It is no secret that the cost of living in the San Francisco Bay Area is astronomical, especially now that the median home price has reached a record high of $1.5 million and rent rates are soaring over $3,000 per month.
Additionally, seeing as competition for these highly sought-after homes is only getting fiercer, many homebuyers have been offering much more than the asking price in order to secure the home of their dreams — or at least try, since bidding wars are not uncommon in the San Francisco area.
These developments, in conjunction with the city’s failed attempt to pass an affordable housing law, are causing many to question whether or not a bubble is forming around San Francisco.
While this would not necessarily be surprising, some experts are denying the mere possibility. In an article for Bisnow, Richard Green, director of the USC Lusk Center for Real Estate, stated that real estate itself is not in a bubble — after all, the market is healthy and industry around San Francisco is booming.
Certain users of real estate, on the other hand, may be in for some hard times. Green went on to point out certain companies that may or may not survive the shifting market in San Francisco — namely, Uber and Airbnb.
Although these companies are extremely popular amongst a diverse audience of users, they are not truly tech companies — which are known to flourish in the San Francisco Bay Area. Instead, these companies use technology to disrupt the market and divert industry-specific profits to their users — meaning they do not necessarily make a notable amount of money themselves. This, Green said, should be the issue at the forefront of everyone’s minds — not the overheated housing market.
However, experts from other media outlets have disagreed vehemently, stating that San Francisco is in the midst of one of its greatest total market slowdowns. After all, growth in tech industry jobs is sitting around 1 percent, as opposed to 15 percent two years ago. This means that fewer and fewer people will be capable of purchasing the pricey homes and rental units the area boasts.
So, is San Francisco truly in a bubble? In spite of the overheated housing market and sluggish job market, the answer remains unknown. At this point, it is safe to say that only time will tell how San Francisco will withstand its own market fluctuations.