Study looks at housing in SF, San Jose downtowns

Downtown San Francisco
Mark Prado

With downtowns across the U.S. still reeling from the changes brought on by COVID-19, a new Property Shark study looks into how prices have changed over the past decade in the most populous cities in the country and their downtowns, including San Francisco and San Jose. 

The study shows downtown home prices in 10 of the largest western cities are now lower than the city median sale price, as opposed to five just a decade ago. In some cases — such as in San Jose — downtown homes are as much as $350,000 cheaper than properties outside the city center.  

Unfortunately for many first-time buyers, this is not the result of large price cuts in the downtowns of large urban centers. Rather, it’s the result of downtown prices increasing at a slower rate than the rest of the city, according to the report.

San Jose’s price gap between downtown and city more than tripled in the last decade, fueled by strong growth in both downtown prices (76%) and the city at large (102%). San Jose became the only location where the city’s median sale price surpassed $1 million while its downtown stayed below.

San Jose's downtown is characterized by commercial buildings and the daily influx of workers, many in the tech sector. Post-COVID, downtown San Jose continues to contend with high office vacancy rates — which, in turn, have maintained high retail and service industry vacancies throughout the area. Many see downtown San Jose more like an entertainment district, and city officials are pushing for more residential development to revitalize it, according to the report.

San Francisco was the only city among the country’s 40 most populous where downtown price growth was strong enough to surpass the rest of the city. More precisely, downtown San Francisco had an $800,000 median sale price in 2014 and the rest of the city was 8% more expensive, according to the Property Shark report.

While the city (excluding its downtown) appreciated 41% during the last decade, the tech hub’s downtown jumped 88% to lift the urban core’s median sale price to $1.5 million. As a result, downtown San Francisco is now $265,000 (or 21%) more expensive than the rest of the city, as well as the most expensive downtown among the country’s top 40 cities.

Considering the struggles San Francisco has been facing since the outbreak of the pandemic, the downtown’s evolution may be surprising. However, downtown San Francisco is a relatively small area with fairly low residential stock, which means that every sale — especially the more expensive ones — has an outsized effect on price trends, the report states.


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