The number of people living in San Francisco with a job reached a record 525,600 in May, an increase of 1,700 as compared to the month before and 19,900 more employed than at the same time last year.
There are now 60,100 more people living in San Francisco with paychecks than there were at the height of the dot-com peak in 2000, at which point the unemployment rate measured 3 percent with a labor force of 480,000, versus 544,700 last month, according to data provided by California’s Employment Development Department.
The number of employed residents in San Francisco has increased by 88,900 since January of 2010, a 20 percent jump in a little over five years. And while the unemployment rate in San Francisco ticked up to 3.5 percent in May as the labor force grew faster than employment, it’s down from over 10 percent in January of 2010.
The unemployment rate in Contra Costa County is currently 4.8 percent, down from 5.9 percent at the same time last year and 11.3 percent in January 2010. The unemployment rate in Marin and San Mateo sits at 3.3 percent. And the un-adjusted unemployment rate in California ticked up from 6.1 to 6.2 percent in May.
And what is the net change in housing units since the last peak of employment?
SF has added more than 30k housing units since 2000. Specifically, 29,513 were added in the years 2001-2014 inclusive, according to SF Planning Dept.
Attempting to compare the 60k “people with jobs” to this 30k added units is a false equivalency, as some of the 60k people came with spouses and/or Kids. Plus the specific number of units built, 29,513, doesn’t really say much except the obvious, that SF haven’t built enough housing.
Once again, data without much meaning.
Would be interested to see the same metrics for Silicon Valley as well to understand if there has been aggregate growth or a shift from south to north. Probably a combination. Either way, staggering numbers and it will continue to grow so long as this run continues.
Since the previous employment peak in December 2000, all the counties have increased in the number of employed residents (CA EDD labor market data for each county at namelink). SF has increased more than either San Mateo or Santa Clara in absolute and percentage increases:
SF: 60.1k, 12.9%
SM: 30.8k, 07.8%
SC: 48.9k, 05.1%
These are for employed residents of the counties, not the number of jobs that are located in the counties. SM net exports workers to both SF and SC.
San Francisco could use 100,000 more housing units at this point.
It sure could. But the City seems more focused on social engineering than making certain everyone has a decent roof over its head at a decent price.
No, the City’s role is not to make certain EVERYONE has a decent roof over their heads. That’s what social engineering is all about.
Our problem is that many believe EVERYONE should be entitled to live here, regardless of whether they can afford to, or not.
Our problem is that many folks like yourself believe that making it as expensive as possible to build new housing is the “market” working.
Did I say that? The market should decide who stays and who doesn’t. But because of rent control and prop 13, the market is already distorted. We have the best and brightest knocking at out door, but only a few can actually make it.
We have 2 choices:
1 – stop rent control and prop 13 and let the market balance itself
2 – build more housing to compensate for the lack of turn-over
But you cannot distort the market AND not build any housing. This is the current disaster-in-the-making we are witnessing. This might look very comfy from the “I have mine, who cares it you have yours” position, but believe me when I tell you the market has a way to hurt those who think they are safe.
Then I can’t wait to see property owners and AirBnB fans like you LOWER your rental costs to make it MORE AFFORDABLE FOR EVERYONE who wants to live here. Why not cut your profits to help out others less fortunate?
And BTW, one of the “best and brightest”, a young family, just move in near me and bought a nice NOE home for $1.8. And they seemed to be able to afford it. What’s the problem?
Rent Control is a false equivalency to Prop 13
Futurist, how about you provide your architectural skills at 1/2 price and then we’ll talk. Because your fees are adding up to the total costs.
In any case:
– I have said many times here I would accept the lower market rent and higher taxes of a world without prop 13 and rent control. My mortgage is paid off now (5 years goal reached).
– Accepting lower-than-market rent on 1-month + stays would be shooting myself in the foot twice: less reward (lower rent) and higher risk (1-month+ guests would be asking for a long term lease).
As long as the misguided social engineering constraints are there, I’ll cash out because this is my only leverage against rules imposed on landlords.
Charlie,
No they are not entirely similar, but they are related in SF. The usual argument against the repeal of rent control.
The debate always goes that way:
Landlord: Rent control makes the landlord business unsustainable long term
Tenant: You pay low taxes thanks to prop 13 despite your higher equity
Most vocal landlords here would be happy without prop 13 as long as rent control is repealed as well.
