San Francisco Investment Property for Sale - 2023 Rental Home Appreciation
The San Francisco real estate market is a “gateway” market because of its history of sustained growth, stability, and appreciation. As a result, it presents many investment opportunities.
San Francisco is the most expensive gateway market to enter. It’s even more expensive than in New York City and Los Angeles. Silicon Valley is the primary driver of San Francisco’s high home prices.
High-paying tech jobs, California’s gorgeous weather, and the Bay Area’s natural beauty have attracted people and businesses to San Francisco for years. The influx of people creates a stable real estate market with limited inventory, high demand, high appreciation, and very high list prices.
Fortunately, we’re here to help real estate investors break into high-performing markets like San Francisco to earn rental income and increase cash flow.
San Francisco's Attractive Housing Market
Think of San Francisco, and you’ll likely envision Haight Ashbury, the Golden Gate Bridge, Alcatraz, and the famous Victorian homes of Postcard Row. But there’s more to San Francisco than these tourist attractions.
Real estate investors can find nearly every property type in San Francisco’s property listings. Whether you’re looking to invest in commercial real estate, a single-family home, or multi-family housing, San Francisco has something to offer all investors.
The San Francisco Bay Area is home to some of the best neighborhoods and suburbs for real estate investors to consider. They include Berkeley, Bernal Heights, Mission District, Oakland, and Pacific Heights.
- Berkeley: Berkeley is north of Oakland along I-580 and the San Francisco Bay. It’s home to UC Berkeley and known as an ethnically diverse community. The median listing price in Berkeley is $790/sqft, and the median sales price is $1,300,000. The median rent is $2,400/month.
- Bernal Heights: Bernal Heights is in southeast San Francisco, just south of Mission District, along I-280. It’s home to the Bernal Heights hill that overlooks the city’s skyline and is known for its trendy shops and boutiques. The median listing price in Bernal Heights is $972/sqft, and the median sales price is $1,500,000. The median rent is $3,400/month.
- Mission District: Mission District is just south of Downtown San Francisco. It’s an eclectic neighborhood with strong Latino roots. The median listing price in Mission District is $993/sqft, and the median sales price is $1,120,000. The median rent is $3,650/month.
- Oakland: Oakland is just east of San Francisco across the bay. It’s known as San Francisco’s Brooklyn and, like Brooklyn, New York, it’s more affordable than the city. The median listing price in Oakland is $592/sqft, and the median sales price is $798,000. The median rent is $2,960/month.
- Pacific Heights: Pacific Heights is in northwest San Francisco near the Presidio. It’s known for its historic and architecturally significant homes. The median listing price in Pacific Heights is $1,300/sqft, and the median sales price is $1,700,000. The median rent is $4,720/month.
A few other San Francisco neighborhoods and suburbs worth noting are North Beach, with its strong Italian heritage that’s reflected in its bustling restaurants and coffee shops; South Beach, near the San Francisco-Oakland Bay Bridge; Alameda, an island neighborhood just south of Oakland; Potrero Hill, known for its historic Victorian homes; and SoMA, an industrial district turned trendy neighborhood with mixed-use buildings not far from the Financial District. Whatever you’re looking to invest in, San Francisco has something for everyone.
Rental Home Appreciation in San Francisco
San Francisco has a robust rental market where 65% of households are renter occupied.
According to Realtor, the median listing price in San Francisco is $1,030 per square foot with a median sale price of $1,300,000. Zillow’s Home Value Index reports a 12.4% change since last year. The median rent in San Francisco is $3,600 per month. What’s more, the cap rate is 2.7%.
With such a solid long and short-term rental market, a San Francisco property has the potential to yield significant returns for homebuyers, real estate investors, and property management companies.
Economic Growth in San Francisco
San Francisco is the 4th most populous city in California and the 12th most populous metropolitan area in the U.S.
The San Francisco Area’s primary industries are manufacturing, textile production, food processing, technology, and aerospace. The city’s largest employers include Ernst and Young, California Pacific Medical Center, Github, Pacific Gas & Electric, and Williams-Sonoma. The Bay Area is also home to Lockheed Martin Space Systems, Gilead Sciences, Sephora, and Apple.
These employers provide well-paying jobs that attract many people to the city and stabilize the city’s economy. In fact, the city has grown by almost 10% since the 2010 census. What’s more, the unemployment rate in San Francisco is just 3.9%.
Want to invest in a San Francisco rental property? Sign up with Arrived to discover how we make real estate investment easy and affordable.