Oh, hi there! Please wipe your feet before you come in. How are you today? Ready to buy a house in San Francisco, I hope! My name is Drew and I'll be your tour guide. Please help yourself to fruit, Entenmann's cookies and miniature bottled waters over on the kitchen island. All of it is complimentary, so long as you're willing to listen to me give you an elevator pitch that, defying all business logic, runs 25 minutes long.
In all seriousness though, if you're in the market for housing in San Francisco proper, you're probably already worried. You've read the stories. You've lived through past real estate bubble/crash cycles nationwide. You've heard that San Francisco is this country's foremost example of listings gone haywire, with sentient Teslas gobbling up every available home before you've even logged on to Redfin. You've gasped in outrage at sticker shock porn online, where a studio apartment in the Castro with no bathroom and no roof that is actually just a cardboard box in an alley is listed for $1.5 million. You're worried you're gonna get f—ked.
Which is where, to pretty much everyone's surprise, I come in. I do not live in San Francisco. I live on the East Coast, meaning my notions of the city's situation have come via the media, or via my sister, who lived here for over a decade and was eventually forced to relocate after the cost of living became too high for her and her family.
I wanted to figure out whether it's possible to live in San Francisco if your income is less than that of Klay Thompson's, and what your home will look like if you do manage to find a place. So I recently visited the city for a week to tour houses, talk with market analysts, and grill every real estate agent I came into close contact with. It was a LOT of real estate agents. A dangerous amount. I talked to so many real estate agents that a tasteful pantsuit spontaneously grew around my body.
But I saw this market with fresh eyes, and I got some answers. I've studied the research. I've talked to the principals. I've also toured homes that are alternately breathtaking and dire. One of them had a corrugated steel fence that made me feel like I was examining an airplane graveyard. All of them will cost you. My job was to find out just WHAT they will cost you, in terms of both money and your general mental health. And to make some jokes along the way. Lo and behold, I have done all of those things. Read on.
San Francisco proper is the second-most densely populated city in America after the borough of Manhattan, and 29% of its households make more than $200,000 a year. That is, by far, the largest income demographic in the city. The next biggest one is people making $100,000 to $149,999 a year, at 15.2%. This is an annoyingly rich city.
And if you think the pandemic helped cool down prices after every yuppie fled the joint for Marin and beyond, you would be wrong. While COVID-19 cooled off a white-hot home sales market for about four or five months and contributed to a population drop in the city, it created a pent-up demand for luxury homes once the pandemic ebbed. When it did, home buyers, especially the most affluent ones, returned to the market with terrifying, and lasting, force .
"After the pandemic hit, the world became very quickly divided into winners and losers," Compass market analyst Patrick Carlisle, who provided me with many of the stats you see above, told me. The losers got sick with COVID and/or became unemployed. The winners worked from home and watched their stock portfolios overflow with impossible gains. Then, once properly vaxxed (one hopes), they drove the luxury housing market in San Francisco higher than it's ever been. The median home sale price in SF so far in 2022 is $1.95 million. That's double the median price from less than a decade ago, and nearly quadruple the amount from the turn of the century.
In fact, there's a hard dividing line right at the $2 million mark for homes in the city. Since the summer of 2020, rolling sales data for joints over $2 million has DOUBLED, with sales still on the increase. Those figures are higher than they've ever been. Higher interest rates and a declining stock market haven't quite yet tempered the enthusiasm of the well-to-do, although there’s still some room for citizens of more modest means. Not much, but some.
According to Carlisle, new market listings are up 3% since a year ago. On any given day, you can expect to see nearly 1,200 active listings. But those availabilities are not all created equal. Modest single family home listings are barely existent. Ones that stay on the market for a long time are probably haunted, or have foundations made of crushed glass. However, Carlisle's research found that overall price reductions on the market are up 50% versus a year ago. So if you're on the hunt for a joint under $2 million — and imagine living in a place where merely being below $2 million counts as affordable — there's a chance you can find a deal. Below $2 million, in fact, sales are actually down. But with those homes, you may have to make a few … compromises.
The first house I toured that was listed under $2 million was located in the Inner Richmond and had just two bedrooms and 1.5 bathrooms. It did have an attic accessible by ladder though, in case you need a place to hide an antique treasure map. The backyard was a swatch of artificial turf, which frankly looked both handsome and easy to maintain. The real estate agent on hand encouraged me to look at photos of the house online, even though I was already right there, standing inside of it.