The land lording business is a long haul one. You get into debt, make investments, and you need a somehow predictable outcome. It’s the safest, most boring kind of bet, in theory.
But local constraints added on the top of US laws have transformed it into some sort of a gambling industry in SF, with winners cashing out big time and losers left out on the curb. What was supposed to be a grandpa occupation has become a shark tank environment, and the sharks are eating people. It wasn’t supposed to be that way, and all the extra safeties added to protect people are well minded but only worsen the problem…
Ah contraire, while prop 13 is a statewide decision, RC is specific to SF. Can’t make an equivalency. And RC especially fails in an extremely housing restrained market. People find all sorts of ways to game the system, both tenants and landlords. I know I have mine and they do wonders to my bottom line. Only thing that ever damps housing demands here is a good recession, and even those can be ridden out by proper long term investors.
So how long have you been here Futurist? What year did you arrive? And what was your job title/ estimated annual income at the time? I’m just wondering if you are a complete hypocrite or really believe what you preach.
Huh?
Exactly. I thought I was struggling my way up 9 years ago when i moved to SF but the new people have it much harder today because San Francisco is crushing their knuckles on the first rung of the ladder.
Prop 13 ain’t goin nowhere, it’s feelin just fine where it is thank you.
I am saving a lot thanks to prop 13, but:
1 – the landlord in me would gladly give it up if it also meant the end of rent control
2 – the citizen in me recognizes that past budget issues are an indirect consequence of tax gifts such as prop 13
3 – the investor in me would love to see more turn-over in property. But granny cannot move out because she’d pay 3 times her current taxes by moving int a place 1/2 the price of her house. This cripples the market and makes everything more expensive. New families are all fighting for the very few places available and this leads to $6.7M Noe houses.
Whatcha talking bout? That’s the beauty of prop 13, decrease turnover and increase values. That, and building restrictions are the perfect antidotes for a life of Cali investing 🙂
Well, my idea of investing is to buy low and then rent at a decent price. Buy a place every 2-3 years, pay them off in 5 to 7.
2010 was perfect. The annual rent over purchase price was over 8%. Today despite very high rents that ratio has gone under 6% and you have to pay almost double 2010 purchase price. Not a good investment for me but to everyone his own.
In other news, Americans are back purchasing on the French Riviera. A bit late now, all the really great deals are gone 😉
Okay, but what does that have to do with the long term benefits of both prop 13 and the general building restrictions we have in the Bay Area, and SF in particular? I’m just pointing out that the RE investing climate has had these favorable conditions for almost 40 years.
As for trading prop 13 for no RC, it may benefit some SF LL’s with enough below market rent units, but for me personally, I much prefer keeping prop 13 and working around RC as I always have done.
BTW, where you getting the dough to pay bldgs off in 5-7 years? Working a 9-5, making big bucks, and living cheap? Cause that kinda dough ain’t coming from your cashflow, that’s fer sur!
As for me, I like the low fixed rate mortgage climate. I get great cashflow from my recent acquisitions (purchased well), as well as a list of development/repositioning that will add tons of equity over the next two years. I’m certainly pausing buying in this high price climate, but I have a strong feeling prices will go sideways (for investment props at least) as this spring buying season ends.
SF Rentier, if you have followed my posts for the past 8 years, I had a past life as a RE specuvestor in Paris. My idea has been to double up every 10 years. Sell a property, invest $1 to purchase $2 of property, and then the extra cash flow is used to pay off the mortgage early. It’s usually not enough, I am always a bit short to achieve that in 5 years. 7 or 8 years would be more realistic, but the rest of my RE being usually paid off or almost, I use all this cash flow to reach my 5-year goal.
Yes I still have my 9-to-5 but I live in LV most of the year which lowers the low cost of living big time. (like, pay $1 in LV, collect $5 in SF) In addition to pre-payments I manage to rebuild cash to get to the next deal. One key element is being able to sleep soundly by not making too much debt. I could be more agressive…
I’ve read your past posts, but never got your game plan. Sell a $1 prop to buy $2. So your mortgage increases too, or your CF takes a big hit. You either keep the same (appreciated) asset base and enjoy the added equity and greater cashflow, or you leverage up (what I do, but still with safe LTV ratio), or you make money elsewhere (9-5, other income, etc) and plow that into RE.
A (somewhat)more specific example and timeframe would be helpful, if you don’t mind sharing.
