The number of people living in the city of San Francisco with a job jumped by 6,700 in September to a record 555,200, pushing the unemployment rate back down to 2.9 percent.

As such, there are now 89,700 more people living in San Francisco with paychecks than there were at the end of 2000, an increase of 118,500 since January of 2010 and 10,000 more than at the same time last year.

Keep in mind that last month’s year-over-year gain in employment was 24 percent lower than the year-over-year gain registered at the same time last year (13,300) and only half the year-over-year gain recorded in September of 2015 (20,400). And prior to last month’s jump, the year-over-year gain in San Francisco employment had been trending down since mid-2015.

In Alameda County, which includes Oakland, employment jumped by 8,900 to a record 817,100 in September which is 10,700 higher versus the same time last year. There are now 125,100 more people living in the Alameda County with paychecks since the beginning of 2010 and the unemployment rate has dropped to 3.7 percent.

And across the greater East Bay, employment increased by 15,000 to a record 1,358,800, pushing the unemployment rate back down to 3.8 percent.

Up north, the unemployment rate in Marin County dropped to 2.9 percent as the labor force increased by 1,300 while the ranks of those employed increased by 2,000 to 139,900 overall and within 1,000 of a record 140,900 set in December of 2000.

And down in the valley, the unemployment rate in San Mateo County dropped from 3.4 to 2.9 percent as the number of employed residents increased by 5,500 to a record 446,000 while employment in Santa Clara County increased by 12,700 to a record 1,005,600 and the unemployment rate dropped to 3.3 percent.

Comments from Plugged-In Readers

  1. Posted by SFRealist

    Monster funding round for Lyft and Stitchfix’s IPO, it seems like this will continue. Incredible.

  2. Posted by Anon123

    “Keep in mind that last month’s year-over-year gain in employment was 24 percent lower than the year-over-year gain registered at the same time last year (13,300) and only half the year-over-year gain recorded in September of 2015 (20,400). And prior to last month’s jump, the year-over-year gain in San Francisco employment had been trending down since mid-2015”

    Glad that I took a class in enginnering physics – I thought I would never have any use for it, and here you proved me wrong. So the numbers are up, but there is a decellarion in the growth rate! Got it!

    • Posted by oakland lover

      You needed a physics class to see the point the aurthor was making?

      @SFRealist: Stichfix IPO, hmmm, do you really think this has legs? Lyft, maybe. But stichfix?

      • Posted by Anon123

        Just another way of saying that the author was going to great length to say that the job growth wasn’t a positive for SF. My concern is the big change month over month – makes me wonder about the accuracy of the data.

        I agree with “anon” sentiment further down the page, and the stock market crash is an absolute possibility.

      • Posted by SFRealist

        Stitchfix had almost $1 billion in revenue. I’d never use it myself, but a lot of people must be.

        • Posted by Markets_arent_a_panacea

          Right, like twitter and all their revenue. You really need to learn to distinguish the difference between revenue and profit.

          • Posted by SFRealist

            Sure, kind of like how Salesforce and Amazon have little profit, large revenue, and huge valuations.

            I don’t know what valuation Salesforce “should” have. I do know that Salesforce has many well paid employees. As does Twitter.

      • Posted by Frank C.

        Could easily have “legs” for another 2 to 4 years, yeah. Long term, I have my doubts.

    • Posted by Notcom

      I would say this is a math – calculus – more than an engineering issue: if one looks at the graphs, it looks like the first order derivative is a constant…i.e. the employment growth seems to be linear rather than exponential; meaning, of course, that it can continue (growing) forever even though “it’s slowing down”.
      At least for people who believe in the IPO Fairy.

      • Posted by SocketSite

        And rather than relying on a look, here are the year-over-year growth rates in employment in San Francisco, on a monthly basis, since January of 2015:

        4.57% (January 2015)
        1.80% (September 2017)

        • Posted by SFRealist

          Of course, the obvious reason that employment growth will slow is that we are approaching 100% employment. We’ve been below the theoretical minimum of unemployment for a long time now.

