An Amateur Analysis of SF & Bay Area Housing Prices

A global analysis of the evolution of San Francico and Bay Area housing prices .

Hello,I’m not a SF habitant neither a US Citizen but the amount of articles about the crazy prices of the Bay Area is too damn high .

As a curious personI feel like I should explore this and it will be like a little trip for you dear reader hope you’ll enjoy it .

The Housing Market 101

A view of the elements that drive the housing market prices

The housing market is a people driven market which means that the prices of housing in general are driven by individual elements .

  • Economic Growth
  • Unemployment
  • Interest Rates & Mortgage availibilty #TheBigShort #2k8Crisis
  • Demographics

Now all these factors have each a specific element that affect the housing prices,let’s break them down .

Economic Growth

The Economic Growth is measured by the ratio of GDP to Population therefore higher the GDP better the economic growth and the San Fransico Bay Area is raising the bar of Economic Growth better than even countries .

As you can see in this very professional graph the SF Bay Area has very outsanding economic growth

Unemployement

The Bay Area has an unemployement rate similar to other metropolitan areas in the US as this graph from the BLS shows

Unemployement rate pre-dot com bubble to 2015

Interest Rates and Mortgagte availabiltity

While the interest rates are at all time low if they rise the house prices will lower which make it not a good investment .

Demographics

San Francisco is known for it’s tech startup scene where dreams come true where companies like Snapchat and Ink are making the world a better place (The Tech Hype) anyway this has made SF and the Bay Area in general a heaven for Software Engineers and other Tech professionals in general and also a birth place for Billion Dollar companies a.k.a Unicorns and as Uncle Ben said with great revenue comes a great salary this has made a large portion of San Francisco acitve population to make more than 90k$ per year which made the housing prices goes up as salaries are closely related to the economic growth we talked about as this graph from data360 shows .

But not closely since altough the housing prices has gone trough the roof the salaries are stable withing the 150k$ per year as a median household income which made it hard to be able to afford a home .

Not really Tech Driven

Tech isn’t a factor
The technological revolution the world is seeing came from and trough people from San Francisco “The Sillicon Valley” but one thing doesn’t necessarely affect the other as we will see in the following article altough the 1999 DotCom Bubble has made companies millions and made others penniless the Housing Market kept rising without a single crack .
For Prices between 600k and 3 Million $ it became a challenge to find a house in the Bay Area.

San Francisco…Housing Bubble

After this fast paced introduction we now move to a deep analysis .

When we talk about the San Francisco housing market we are discussing an independant market one that defy gravity as this chart from Paragon shows us

As we can see above us whether it was the DotCom bubble or Crash and recession of 2008 the SF housing market recovers very fasts and sets highest prices than before .Because of the Bay Area pretty exponential economic growth and the non balanced number of Supply and Demand only the rich can afford buying houses .
At the time of writing there are more than 7000 Open Job offers in Monster alone, and 857 Houses on Sale .
It will take a lot of time to go trough all theses data and figure out the exact factors behind but the difference between supply and demand should explain it .
Moreover a lot of people are renting nowadays simply because it coast less for short term stays and it’s a little bit more affordable for early comers to the bay area .

Can we fix it ?

I’m not an economist but …

Housing pricing isn’t a problem to be fixed by a magical solution the only way to balance the prices in this case lower them would be by providing a larger supply in this case housing projects can be a good idea but as far as i’ve seen in this 24 Hour data marathon it’s going to be a long time before the housing prices of the Bay Area and specially SF hit a lower index .

I wouldn’t be able to explore all the datasets and documents without the help of sentdex python programming tutorials and the Coffee and the occasional cigarettes . This article should be taken with a pinch of salt and beer .