For me my plan is simple: 1- buy a good deal. 2- with fixed low rate financing. 3- with multiple development/forced appreciation plays. 4- in gentrifying markets. 5- use appreciated value to pull capital out, and purchase another property that meets my benchmarks. Devil is in the details and creativity is a must. Also, things get easier after yor third property, as you finally start breaking free of cash/asset restraining inertia.
Well, let’s take one unit part of a 3-unit building. In 2010 this building could be sold in a decent nabe for 1.5M, or 500K per unit. This unit can be rented for 3200 at that time or 5000 today.
You put 50% down, your PITI will be in the range of $2000. If you decide to amortize tax-wise and use all available tax tools available you can shave off 400-600, say a total outlay of 1500/month excluding maintenance. Your rent today is in the range of 5000. Say you are adding 1000-1500 per month (2000-2500 at first) to get to 3300 extra principal payments per month from other incomes (day job, other rental). As you pre-pay, the share of your principal will increase and those 5 years will amount to almost 50K, in addition to the 200K you pre-paid. With this situation and a rate at a hair under 4%, the mortgage will be paid in 62 months.
Then you sell and do the same with 2 properties. Of course there’s appreciation which in the case of SF was probably 70% since 2010. If the numbers work outright while you’re in the middle of a housing crisis, chances are you are making a good bet.
My case is different and but I gave something realistic and very achievable without cutting down too much into luxuries. We used rent from property that was already paid off to top off the principal payments. 5 years and done.
Ok I get your model but why sell and deal with cap gains or be forced into a 1031ex when you can just borrow on the existing to buy the next prop? You also get to keep the lower prop 13 tax base 🙂
Also, is your goal to fully live off your RE assets? If so, how do you quantify the number units/bldgs, cashflow and equity you need to achieve that?
The tax question is an excellent one. As I said my case is a bit different. I did start that way and if I need to this will be my MO. I did pay a lot of taxes but it was a matter of sticking to a plan until I could have the choice of keeping the best producing asset.
Where to stop is a good question. When you ask someone how much income they need, they’ll invariably tell you 50% more than what they get today. We are wired for growth. I have reached the goal I had set myself in 1994 and surpassed it. I am seriously ready to start enjoying the spoils. But first pay off this villa.
How are you wired for growth? Due to owning SF units and you expect mid term appreciation? Or in spite of owning SF properties and their low cash returns?
By wired for growth I mean we all have the instinct to set ourselves new goals once we reach the old ones. Then you reach the new ones and still go on. It’s not a disease, it’s built in. Very few people can actually be content with what they have.
Gotcha. I actually will be testing your thesis as I wrap up my investments in BV over the next two years. My plan is to F off from this superficial society and live part time aboard, so I don’t want a complicated RE regime. Just enough so I can run it from abroad, and spend limited time in SF, so when I begin hating it, boom I’m otta here again.
Vegas? RU there just because it’s cheaper? You planning on making it your USA base? Or splitting time between France and ??
LV 8 months a year, South of France the rest. Just look at the weather report for LV this week. 112F is fun for a week-end but not for someone who enjoys outdoors.
I am enjoying 87 degrees and 73 in the water right now. Dinner looking at the Mediterranean 15 minutes ago. All RE is managed remotely now. Life is pretty sweet.
BTW, LV is a strategic choice. Wife got an opportunity. I saw an angle. The SF tech income and lower cost of living are helping pay for the last purchase.
Ha ha! I’m in the Mediterranean Sea too as we speak (note hours that I been writing lately.) Cali people just don’t realize how much the pacific ocean lacks in swimability, even in San Diego, compared to the Med. love just walking right into the water. Beaches super clean and well maintained. Got a nice tan to boot…and hoping SF picked up a bit wrt decent weather, as I’m coming back soon. (The wife still works, so you know, American vacations allotments…I’ll skip the expletives.) but the whole point is for her to bag her job in the next two years, right as those BV investments kick into high cashflow. And funny, my game plan is also to spend 8 months in SF and 4 out. I think that’s the right balance for now, but the wife will need to get used to not working. Funny but it’s not a trivial change for some people. I got used to not having a 9-5 right away, been doing it since 2004.
I tried stopping the day job in 2004 too, and it worked. But I realized my tech job kept me sharp. RE was a bit too dry and not challenging enough intellectually. I went back to tech in 2006 and figured it was a way to expand RE too. French banks are very binary when it comes to borrowing for RE. “Do you have a job Y/N?” I earned my remote work chops a few years back which was great for geographical control and cost arbitrage. Property management and beach town living at day, tech work at night.