          • Posted by Anon123

            Yes, and with the slow and expensive process of building more homes the only way to increase the number of employed residents is to push people out of the area who is not in the workforce – children, retired, diabled, students etc.

          • Posted by anon2

            But it’s a count of employment not a percentage.

          • Posted by SFRealist

            If you’re saying we should build more housing, I agree 100%.

          • Posted by Anon123

            Yes, I am saying that the city needs more housing. And SF has no business trying to make a deal for Amazon HQ2 – how would a company with another 50,000 employees (per sales pitch) benefit the city?

          • Posted by SFrentier

            It would be awesome if Amazon made a play for HQ2 at the shipyard/candlestick park area. Unlikely, it probably will go somewhere boring like Austin or Atlanta, but I’d be a pleasant surprise.

          • Posted by jimbo

            the tax revenues would help the city, and a housing requirement could be attached to it.

        • Posted by Notcom

          Or to look at it in linear terms
          mid 2011 ~450K
          mid 2014 ~500K (+50K)
          mid 2017 ~550K (+50K)
          Isn’t it wonderful how we can both be right?

      • Posted by jwb

        The first rule about any phenomenon which appears to grow without bounds is that it will turn out to be logistic.

  3. Posted by anon

    If the unemployment rate hits above 5% and/or the labor force drops below 525,000, then you might see the employment situation drag down housing prices. Growth, but at a slower rate, or even leveling off, isn’t going to do it. Currently far too little supply and too much demand from even the current population.

    That’s not to say that other factors couldn’t hit housing (a war with N. Korea, stock market crash) but not the employment numbers. Heck, housing prices rose a lot in SF during the ’02-’07 period when the labor force was declining significantly.

    • Posted by SocketSite

      Growth, but at a slower rate, or even leveling off, isn’t going to do it.

      That’s incorrect. While marginal demand is one factor, it’s really the relationship between marginal demand and marginal supply which matters when it comes to the price, or value, of housing.

      • Posted by Pero

        “While marginal demand is one factor, it’s really the relationship between marginal demand and marginal supply which matters when it comes to the price, or value, of housing.”

        This is just a part of the story and here is why. The city recorded a NET 10’000 new residents with jobs over the last year. This means that probably 40’000 people left the city and 50’000 new people moved in. If the 40’000 people leaving have an annual income of $50k and the 50’000 people have an annual income of $100k, this will likely lead to an increase of real estate prices beyond the impact of the marginal 10’000 NET new residents. Why? Higher income folks are looking for more luxury housing, they have money for renovations, expansions etc. So even if the number of residents and the number of units in a city were held constant, while the average income level increases significantly, real estate prices would likely be rising.

        • Posted by Tipster

          “If the 40’000 people leaving have an annual income of $50k and the 50’000 people have an annual income of $100k, this will likely lead to an increase of real estate prices beyond the impact of the marginal 10’000 NET new residents. ”

          In a city that has an average price of $1M, when mortgages are for homes costing no more than 4x your income, even a couple making $200K moving in and a couple making $100K moving out will not drive prices up any higher, as neither couple can afford the median priced home.

          • Posted by Dave

            Agree to a point. One thing that has emerged from the recent housing stats – besides the flattening of new condo unit prices – is the flattening of prices in the top third tier of single family homes. The bottom SFH tiers outperforming the top. Despite the net 10K new jobs which presumably went to top tier earners.

            There is an upper limit as to what even a couple making 200K or 300K can afford. Especially a young couple who may not have the large down payment needed for a 1 million dollar home. Actually, 1 million dollar homes in SF are, as in the Sloat Lakeshore area and Mt. Davidson where I live only found if they are fixer uppers. And Mt. Davidson and Lakeshore are not considered prime SF neighborhoods. I’d imagine the high paid couple is looking more to Noe, Portreo Hill, the Richmond – and the prices there are 1.5 million and up.

