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Report: Demand, Not Market-Rate Supply, Drives Housing Prices in San Francisco

The Urban Institute takes a detailed look at San Francisco's real estate market, where most home sales top $1 million, revealing that old units are far more likely to attract top dollar.

1 minute read

June 5, 2017, 9:00 AM PDT

By James Brasuell @CasualBrasuell


Jorg Hackemann / Shutterstock

"New evidence from [Urban Institute's] data scientists, using data from the city’s Housing Inventory and Office of the Assessor-Recorder, contradicts the claim that a rise in million-dollar homes is primarily because of new construction," according to an article by Graham McDonald.

The key finding at the center of the argument: "In 2016, at the height of the million-dollar home market of the past eight years, only 10 percent of home sales worth a million dollars or more were located in new complexes."

The idea that renovated units could also be responsible for the city's high housing costs is also debunked by the data, according to Graham. "San Francisco’s building permit data show that just 2 percent of units spent at least $250,000 on a renovation or new construction project of less than 10 units, while new construction in buildings of 10 units or more represented 4 percent of the city’s units."

The conclusion to Graham is clear: primary factor driving the cost of housing in San Francisco "is that the demand for housing in the region has outstripped new supply."

Thursday, June 1, 2017 in Urban Institute

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