Should You Invest in Residential Real Estate in the East Bay Area (Oakland, CA) in 2014?

This year promises great investment opportunities for those looking to invest in residential real estate in San Francisco. Only 17 cities in the United States witnessed double digit growth in the per square foot list price for homes in 2013. San Francisco made it to this list by the skin of its teeth with a 10.2% y-o-y increase.

According to the Emerging Trends in Real Estate 2014 report, published by PriceWaterhouseCoopers and the Urban Land Institute, San Francisco is the top ranking real estate market in the country right now. The report puts the city in the #1 position for the second consecutive year due to its thriving economy, which is likely to see an addition of 2% more jobs in 2014. The report also mentions that respondents to the survey of top real estate markets in the US pegged San Francisco as a strong “buy” for all types of property. Multifamily housing continues to gain momentum due to demand from Gen Yers and Baby Boomers alike.

Our work in San Francisco’s Bay Area shows us that there has been price recovery in both 2012 and 2013, with the high-price tier of the housing marketing witnessing a surge in the spring of each year. This surge was especially noticeable in Spring 2013, led by an increase in buyer demand, coupled with low inventory levels, high consumer confidence and historically low interest rates. The demand is likely to continue in 2014, fueled by new wealth from the mushrooming high-tech sector.

The S&P/Case-Shiller Home Price Index also supports investment in real estate in San Francisco, with home prices rising more than $900,000 in 2013 in the city. This significant jump in prices was witnessed by both house and condo sales in the last quarter of 2013. With experts predicting a potential rise in interests rates during 2014 and increasing inventory levels as home builders continue to focus on new development, the time to invest is ripe.