          • Posted by Pero

            Tipster, feel free to assume the incoming residents make 150k instead of 100k per year. The principle still applies.

          • Posted by jimbo

            a couple moving in who makes $300K is not going to drive prices higher as they wont even be able to afford to buy a studio . the increase in couples making of $500K is a much bigger problem.

          • Posted by SFRealist

            A couple making $300k can definitely afford a studio. I don’t make $300K and I’ve owned multiple properties, none of them studios.

        • Posted by anon

          Where do the 40,000 out and 50,000 in numbers come from? And the $50k vs $100k? Are there numbers for the inflow and outflow of people and their incomes or are these purely abstract hypotheticals?

    • Posted by anon2

      It’s not true that an employment crisis must precede a housing crisis. In fact for the previous bubble: “It is now well established that the U.S. housing market crisis preceded the labor market crisis.” And this was specifically the case for the SF MSA and most of California.

  4. Posted by Pero

    If there are 10’000 more people with jobs living in SF and we assume that these are all new arrivals creating households with a size of 2.0 working people per unit (2.3 is SF average household size), this would imply that 5000 new residential units per year are necessary just to keep the prices at what they are today.

    I just looked up housing construction for 2016 and it stands at 5’114 units per year. The expected number of new units is scheduled to be lower in the upcoming years. You can figure what this means for real estate prices.

  5. Posted by anonymous

    What happened in early 2010 to create that almost vertical jump on the graphs?

  6. Posted by Tipster

    According to the San Jose News, on a *seasonally adjusted basis*, Employment dropped, not gained. Steven Levy, an economist specializing in the Bay Area says ““The slowdown is real,” said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. “There were times this year we thought that job losses here and there were just temporary. But the slowdown is a fact. It’s happening.””

    So, it appears the increases only happened due to normal seasonal effects, but employment is actually falling, not rising.

    Obviously, the absolute numbers matter, but seasonally affected workers like teachers are probably not moving in or out based on their jobs.

    • Posted by Notcom

      I’m not sure a teacher qualifies as a “seasonally affected worker”: I’m pretty sure they don’t count as “unemployed” simply b/c they’re on Summer Break.

      As for the more general observation(s), yes, we had a lengthy discussion here on the diffs b/w “jobs” and “employed.”

    • Posted by Dave

      One needs to read the analysis of several job watchers to fully get the picture. There is a seasonal component but is the gain normal for the September jump. I have not found that analysis yet. This article is quite negative but it is one analysis only. Still, one thing that is increasingly looming as a significant threat to the viability of the Bay Area as a jobs center – vis a vis Seattle, Atlanta, the Texas metro-plexes and more – is summed up in the article and is spot on:

      “The economy in the Bay Area has pushed up against the physical limits of a lack of housing and a lack of places for workers to live,” said Jeffrey Michael, director of the Stockton-based Center for Business and Policy Research at University of the Pacific.”

      That says it all and with SF housing production set to drop sharply in the coming years more and more potential employees will simply not accept job offers here or apply in the first place. Anecdotal, went to my dentist this week. He lives in the Sunset. They would like to move to a nicer area but the prices are daunting and the huge increase in property taxes (he bought for 400K and his home is worth 1 million) adds to the problem. He is thinking instead of adding to his Sunset home but is unhappy with the neighborhood because it effectively has become an RH2 area. He said that if his practice was not mature (15 years) he’d leave the area and start over. Professionals are feeling the housing crunch too.

      • Posted by SFRealist

        The drop in the construction pipeline isn’t great for our local economy, but it is great for our local property values.

    • Posted by anon

      “10,000 more than at the same time last year” in SF. You don’t need to “seasonally adjust” year-to-year comparisons because, by definition, the numbers are in the same “season.” Can’t spin this positive growth into the opposite even if that’s what you really, badly want the facts to be to support a position you’ve staked out, which so far has turned out to be wrong.