A condo I looked at in Eureka Valley, listed at $888,000, was a basement unit that, from the outside, looked like the kind of underground dwelling a PI steps into cautiously. But inside, it was newly renovated, staged with plain black tees hanging in the closet and a backyard divided right down the center by a retaining wall. So it had that going for it. I've slept in worse basements. Thrown up in them, too.
Many of these units come from old bones, which means they weren't necessarily built with modern amenities in mind. I toured not one, but two condos where the washer/dryer stack was located in the bathroom, right next to the toilet. And you know what? I didn't even flinch. I wasn't like, “e wwww I don't wanna change my whites while I'm mid-dump.” I was just like, “yeah I could get used to this.” It's remarkable how quickly you'll forgive a home's flaws when you understand this is the market, especially when you love many other things about the place, and when you just want the process to be over with. You will learn to love washer/toilets, and floor plans with odd angles, and "flex spaces" that can be any kind of room — except a comfortable one. You will be compelled to make do with what little space you have. Putting your bed right next to your water heater is a triumph of ingenuity, and don't let anyone tell you any different.
You may as well go ahead and add private school tuition costs to the list price while you're touring San Francisco. I'm the kind of parent who treats GreatSchools ratings as gospel anytime I'm dicking around on the Realtor.com app. Any school that gets an eight or above passes muster. Below that? GARBAGE. Are these ratings worth a crap? No. But San Francisco public schools, to no one's surprise, wouldn't come close to passing my stupid GreatSchools test, even if the ratings were accurate. Real estate agent Paul Kitchen relayed a rather uncouth story about it to me:
"When I was in eighth grade, I had a math teacher who said, 'If you didn’t do well in math class, you could go to public schools in San Francisco, where the only thing you have to pass is the metal detector.' They’re not well-funded, and they’re not well-managed. So you don’t really have an option." And who doesn't love shopping around in a market that forces you to compromise on every last thing you want?
Location(, Location, Location)
You might already be thinking to yourself, "Fine then, I'm gonna live outside of the city! I'll spend half my life commuting, but I'll be happier, damn it!" Alas, home prices have increased MORE just outside of San Francisco than they have in San Francisco itself. Median house sale prices in greater Oakland and Berkeley are currently $1.25 million, which is nearly double that of just six years ago. But that's not even the biggest kick in the crotch.
Your average monthly payment on a home in the East Bay will be over $6,000, which is $2,000 more than a year ago, due to higher interest rates. THANKS FOR NOTHING, BIDEN. And real estate agent Michael Spivey gave me an idea of what awaits you if you venture way out into the boonies:
"Within River Islands (in the Central Valley), they have some new construction that’s coming soon. They would literally have lines of people waiting outside overnight to be able to get into these homes. For new construction. Just to be able to sign their name on a waiting list. Not even to get a home guarantee to sign. There were some developments that just completely shut down their list for months because it was already filled, to the point that they didn’t even have homes prepared for as many people as they had on the list."
Thus, simply landing a spot in San Francisco itself is a triumph of location. I toured one condo in Potrero Hill that had a gorgeous view … of Interstate 280. And while that view made me feel like I was forever on my way to the airport, I could see myself getting used to it. This is your brain on a real estate tour. If you want San Francisco badly enough, you can convince yourself of a future lifestyle that, from afar, you never otherwise would.
Most homes in San Francisco still sell over the asking price. In fact, sellers bank on it, and a good number of real estate agents list their properties at a number that they know they'll never accept, because they know they can trigger a bidding war if they do. And if you're like, "Well, actually I have $3 million in the bank because I'm the CFO of Zoox," you still might get left out. Real estate agent Vanessa Kitchen, sister of Paul, gave me a horror story to demonstrate:
"Unlike New York, the rudeness here is well-disguised. But mostly, people will just pay more money. I had a buyer who bid $2.3 million on a house. It was listed at $1.9 million. A big overbid. Everyone was happy. Then, five minutes to the offer date, the buyer got a $3 million dollar offer. Which was wildly inappropriate, honestly."
The buyer took that $3 million offer, of course. It gets more inappropriate. Real estate agent Jennifer Ferland told me that buyers often have to get "creative" with their offers, and what she meant by "creative" was paying for a house in cash. One hundred percent upfront. "Maybe they’re borrowing money from their parents," she said. "Maybe they own a property, or they’re pulling money out of another property. It makes their offer more competitive with a cash offer versus a loan. And as a seller, there are less hoops to go through. A cash close can be seven days and there’s no appraisal. There’s no bank to get involved. There’s no underwriting."