That’s funny, I left tech 10+ years ago precisely because I found it intellectually lacking- more like a bunch of chickens running around with their heads cut off. The type of RE I do is much different than yours. You basically buy in down markets with cash. I buy development projects and force appreciation, which is very intellectually stimulating, especially in this (San Fran) environment. I’ve added units, expanded into basements, condo converted, executed lot splits, changed building use, worked with tenants to access my properties for development, etc. additionally the financing is key- refying properly, pulling cash to reinvest, using helocs to advantage. And of course strong property management- I get great rents and my tenants love me. I’m definitly regarded as a more with it LL than most in this city. Makes my tenants happy and I can achieve my goals as well.
This comment is also in response to the BV thr ad where you liken me to Vegas being “all in.” Indeed I’m not, as I secure equity by my development projects. But I have succeeded and quite enjoy, the notion of having my cake and eating it too, by keeping (almost) all my projects and using cash out refis to purchase the next. I think 40-60% leverage is reasonable. 40% when I’m done.
That’s pretty cool. For me debt is almost like a character flaw. I know why I need it but I do not feel right knowing I owe something to someone. I have a friend who has become his own banker, and even a banker to others.
The last 2 purchases could have been done with cash but that would have been foolish. As an owner in San Francisco you know you should have a sizable safety net for WHEN the big one will hit. In 1906 SF was rebuilt with the gold that sat in the FiDi’s safes, and the ones who could rebuild were the smart ones. My goal is 0% debt and enough cash to not have to go back to a bank. Ever.
Tech gives you a rush, and a satisfaction that I couldn’t find in RE. I loved renovating myself. I loved marketing, finding buyers. It has a very concrete satisfaction of making actual things. But ultimately you sell the place and it’s no more yours. In that way it’s a bit similar to coding. None of the code I have written prior to 2007 is used by anyone, even though Billions of $ have transited through some of my code. But there’s a creative side to software that I missed. Of course if you are in a Dilbert universe swimming inside the middle manager sandbox things can get frustrating. Meeting after meeting of accomplishing not much: not for me. Also the co-workers are much smarter than the contractors or agents that I have met.
Yeah my tech career was either in failed start ups or delbertesque middle management at larger firms. Not too satisfying. I can see the fun of coding and having it mean something.
As for debt, I don’t have issues with 4% fixed 30 year debt! I know it will be gold once rates bounce higher, and the cashflow easily covers it. My whole strategy revolves around buy and hold. I hate the idea of flipping. It’s quite difficult to buy in SF and have it cash flow strictly from your own ingenuity. Most who buy and hold here already have cash in hand from other sources. So I’m quite proud being able to now own a several buildings on my own, all strictly from the RE itself.
But one thing for sure. You’re pretty independed minded in your thinking, and so am I. And RE has been our ticket to success even with our varied resources and perspectives. It’s a great asset class, but you really need to understand it well to succeed. Especially in a market like SF. Congrats to your success.
sFS said: But granny cannot move out because she’d pay 3 times her current taxes by moving int a place 1/2 the price of her house.
Because of Prop 60, grandma can transfer her Prop 13 tax basis to a new abode (within the same county, and in some cases, into another county).
My previous Noe neighbors moved to Oakland and they were in shock at the first tax bill
Alameda County accepts inter-county transfers (so does SF and 8 other counties). They have to file a claim with the county to get it. I think they have 3 years from the purchase.
So when is northern California going to build more transportation? It’s great that the economy is doing better, but the constant gridlock is suffocating us. Why is there only 1 freeway (3 lanes wide) and 1 Amtrak line between the Bay Area, with 7 million people, and Sacramento, with 2 million people?
We need to build more freeways, more subways, more fast rail, more bridges. The quality of life is terrible now because of this constant congestion.
Transportation? When is California going to build a reliable water delivery system?
Our water delivery system is fine, the water just needs to be market-priced.
Agree transport ant here is 3rd world
Live within bicycling distance of your job and you won’t have any problem. People drive too much anyway.
I dont want to live in South San Francisco and obviously many people can’t afford to live near their job or may not want to. I also dont’ want to bike to work. THanks for telling me how to fix my problem by joing the elitists 3% of white male cyclists.
Public transport is what needs to be fixed for the other 97% of us
Run Caltrain, every 20 minutes, from 5am to 12am. Minimum.