      • Posted by tipster

        You seasonally adjust and look at trends to identify the trend that straight YOY numbers will mask. For example, if employment jumped up 20,000 in Q1, then started falling by 3300 in Q2, Q3, and Q4, you would say that employment appears to have peaked, even though it remains 10,000 higher than a year ago.

        Seasonal adjustment tells you where you are in that cycle. Thus, if employment went up by 3300, but it usually goes up by 8300 in September, then overall employment is probably falling, not rising. Investors pay VERY CLOSE attention to these trends. This explains why investors have stopped buying here, where big increases seem unlikely, and have moved their purchases to Washington and Nevada, where big increases are all but assured as long as the economy holds up.

        When investors stop buying, condo prices fall first, because investors tend to favor them. Particularly hard hit would be condos that are new, as investors tend to speculate with unfinished developments in which they can lock in pricing and then bail out with a small loss of a deposit if the market turns. So you have places like Lumina being particularly hard hit. Later, the prices of other condos tends to fall and then SFRs, as the market for all types of places is ultimately connected.

        So the fact that the trend seems to be declining will cause more investors to sell her or not buy here and buy in places where employment is rising.

        The other trend to watch is 1101 Green Street #303. One place doesn’t make a trend, but that is a very “old money” building that in years past would continue to do very well at the start of a downturn that is listed ever so slightly under its 2015 price and still hasn’t sold over a two month period. There’s something else going on with that, as old money buildings have, at least in the past, been well insulated from job market fluctuations. Are wealthy people who would normally retire to SF now retiring elsewhere?

        • Posted by Dave

          Actually, job and population growth trends back in 2014 showed the start of a falloff in the Bay Area relative to Seattle, Phoenix, Atlanta and several Texas cities. The Seattle metro area is projected to add more net residents than both the SF/Oak and SJ MSAs combined by 2035. That is hugely significant. The projected population growth in Phoenix is stunning in that same period. Reno is a second tier city but is projected for a huge increase in population and jobs – there is a housing shortage there in general and in particular upper end homes. As engineers get transferred from the BA to the Trek business park these higher paid individuals are looking for a more upscale setting than is not readily available in the Reno area. The head of Tesla there commutes in his Tesla from the Mt. Rose area to Sparks where the Tesla plant is. If Tesla shifts auto production to Reno, which has been rumored, all bets are off.

          As an investor I 1031’d out of the area in 2014 to the Northwest. Investors have been pulling out – note all the entitlements put up for sale.

          The article’s reference to the housing situation is exactly right. My friend who was treated for prostate cancer by the top gun in brachytherapy on the West Coast a year ago is having his one year follow-up and…his doctor has transferred to UCLA because he can’t afford appropriate housing here for his family of 5 kids.

          Not sure if wealthy people are retiring away from SF, but middle class people are. The Vancouver area is flooded with them as they escape California taxes. A big chunk of the hone sales in Reno are to people retiring from California.

          IMO the economy has indeed pushed up against an upper limit because of the housing situation and, more specifically, the absolute failure of the Bay Area to address it. That is catching up now and, despite that, Brisbane is proposing 8 million square feet of office space with minimal housing in Baylands (or is it Badlands) and the Central SOMA plan is proposing a 7/1 jobs/housing balance.

          • Posted by Ohlone Californio

            Do you ever stop talking your book? If you were not bearish you would have been excoriated by now. And certainly, you would have been so treated in previous iterations of this website.

            At any rate, what you are saying amounts to whataboutism really. What about Seattle? Amazon. What about Reno? are you being serious right now? What about Phoenix, Atlanta, “several Texas cities”? Really. Do break all of that down, case by case if you would, “Dave.”

            The thing is, what we have in San Francisco is a market that is approaching full maturity. We’ve seen that large single family homes in the southern part of town top out at 5M-ish, unless they are truly exceptional. We’ve seen that 2K a foot for a good property on the north side of town is the mark for something truly good. These things are in keeping with more mature American markets. I find your willy nilly book talking a bit comical, Dave. But I like it. Keep up the good work.

          • Posted by Sabbie

            And in the market cycle, what comes after maturity? Hint: it’s not happily ever after.