When I told Jennifer that in skipping an assessment, the buyer is suddenly taking on lots more risk, she nodded solemnly. "Of course you are, but that is the norm in San Francisco."
Her fellow agent, Brad Coy, agreed, and has witnessed the enervation his buyers have experienced when facing stiff competition: "My buyers have already cooled off and taken a step back, or they’re tired, or they’re just going full force. It’s typical in San Francisco. My experience of working with buyers is generally, they have to get beat up a little bit."
That's you. You are going to get beat up. Speaking of which …
All of the high-end homes and condos I toured in San Francisco had their own parking, usually in the form of a garage so tight that you'd need to own a Matchbox car just to be able to open the driver's side door. I toured one apartment on Hyde Street with strong Manhattan vibes — built on bedrock, no outdoor space, a pristine and newly renovated kitchen that looked destined to never be used by its eventual owner, a Lucite Connect Four set tastefully adorning a coffee table — that was listed for nearly $5 million. That price, in my opinion, was entirely derived from the fact that the apartment came with its own private charging station for your electric vehicle.
San Francisco has always been a wealthy city, but in this century, wealth has migrated from investment bankers and lawyers to tech magnates and their protégés. I know precisely what that gang's priorities are when it comes to notions of fine living: apartments designed like f—king Apple Stores, plus a car plug to call your own. For the rest of you, you can either buy a $5 million Victorian that was built before garages, and cars for that matter, even existed. Or, you can endure the grind of daily street-parking angst. Iron sharpens iron.
Pretty much every house you tour will be staged, because the market demands it. Also, most every home you tour will be recently renovated, because no one here has the extra money, or the patience, for fixer-uppers. They want to start living well right away. Paul Kitchen told me, "The city is totally stalled with permits. It's a combination of a rush of people wanting to do it, difficulty with the administration, and also a lack of good contractors."
According to Coy, half the homes on the market used to be shown empty, or as-is. But those sellers quickly fell in line with staging because A) staged homes look nicer, and B) fair or not, buyers like you will hold an unstaged home against the seller. I know I did. I toured one unstaged home in the Mission and the emptiness was glaring. Like I had just moved out of the joint rather than moved into it. Whereas with the staged homes I saw, I got that hefty shot of retail therapy that comes when you tour a house and picture yourself sitting on the couch, or dining out on the veranda. The staging gooses your imagination. You can picture your future life in such a place, making it all the more tantalizing. Left with an empty house to survey, you can't engage the HGTV-addled lobe of your brain, and the thrill is lost.
"Believe me, buyers have no imagination," Coy told me. "They really get wrapped around the concept of like, 'Where is my bed going to be? Where is the TV?' I've heard that all the time." Sometimes I need to SEE that placement to know where the TV should go, and perhaps you do as well.
The good news
I dislike people who have a bleakness fetish, so let me end this little tour by telling you a few heartening things. The first is that, even though the Trump tax cuts made being a landlord in America considerably more profitable , rents here are down by about $400 a month versus their peak in 2015, Compass figures show. Also, the advent of 360-degree virtual tours on sites like Redfin has absolved you, and your feet, of endless days on the open house circuit. If you're looking in Alameda County, you can still apply for AC Boost loan assistance , which is the real estate equivalent of a college basketball fan taking a 3-pointer during a halftime show for the chance to win free tuition. And condo prices in San Francisco are flat, especially compared to home prices, which only cool down long enough for you to miss your window of opportunity.
Finally, there is the upside of San Francisco itself. There is no better city in America to be f—ked in than this one. If you live here, you know that innately. If you don't live here, and I do not, you'll grasp it very quickly. This is the second-most densely populated city in America for a reason: because its citizens decided that San Francisco is worth any price, even if their apartment only has enough room for a f—king daybed.
And the places that are nice here are VERY nice. Nice enough to motivate anyone to want them. My favorite was a triplex condo on 1160 Greenwich St. It had a parking spot. The master bedroom had its own balcony. Each view, from each level, was better than the last. There was a walk-in closet with strategically placed Hermes bags propped up inside. You got rights to a part of the roof and could build a pagoda there if you jolly well feel like it. It cost $3.6 million and, when I saw it, had been on the market for 60 days. It's still there now. No one wants it. I have no idea why.
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