San Francisco apartment construction projected to decline
Add Axios as your preferred source to
see more of our stories on Google.
San Francisco is among several metro areas expected to slow the pace of apartment construction by 2028, a new report finds.
Why it matters: The projected cool-down comes as a national shortage of homes to buy or rent is keeping housing prices high.
By the numbers: San Francisco completed construction of 38,060 apartments from 2019 to 2023, per a recent analysis by RentCafe.
- That number is poised to drop to an estimated 25,730 for 2024 to 2028 — a 12,330 difference.
- Meanwhile, a projected 5,078 rentals in the San Francisco metro area will be complete this year — of that, about 1,100 will be in the city proper.
Between the lines: The Bay Area has long struggled with apartment construction, including complications with permitting.
- Obtaining a permit in 2022 took an average of more than 600 days, according to a San Francisco Chronicle analysis of city permitting data.
Yes, but: Local and state officials have sought ways to cut down the red tape in recent years.
- The city also triggered a new state law this year that will expedite the permitting approval process for certain developments.
The big picture: A half-million-plus apartment units are expected to be built this year in the U.S., but the pipeline is slowing.
- A rush of new apartments, financed when interest rates were lower, helped recently to ease rent hikes.
Reality check: Most new apartments are amenity-packed and perched in sweet locations — not the affordable rentals many people want.
- The average U.S. asking rent in larger properties with multiple units cost roughly $1,700 in Q2, 19% higher than pre-pandemic levels, according to CoStar Group data.
What's next: As people postpone house purchases, less new apartment construction paves the way for landlords to raise rents.