The San Francisco Bay Area (commonly known as the Bay Area), circling the San Francisco Bay in the northern part of California, is a geographically wide and diverse populated region. It is the home to over seven million residents in cities including Oakland, San Jose and San Francisco, alongside minor urban and rural areas such as San Francisco, Santa Clara, San Mateo, Alameda, Contra Costa, Marin, Solano, Napa and Sonoma. The Bay Area is popular for its high-tech industry, liberal politics and lifestyle.
The Bay Area is a good place to live in, but most buyers cannot afford the cost of housing because of its expensive price. Housing costs have relatively decreased in some parts of the United States over the past years, but San Francisco Bay Area real estate properties have been able to maintain their value. The average rent in the Bay Area costs around $1,500 a month. That rate is higher than any major city in the US.
Despite the recession, real estate properties in the Bay Area have retained their value for different reasons. Since San Francisco Bay Area is located on a peninsula, the size of land available for potential inhabitants is limited, thus making every land more expensive and valuable. There is rather only one way for the region to increase the number of housing units: by building more units vertically.
The Bay Area will be able to fit more residents if more houses are added and rents are lowered, but that is impossible to achieve since the state and local government enforce strict land controls and regulations, hence decreasing the housing elasticity in the area. Some of the boundaries imposed by the government are the following:
- Some mandates made it easier for residential areas in San Francisco to avoid development of tall properties. This effectively puts a stop on major expansion plans outside the downtown area.
- Majority of the residents in the Bay Area are afraid to lose the iconic views of the region. To preserve them, the residents started passing mandates that created Sunset Zoning. This mandate outlaws any tall building creating shadows on any public square or park for more than an hour before the sunset and an hour after the sunrise.
- To preserve the history of some structures in the Bay Area, the government prohibited development of historic buildings. One example of this is the situation in the South Market area. Many old buildings there used to be warehouses for San Francisco’s finest industries. While they are good to look at, warehouses demand lots of space, thus making it impossible to build more housing units.
Another reason why rent is so expensive is the Bay Area’s enticing amenities. The San Francisco Bay area is a densely populated region and the competition for real estate properties can increase prices of services even if the values across the US are decreasing.
Lastly, since the residents and families in San Francisco have been able to preserve a good amount of income even when the recession came, there has been no basis for real estate costs to lower. The increase in the average income of the families in the area makes it possible for the Bay Area residents to afford high housing rates.
During the recession, several people hoped for a decrease in San Francisco’s property values to make way for high return investments. Still, property costs remained higher compared to the prices in other parts of the US. Despite the high value, San Francisco Bay Area real estate continues to be appealing to buyers for several reasons. The Bay Area is a very diverse community that is why majority of the buyers will mostly find at least one property that fits their needs. Several buyers are also able to find great investment opportunities that assure a significant amount of yield when the market goes back to its normal state.
Property values in San Francisco may not be affected by the recession, but this does not mean that people cannot find great bargains and deals in the area. Real estates in the Bay Area are famous for their flexibility and long life so it is safer to make an investment there rather than buying real estates in other locations. Buyers can also enjoy an increase in the cost of a certain property if they ever decide to sell it. The cost of San Francisco Bay Area real estate may become increasingly expensive over time so if someone is interested in buying some properties in the Bay Area, then it is better to do it as early as possible.