Picture perfect scenery, a robust restaurant scene, and consistent weather are a few of many reasons that people love visiting/living in the Bay Area. However, it is no secret to many that the property prices in the Bay Area are astronomical compared to most places in the US, especially in San Francisco. Countless stories are spread of lower income earners struggling to find affordable rental prices, including some tenants having to pay $1200/month for a 150 sq ft. apartment. The seemingly cartoonish rental prices and the widespread media coverage of homelessness has made it a fascinating place for people to point at and wonder, “how is this even possible?”. There are various factors at play here and they can provide a good case study of what to look for when investing in real estate.
Geography
This is probably the most important aspect that makes the property incredibly valuable in the macro sense. The bay area’s land mass is a peninsula, which has historically provided great production through its ports. However, having that particular land shape lends itself to a limited number of properties and land acreage overall. With outside government control of land/urban growth through the years, it has limited the area’s elasticity. Having a smaller amount of space with unique amenities, combined with the large number of high income earners, has resulted in the competition significantly driving up prices. Data has shown that the median household income has rarely dropped in San Francisco through the years and has made property values virtually recession proof because of this.
Tech Industry
Most people can cite this as the primary factor to why the bay area is so expensive these days. They wouldn’t necessarily be wrong. Having the tech center of the world in your proximity would make any place raise their property values incredibly high. According to the Brookings Institute, while most of the top 100 metropolitan cities have seen an increase in tech jobs over a ten year period, San Francisco has seen the second most growth at 11.7% (The first being Austin, TX, which currently has less than half the tech jobs that SF has overall). Projections show that the centralizing nature of the tech industry will continue this trend within the Bay Area for years to come.
Given the lucrative nature of the tech industry, the number of high earning workers has made San Francisco into one of the “wealthiest cities in America” (Business Insider). Tech has been thriving and the continued spending from venture capitalists has helped with keeping its status. This has played a major role in the resulting level of income inequality that the Bay Area is infamous for. The number of high earners has virtually boxed out anyone who makes less than six figures to live comfortably at or near the bustling economy taking place within the city.
Where does East Bay Investment place in all of this?
With the ongoing COVID-19 pandemic, this incredible circumstance has opened up slew of opportunities for investment and growth within the East Bay. Working from home has been a method of productivity that many companies are becoming more comfortable with. One of the few advantages that has come about is the lack of geographical constraints for commuting workers. Before the pandemic, many workers have had megacommutes (2 hours or more to get to office). Nowadays, companies have found new efficiencies in their operations with the work from home approach. A potential “hybrid work-from-home” approach can now have an employee work from home 1-3 times a week, or even fully remote.
Because of this, the East Bay has been in serious consideration for prospective homeowners working for tech companies in the South Bay (Cupertino, San Jose, etc.) and the Peninsula (Palo Alto, San Mateo, etc.) The East Bay has always been a great area to live and find homes for reasonable prices in the Bay Area.
As a firm, we believe this work-from-home shift will skyrocket the value of properties in the East Bay. We are currently investing in real estate in the East Bay, so give us a call on how you seize the opportunity of owning part of the Bay Area real estate market today!
510-344-6368
댓글