          • Posted by anon2

            Exactly. I don’t agree with Dave that the the Bay Area is in for a permanent decline. It’s just much more likely that this is a market cycle, albeit a very large one.
            People who have been here through a few cycles often catch on to the cyclical nature of the market and so it’s very unsurprising that they would choose to leave at the top. New arrivals are much more likely to buy into the Endless Summer nonsense.

          • Posted by Dave

            @anon2 I don’t believe the Bay Area is in for a permanent decline. As I’ve said, it will grow and add jobs but at near the national rate and will not be a robust metro area for the next decade plus. It’s all cyclical and there are great real estate markets for investors which are in an up-cycle.

          • Posted by Rillion

            “Reno is a second tier city but is projected for a huge increase in population and jobs – there is a housing shortage there in general and in particular upper end homes. As engineers get transferred from the BA to the Trek business park these higher paid individuals are looking for a more upscale setting than is not readily available in the Reno area.”

            There isn’t as great a shortage at the upper end as there is at the lower end. The biggest shortage is at the entry/lower level for what they call “workforce” housing. The median house price is in the mid 300’000’s after slipping a bit over the last couple of months (still up significantly over last year). Places under 400k are still moving fairly quickly despite limited inventory but places over 500-600k are lingering on the market with few buyers. There are quite a few new home builders building out new communities, a couple at the upper end (you can get a 5/4 McMasion built for around a million or a bit more if you want a place in a development with larger lots).

            Now, there is a shortage of upper end homes in Sparks (which is closer to TRID) as historically Sparks has seen a lot of mid-tier track homes. The fact that the above mentioned head of the Tesla plant commutes from the Mt Rose area doesn’t mean there is a shortage of upper end housing in Reno, it is because much of the upper end housing is located a lot closer to Mt Rose than it is to TRID. Most of the nicer housing in Reno/Sparks is located on the western or southern edge of Reno and more of it continues to be built in that area. I’m in an apartment complex in southern Reno and there are quite a few Tesla/Panasonic employees located in our complex and another one nearby.

            There is currently a new road being constructed on the southeast side of Reno that will provide additional capacity for those commuting from south Reno to the east side of Sparks, where they can then jump on 80 to get to TRID. Currently it seems the commute in the morning to south Reno is actually worse than the commute north (I image quite a bit of it are construction workers coming from Sparks to build new housing down in south Reno plus retail buildings for the businesses that will serve the growing population in the area).

            Also demand is starting to spill over to Fernley, which is east of TRID, but housing prices and quality there is more appealing to the middle class and isn’t upper tier housing.

          • Posted by Dave

            @Rillon – yes the real shortage is in starter and mid-level homes in Reno. Apartments are in demand too so there is some conversion of motels to apartment use. There is some upscale housing being built in the Boomtown area – I believe Reno has or is about to annex that area.

            I’d guess south Reno and the Mt. Rose area remain prime locations and see more luxury style housing – because they are so close to Tahoe and the skiing centers. Fernley has the disadvantage of being more in the desert but I closer to the emerging job hub. The area on the west side above Carson City is also in demand and is more of an upscale area.

            Reno should be good for investing for a while to come especially if the projected job growth is accurate. There are rumors about Tesla and also that one of the casino towers will be taken by Amazon or some such.

          • Posted by Anon123

            Dave wrote a book?
            Hard to see how the Baylands plan improves the quality of life for the good citizens of Brisbane, but I am sure that it will be a very profitable use for the owners of the landfill.

        • Posted by anon2

          As Notcom pointed out, the issue is jobs vs employed. Not so much one of seasonal adjustment.

          Not definitive yet, but anecdotally it seems that more and more people take up ‘gig’ work when they are without traditional employment. Thus counting as employed without a corresponding job.

  7. Posted by Sabbie

    Zillow SF rental index looks to be turning back up right now too. The thing is that we are in a Goldilocks economy right now, but if we start seeing any real heat there will probably be issues.

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