Summer 2019

San Francisco

Presented by Beacon Economics

Welcome to The Regional Outlook, a forecast for five of California’s largest regional economies. Each quarter, find updated analysis that goes beyond the state and national level to present a snapshot of employment, home prices, consumer spending, personal income, and other leading economic indicators within key areas of the state. Visit your region of interest and subscribe for email delivery.

Summer 2019

In a region historically defined by picturesque views, diversity, and Victorian architecture, the San Francisco Metropolitan Division (MD) is increasingly being defined by its red-hot job market, which is not only leading the Bay Area economy, but also the entire state. While the booming local tech industry has fueled San Francisco’s economy and brought enormous wealth to the region, for those who do not work in the highly paid sectors associated with tech, the growth has increasingly forced residents and workers to choose between long commutes and escalating rents and home prices.

San Francisco Job Growth Punching Higher Than Its Weight

Nonfarm employment San Francisco

In April of 2019, the unemployment rate in San Francisco (MD), reached 2.1%, which is significantly lower than the statewide unemployment rate of 4.3% and slightly lower than the unemployment rates in the nearby East Bay (3.0%) and South Bay (2.5%). Moreover, despite the region’s low unemployment, San Francisco (MD) added 40,600 positions year-over-year between April 2018 and April 2019, growing by 3.6% to reach a total of 1.2 million jobs. These job gains have exceeded growth in other parts of the Bay Area – 20,000 positions were added in the East Bay and 29,000 in the South Bay – and were nearly as large as in Los Angeles County, where 50,200 jobs were added during the past year (San Francisco is, of course, a fraction of Los Angeles’s size). Given that the local labor pool increased by just 17,400 workers year-over-year as of April 2019, it is evident that employers are adding workers from outside the region, which is not sustainable in the long term.

It’s not surprising that the Information sector led the way in terms of local industry job gains given the region’s high concentration of tech jobs. That sector experienced a 9.4% employment increase from April 2018 to April 2019, reaching a total of 91,500 workers. At the same time, the Professional, Scientific, and Technical Services sector enjoyed the largest absolute job gain, adding 11,700 positions, a 6.2% rate of growth. San Francisco’s (MD) largest employment sector, Hospitality, with some 145,300 workers, increased employment by 3.0% or 4,200 jobs over the past year.

Despite the precipitous growth, not all local sectors added jobs. Following a nationwide trend, the Retail sector lost 1.6% of its workforce or 1,300 jobs between April 2018 and April 2019, as that industry continues to adjust to the ever-greater presence of online purchasing and distribution. Manufacturing also lost 0.7% of its workforce, or 300 jobs, during the past year due to long-term restructuring occurring in that industry as well.

Looking ahead, Beacon Economics is forecasting San Francisco’s (MD) unemployment rate to remain in a narrow range around its current reading through 2019. Total nonfarm employment in the region is expected to expand in percentage terms by 2.8% over the year, with job growth slowing in 2020.

San Francisco Housing and Apartment Market Cooldown

Median Home Prices San Francisco

From the first quarter of 2018 to the first quarter of 2019, the median price of an existing single-family home in San Francisco decreased by 1.1%, or $16,200, to reach $1.43 million. While not a huge dip, it is indicative of greater weakness in price appreciation, changes in the mix of sales, and possibly the federal government’s cap on the deductibility of state and local taxes that went into effect in 2018. The decline is not unique to San Francisco (MD) within the broader region as home prices in the South Bay declined by a greater 8.3% over the same period. The East Bay continued to experience price appreciation (4.2% from the first quarter of 2018 to the first quarter of 2019), but the rate of appreciation was far slower than the region experienced a year earlier (9.2%). With very few exceptions, this trend of decelerating home price growth is evident throughout the entire state.

Home sales of existing single-family residences in San Francisco declined 5.9% from the first quarter of 2018 to the first quarter of 2019, although sales fell by less than they did in either the East Bay (-11.8%) or the South Bay (-18.2%). Home sales are a strong indicator of the demand for housing. Given the Bay Area’s healthy economy, it’s possible that even with all of the wealth being created in the region, the price points for homes have reached a level that households simply cannot afford.

From the first quarter of 2018 to the first quarter of 2019, average apartment rent increased 2.6% in San Francisco, hitting $3,376/month. Although it is still the most expensive rental market in the Bay Area, and in the entire state, the rate of rent price growth was slower in San Francisco (MD) than it was in both the East Bay (3.1%) and South Bay (3.3%). Additionally, all three of these regions experienced smaller increases in rent prices than they did the year before, similar to prices in the single-family housing market. San Francisco (MD) also experienced a rather large increase in its vacancy rate, which grew by 0.5 percentage points to 4.0%. By comparison, the South Bay’s vacancy rate saw no change while in the East Bay, the vacancy rate declined by 0.1 percentage points. This could indicate that more units are finding their way onto the market in San Francisco, but the cost of rent is making those units harder to fill.

** The San Francisco MD includes San Francisco and San Mateo Counties. This is a change from previous editions of “The Regional Outlook San Francisco” when Marin County was also included.

More Information

For information about any of the Center’s research services, please contact:

Northern California Representative Mike Dozier at 424.372.1061 ext. 1006 or

Managing Partner Sherif Hanna at 424.646.4656 or