Media Reports Suggest Major Bay Area Decline

My talented friend and colleague Patrick Carlisle makes excellent points as usual with style.

– Jennifer

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Quotes and headlines from selected media articles in March 2018 
[According to a survey] “49 % of Bay Area residents were looking to move out.”
Business Insider“San Francisco is such a boomtown that people are leaving in droves.”
Wall Street Journal

“Silicon Valley is over” “In the last three months of 2017, San Francisco lost 
more residents to outward migration than any other city in the country.” 

New York Times

“San Francisco is so expensive that more people are leaving than moving in
– and it could mean disaster for the nation’s tech capital.” 



That sounds really bad. 

The sources of the data behind the above (and many more) articles: an online survey by a PR company; an analysis of traffic on a real estate website; the alleged cost of a U-Haul to Las Vegas; anecdotal opinions from a handful of venture capitalists on a mid-west bus tour; and new U.S. census data, more often than not selectively or misleadingly quoted to sound most ominous. 

Bad news, predictions of crashes, the arrogant finally getting their comeuppance: These stories grab eyeballs and get re-posted on social media. And much of the country finds the Bay Area insufferably smug – its wealth, home prices, unicorns, Google buses, 26-year-old billionaires, liberal politics, and much else – and if it is finally getting its just deserts (or “just desserts,” if you prefer), that is entertaining news. I get that: Sometimes, I find us insufferably smug myself. But let us investigate the issues a bit deeper. 

First of all: Without argument, there are big economic and social challenges facing the Bay Area: high housing costs; high state income taxes; recent federal tax law changes; the hostility of the current federal government to foreign immigration; rising income inequality, poverty and homelessness; growing commute times and other quality of life issues; national and international concerns; and, yes, population migration trends too. This was covered in some detail in our recent report Positive & Negative Factors in Bay Area Markets. It is certainly true that places like Austin and Seattle, with much lower housing costs and no state income taxes, are actively luring our businesses to relocate or expand there, and doing so with some significant success. 

But, for a much more realistic illustration of what is going on in the Bay Area, here is some hard data from U.S. Census and CA Employment Development Department data released in March: 

More people are NOT leaving San Francisco or the Bay Area than arriving. When you tally both domestic migration in and out (to and from other places in the U.S.), and foreign migration, more people are arriving than leaving. It is true than in the past 2 years, domestic net migration has shifted to a net loss, but that deficit is still overcome by the large positive in foreign immigration. Is the shift in domestic migration worrisome? Yes, if it continues to grow. But it is not cataclysmic in its current proportions, and there are further underlying factors to consider, which shall be discussed later in this report. 

San Francisco County: Residents Leaving, New Residents Arriving
Net Domestic & Foreign, and Total Net Migration Numbers, per U.S. Census 
The last column in each year tallies the net positive migration number 

5-County San Francisco Metro Area Migration 

The last column in each year tallies the net positive migration number 

The Bay Area population is still growing both from migration and natural factors (births less deaths), albeit at slower rates than the torrid pace of previous years. As the WSJ admits in its article, SF and SF metro area populations are not shrinking: The SF Metro area population increased by .6% in the last 12 month period, as measured by the census through 7/1/17, which is one tenth of 1 percent lower than the .7% national average. A slower rate of growth than our recent population explosion is actually a good thing, since the Bay Area is bursting at the seams from growth without concomitant improvements in housing supply and infrastructure. 

Long-Term Population Trends: San Francisco County 

Short-Term Population Changes: 5-County SF Metro Area 

The representation by Business Insider that 49% of residents were looking to move out is simply absurd. Really? Every other person? If people were fleeing or planning to flee in the proportions suggested, one would expect every other home in the Bay Area to sport a “for sale” sign, while the percentage of homeowners selling their homes is actually at historic lows: Less than 2% of SF house owners sold their homes in 2017. (The ratio was higher for condo owners, but still low at something over 4%.) I suppose it is possible that in the frenzy to get away, people are simply abandoning their homes instead of selling them. 

