multifamily sector as the most popular.

The real estate think tank Urban Land Institute is expecting San Francisco to be the nation’s premier real estate market in 2014 for the second year in a row, according to Paragon.

Surprise, surprise.

When it gets down to the residential housing numbers, the report says 86 percent of apartment buildings — at least those listed in MLS, or the Multiple Listing Service used by real estate agents — were sold in the last part of 2013 without any price reductions. The average sale price for such properties was a cool $3 million.

This, evidently, is a sign that apartments in The City are in demand as investment properties.

A snapshot of profits, or the return a buyer gets on a purchase, shows that apartment buildings in more expensive neighborhoods such as Pacific Heights and both Russian and Nob hills have lower profits than the Sunset or Richmond districts, where sale prices are lower and rents have more room to rise. That’s no surprise, since investors pay more for properties in nicer areas where rents are already at their peak.

On the contrary, the Inner Mission has higher median return rates when compared to the aforementioned areas. Oakland, by comparison, had the area’s highest such rates at 6.5 percent.

As for those pesky rising rents in apartment buildings, average asking rates varied in San Francisco, according to the report. Russian Hill, the highest at $2,851, was followed closely by South of Market, Pacific Heights and Haight-Ashbury. Downtown San Francisco was, by the report’s measurement, the lowest at $1,730 — only slightly lower than western San Francisco at $2,180.

About The Author

Jonah Owen Lamb

Jonah Owen Lamb

Bio:
Born and raised on a houseboat in Sausalito, Lamb has written for newspapers in New York City, Utah and the San Joaquin Valley. He was most recently an editor at the San Luis Obispo Tribune for nearly three years. He has written for The S.F. Examiner since 2013 and covers criminal justice and planning.
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