Meg Spriggs of AvalonBay Communities said her firm sees continued demand for apartment development in San Francisco for at least a few years to come. 

Blanca Torres
Reporter- San Francisco Business Times

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San Francisco is expected to reign as the nation’s top real estate market for investment, development and homebuilding in 2013, according a recently released annual report from the Urban Land Institute.

The report, “Emerging Trends in Real Estate,” placed San Francisco above other markets such as New York (second), San Jose (third) and Austin, Texas, (fourth) for having the best real estate prospects in the year to come.

It may not be surprising that San Francisco and San Jose would make the top five, while Los Angeles ranked No. 16. Nonetheless, Bay Area experts and real estate leaders are wondering, how long will the good times last?

ULI presented the reports findings at an event Tuesday morning in San Francisco featuring a panel of local experts including Luis Belmonte of Seven Hills Properties, Mike Covarrubias of TMG Partners, Oz Erickson of the Emerald Fund, John McNellis of McNellis Partners and Meg Spriggs of AvalonBay Communities.

The panelists spent an hour debating whether we can call the current market a bear or a bull and sharing insights.

Some of the panelists pointed out the market’s strengths. Erickson said double-digit rent growth has made apartment development lucrative and even with thousands of units under construction, there will still be demand.

Spriggs presented data that showed the number of jobs in San Francisco has outpaced housing development in recent years, further emphasizing Erickson’s view. She also said renting is cheaper than buying in the Bay Area, which isn’t the case in other markets, like New York City.

McNellis said that economic conditions in China and Europe are important to keep an eye on, but are unlikely to derail the Bay Area’s growth.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2012/12/san-francisco-number-one-real-estate.html

The average monthly price of an apartment lease has risen to $2,734 — up 12.9 percent since 2011 — according to data compiled by the rental data firm Real Facts. The spike in San Francisco rents seems to be spilling over to cheaper markets like Oakland, where the average rent is now $1,835 — up 14.4 percent since last year. Pacifica, where rents now average $1,908, has experienced a 15.6 percent increase.

“Outlying areas are starting to benefit from the improvement of Silicon Valley and San Francisco,” said Nick Grotjahn of Real Facts. “But you can still go right across the Bay and to Oakland and pay almost $1,000 less per month.”

At a forum Tuesday sponsored by the San Francisco Planning and Urban Research Association think tank, housing developers were asked whether The City is experiencing a “rent bubble.” Their answers didn’t break down along clear yes-or-no lines.

“Not quite yet,” said Meg Spriggs, a senior development director with the developer AvalonBay, which is seeking to put more than 250 new apartments on Ninth Street near the new Twitter headquarters. “But I think we’ll start to see rents taper a bit. Sixteen percent growth is not sustainable, but I think there’s still room for growth.”

Rental prices have surged following a new influx of young, high-earning workers who don’t necessarily want to be tied down to one place, but who also haven’t yet amassed enough money to make a down payment for San Francisco’s average home price of $725,000.

A recent survey by Realtor.com shows that The City’s median listing price is up 15.4 percent since last year, which matches a similar upward tick in Oakland, where the average home is selling for $379,000. The number of homes for sale in San Francisco is down 40 percent since last year, and nearly 60 percent in Oakland.

And where apartment owners in the mid-2000s fought to convert their units to condominiums so they could be sold, the popular move in today’s market is to build what could be considered condos and instead rent them as apartments.

“It’s the reverse trend now,” Grotjahn said.

Even with rising rents, the disparity between who can only afford to rent and who can buy in San Francisco remains large, said Kevin Kearney, a Coldwell Banker real estate agent who works throughout the Bay Area. He said even though high-earning young tech workers might not be able to afford homes just yet, in some cases their parents can.

“With the rising rents, we’re definitely seeing some people get off the fence,” Kearney said. “But still, a lot more people can afford to pay rent on a monthly basis — even if it’s higher than a mortgage payment — than those who can come up with a down payment. So we’re seeing more and more of those down payments from parents.”

dschreiber@sfexaminer.com

Median home price increases in Bay Area

• San Francisco: Up 15.4 percent to $725,000 since last year
• Oakland: Up 14.8 percent to $379,000 since last year
• San Jose: Up 12 percent to $549,000 since last year

Source: Realtor.com

Monthly apartment rent increases in Bay Area

Article source: http://www.sfexaminer.com/local/2012/07/san-francisco-housing-market-booms-bigger-ever