New Listings Coming on Market: San Francisco County 

Bay Area employment growth remains extremely strong. According to the CA Employment Development Department, for the six big Bay Area counties (the 5-county SF metro area plus Santa Clara County), no matter which month of 2017 one looks at, the year-over-year increase in Bay Area employed residents, ranged from 60,000 to 90,000. As the WSJnotes: “The broader Bay Area is the most robust metro region in the nation in terms of payroll job growth, according to the most recent regional analysis from the University of California-Los Angeles Anderson Forecast, an economic forecaster.” 

Number of Employed Residents, per EDD
5-County SF Metro Area + Santa Clara County 

Some other factors to consider: 

Many of the people leaving inner Bay Area counties are moving to adjacent counties, such as Solano, Sonoma, Sacramento, Santa Cruz, San Joaquin, San Benito and Stanislaus Counties. Many of those people almost certainly continue to work within the metro area. To some degree, the Bay Area economic zone is expanding geographically, not declining. 

The Bay Area over the past 7 years has been one of the greatest new-wealth creation machines in history. With the recent Dropbox IPO, it seems to be cranking into gear again – and there are still dozens of other local unicorns such as Uber, Pinterest, Airbnb, Palantir, with total values in the hundreds of billions of dollars – that could yet go public. Uber has already stated its desire to do so in the near future. 

A significant portion of those leaving the Bay area are retirees, cashing out on high home prices to move to less expensive locales, such as other counties in California, and Nevada, Arizona and Oregon. This is not a new phenomenon, as it has been going on for decades, though it may have accelerated in recent years, since cashing out has become so much more lucrative. 

Most of those coming to the Bay Area are coming for new jobs, and the Bay Area remains a magnet for many of the best and the brightest around the world. Besides which, every year, thousands of Bay Area students graduate from schools like UC Berkeley, UCSF and Stanford, to take jobs locally as well. Economically, the Bay Area is trading many residents who are, to a large degree, checking out of employment for people in the prime of their working lives. 

Millions of square feet of new commercial office space continue to be snapped up as soon as they come on market, even before the buildings are finished, and the only possible reasons are new businesses arriving and existing businesses expanding, both of which are fueled by continued hiring. 

Last, but not least, neither Bay Area home prices nor rents have, so far, been dropping – most median home sales prices jumped in 2017 and rents stayed relatively unchanged – which one would expect to see if the doom-laden media articles were correct in their analyses. 

The Bay Area certainly has substantial challenges to face and it is not sure it will overcome its problems. And it is true that people and businesses are moving out in greater numbers than any time since 2002. But, on the other hand, start-ups continue to start up by the hundreds, local business continue to expand, and the Bay Area undoubtedly remains one of the most innovative and dynamic economies in the world. And despite all its faults and problems, it is still, in my opinion, one of the great metropolitan areas and best places to live on the planet. 

Note: To be fair, the Wall Street Journal article was by far the most fastidious with using hard data and important context from reliable sources, though it was still needlessly alarmist in tone. Unfortunately, dozens of other media articles then quoted the WSJ to create their own semi-hysterical headlines, without paying any attention to the underlying data WSJ detailed later in its report. Quite honestly, after seeing these articles propagate like rabbits in recent weeks, all feeding off each other – trying to out-shout each other with “Hurray! The sky is falling in San Francisco!” – it became almost funny, in a sad sort of way. 

Other Paragon reports you might find interesting: 

Positive & Negative Factors in Bay Area Markets 

Changing California Migration Trends 

30+ Years of Bay Area Real Estate Cycles 

Survey of Bay Area Real Estate Markets 

All Paragon reports can be found here



These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. 

© 2018 Paragon Real Estate Group

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San Francisco Real Estate Market Update: March 2018

As of the end of February, there were fewer total home, condo and loft sales in the first two months of 2018 than in any of the previous ten years. And while it’s impossible to say exactly what is causing the low number of sales, it is possible that buyer fatigue following six straight years of rising prices, interest rates jumps, and stock market volatility may all be contributing.

At the same time, the median sold price per square foot for a single family home broke the $1000 threshold for the first time in San Francisco. That is up almost 150% since it bottomed out at $408 in January, 2012. And, enough buyers are still buying that prices are still rising. February’s median home price crossed $1,700,000, another first.

