Speculating on the next boom in San Francisco real estate
Projecting future values of real estate is theoretically less difficult than picking a good stock, you can generally project the direction a neighborhood will go based on what development is happening, the infrastructure being built, as well as the locational potential of a neighborhood’s growth.
The city of San Francisco as a whole has seen an exponential spike in real estate value since the 2008 financial crisis. 2011 - 2015 saw real estate prices increase at a rate that basically voided the value of investment property; the rental returns no longer justified the acquisition price, with most of the city seeing a negative ROI on investment properties with less than 50% down. The threshold for investing was set so high that only cash investors could play.
Certain neighborhoods saw rapid growth in the ballpark of 100% price increases; the most notable being Mission Bay
Since 2011, Mission Bay prices have officially doubled.
This PDF shows an overview of sales data between 2011 and 2018:
Being one of San Francisco’s newest neighborhoods, it positioned itself well to ride the wave of appreciating prices in the city, while also following a more recent trend of buyers seeking ‘a modern, new home.’ With most buildings on the north side of the city being 40+ years old, this trend was bound to come soon, the city just needed to find enough land to build the new construction on.
Mission Bay was SF’s first landfill district, as was most of the eastern shoreline of the city. At first, the idea of living on landfill and potentially toxic soil set the city on fire. Check out this old article from 2009 titled, ‘Tons of Millions of Toxic Dirt buried at SF Mission Bay - prone to LIQUEFACTION
Sound Familiar?
A decade later, San Francisco has a new hazardous site - Hunters Point. A few miles south on the eastern shoreline, this neighborhood has been under scrutiny for the same thing - The Navy botching a clean-up of potentially radioactive waste. Good to see not much has changed over the years..
ShipyardSF is the most recent development in the Hunters Point area, with developer Lennar building ~ 1500 condos and townhomes on the highest point of Hunters Point. These homes have been selling since 2015, with near 600 new residents occupying the district to date.
5 Point, the master developer of the entire district and owner of the majority of the land, has permitted and began the development of two beautiful new waterfront neighborhoods, Hunters Point & Candlestick Point. While the Hunters Point development has been delayed, 5 Point has shifted focus to developing the Candlestick Point region.
Could we be seeing the next Mission Bay? The similarities are uncanny.
Brand new construction averages ~ $720 a foot in Hunters Point today, with a 10-year timeline for the entire waterfront redevelopment to be complete.
I’ve been representing a group of investors looking to purchase multiple homes in the district at a price we feel we are a basement bargain. If you’re an investor and looking for a long-term hold strategy, email:
I would be happy to consult and represent you on a sound acquisition strategy.