Single Family Homes:
The three-month rolling average median sales price of $1,501,667 is up 17% over last year’s.

Year-to-date, new listings are down 7.4% while sales are down 9.7%.

February’s inventory of 1.4 months is 26% lower than in 2017.

80% of homes sold over their list price and the median percent of list price received was 113% in February

The three-month rolling average median sales price of $1,096,667 is up 3.13% over last year’s.

Year-to-date, new listings are down 14% while sales were up 9.2%.

February’s inventory of 1.9 months is 30% lower than in 2017.

59% of homes sold over their list price and the median percent of list price received was 103% in

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San Francisco Real Estate Market Update: February 2018

Many separate but connected events occurring in the global, national and local economy may have an impact on the San Francisco real estate market this year, the extent to which is unknown. These include a jump in the inflation rate, increased stock market volatility, the bond market sell-off, the weak dollar and talk of a fourth rate increase this year by the Federal Reserve Board.

Home buyers are laser focused on mortgage interest rates, as well as how financially secure they feel with their investment portfolios. A gyrating stock market can not only reduce buyers’ ability to deliver on their downpayments but also deter their eagerness to make offers, let alone bid aggressively on them. As mortgage rates rise, and perhaps even more this year than anticipated, it hurt buyers in terms of the amount they can qualify for and sellers in terms of the downward pressure it puts on home values.

All that said, San Francisco still has a booming job market and buyer demand that well out-strips supply. It’s hard to imagine a truly shifted market place, yet these two sides may come a bit more into balance this year.

Single Family Homes:
The three-month rolling average median sales price of $1,350,000 is up 10.5% over last year’s.

In the past 12 months, new listings were down 5.9% while sales were up 0.94%.

January’s inventory of 1.1 months is 35% lower than in 2017.

70% of homes sold over their list price and the median percent of list price received was 108% in January.

The three-month rolling average median sales price of $1,050,000 is up 11.3% over last year’s.

In the past 12 months, new listings were down 7.5% while sales were up 2.4%.

January’s inventory of 1.6 months is 33% lower than in 2017.

39% of homes sold over their list price and the median percent of list price received was 100% in January.

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Free Money for Causes You Love

KW Cares is an organization that helps Realtors with Keller Williams in times of massive need – think wildfire, earthquake or hurricane, or in case of personal need – think cancer, house fire, flood or other tragedy.
I donated from every transaction to this and also to KW Kids Can which is an educational program that teaches young adults how to gain their edge in an increasingly competitive world.
I am posting this because KW Cares pointed out recently that there’s a good way to help any charity of your choice with little effort and no extra funds of your own. Most of us know about AmazonSmile, but here are instructions to make it more seamless. (Since I found out two years ago, I have remembered to use it manually only 7 times – and I felt very virtuous each time indeed. I’d like to make it 100%!)


You shop just like you do now, and your favorite charity or KW Cares benefits. Here’s how:

Many charities, including KW Cares have partnered with AmazonSmile, a website operated by Amazon that lets customers enjoy the same wide selection of products, low prices, and convenient shopping features as always. The difference is that when customers shop on AmazonSmile, the AmazonSmile Foundation will donate 0.5% of the price of eligible purchases to the charitable organizations selected by customers.

Shop AmazonSmile →


How do I shop and help KW Cares at the same time?

If you have an existing account, you use the same account on AmazonSmile. The only catch is you’ll need to access the AmazonSmile link each time you shop. You can start shopping and giving at the same time:

  1. Direct Link: Use the yellow “go to” button above. It will take you to AmazonSmile and you can shop as you usually do on Amazon.
  2. Create a Bookmark
    Visit AmazonSmile and press Control B on your keyboard to create a bookmark for easy access to the site.
  3. Utilize Amazon Assistant
    Install the Amazon Assistant to get easy access to Product Comparisons, Deal of the Day, and time-saving shortcuts, which all link to
  1. Browser Extensions. Once you choose Keller Williams Realty Cares as your charity of choice, you can add the AmazonSmile extension to your browser of choice, which will ensure each time you shop Amazon will give to KW Cares:

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