The 2023 Hater’s Guide to the Bay Area real estate market

On a macro level, the Bay Area market remains bulletproof to driving forces both within and without. According to data compiled by the California Association of Realtors, the median home price in every part of the Bay Area is down compared to last year but still clocks in at well over a million dollars in most counties, which is double the entire country’s median home price. 

This has all transpired despite San Francisco alone having lost more than 6% of its population since the pandemic hit and the population of California decreasing by roughly 500,000 people since 2020. Two banks collapsed. Meta laid off 21,000 people in the past year. And finally, the Warriors got their s—t ruined by the Lakers. All of which screams buyer’s market, does it not? HOMES HERE SHOULD COST $5, DAMMIT.

They do not. Pisses me off, to be frank. 

Not only is all of this inventory hideously expensive, but it’s also scant. Roughly two-thirds of all properties are rental properties, much higher than the average city’s rental rates. Available single-family homes remain all but a rumor. Over in the East Bay, active listings are nearly half the number they were just last fall. Supply, annoyingly, is not meeting demand. It may never.

It doesn’t help that sellers have investments to protect. Over the past 30 years, home prices in this country have vastly outpaced inflation and continue to do so even now. This, alas, is not Vienna. The Bay Area market is heavily afflicted by the investor mindset, with corporations and other nonfamilies gobbling up properties they have no intention of living in. With such a high rate of return, why wouldn’t they treat these places as assets and not homes? And why shouldn’t you and I grab our pitchforks and make them all PAY for their hideous greed?

[An SFGATE lawyer frantically whispers in my ear.]

Ah, I guess that makes sense. Nevertheless, I latched onto a sliver of hope (slightly cooled-off median prices!) and looked around for homes with some relative value: the kind of homes you can talk yourself into buying only to realize later on that you’ve made a terrible mistake. Let’s see what I found! 

The almost suburbs

Home prices in suburbs like Marin, San Mateo and Santa Clara have all outpaced home prices in San Francisco and the East Bay. So I went to Walnut Creek — a relatively affluent town itself, but not quite wealthy enough to shove out the people Steph and Ayesha Curry don’t want to live near — to see what you can find in an area that’s a little bit more spacious and a little bit more suburban than adjacent cities.

I’ve lived in the suburbs for the majority of my lifetime, which means Walnut Creek suited me to a tee. It had all of the beauty of Northern California but also enough requisite shopping plazas — replete with Safeways, Paneras and horribly laid-out parking lots — to warm my anodyne soul. The prices did likewise. I looked at only one home here that cost more than $1 million. The rest were all under that.

There was a catch, however. In real estate, there’s always a catch. Always a dead rat in the crawlspace. Every sub-million home I looked at is located in a planned development with a name like Bancroft Village or Oak Road Station. Cookie-cutter houses and condos. None of these places felt like your home and your home alone, and all of them will make you feel like you’re living across the street from a f—king golf course. Turns out, a lot of people in Walnut Creek want this exact feeling. 

The first house I visited, listed for $998,000, is located in the aforementioned Bancroft Village, where two nearby houses sold after less than a week on the market. This third house, owned by a man who now lives in San Diego, got an offer before it even hit the market. The buyers were eager to snatch it up because it is just a one-story home, with no stairs to trip over. Either they’re getting up in years, or they just wanted a house that has the same floor plan as a Chipotle. 

Thanks to its schools and its relative proximity to the city, Walnut Creek is “desirable,” in real estate agent-ese. But much of that desirableness is based on your location within it. Walnut Creek has its own hierarchy, and you’ll get what you pay for, for better and for worse. Much of the construction materials I saw — from the doors to the cabinetry — looked and felt cheap. Like entire homes were made exclusively from s—t a contractor bought at Home Depot. I saw a lot of sad communal pools, the kind you’d find at a Holiday Inn. I strolled along a lot of patios that looked out over nothing. I went to one condo ($400,000) where the “COME AS YOU ARE” welcome mat was facing in the wrong direction, beckoning me to leave. I got lost in a condo complex because the units all looked so much like one another that I had to consult a map in the center of the complex just to find the joint I was looking for, and I STILL couldn’t find it. I checked out a house that is in a planned community sandwiched between the Diablo Hills Golf Course and a massive hospital complex; you may as well live in a hospice. 

I saw no other buyers while touring these homes, and yet nearly all of the listings were red-hot anyway. Most had offer dates attached, with sellers accepting offers on a single date and then choosing the best (highest) one. This renders every sale a de facto auction, and you can only hold such an auction if you know that more than one offer is forthcoming. And that was just for the houses that were still on the market. As with the Bancroft Village house I toured, urgent buyers in Dub Creek (I just coined that; use it freely) find out what’s going to be on the market in advance, then swoop in to stake their claim before latecomers — content and naive enough merely to be on time for a first open house — even know it’s been sold. This is why open houses are for amateurs and nosy neighbors.

My final stop in Walnut Creek was a $1.3 million standalone single-family house. An actual house, not a glorified Vrbo hidden inside Wrinkly Prunewood Estates. And it was just one level! SWOON. Like an idiot, I was expecting a palace. What I got instead was a fixer-upper that made the market only because its original owner had died. A trust sale. The backyard is occupied almost entirely by a garage that looked like it was built from some sort of kit. The rest of the yard is mostly old asphalt and looked like a dried-out riverbed. The kitchen cabinets and appliances are all straight out of 1990. There is a wine cellar — OOH! — that has a staircase so rickety that visitors like me were actually not allowed to walk down them to see it. Or at least, that’s the reason we were given. Buy an affordable home in Walnut Creek, and your work has only just begun.

This particular open house DID have visitors, all of whom already lived in the Bay Area. One couple came from Fremont, the other from Walnut Creek itself. None of them were in urgent need of a new home, and none of them seemed to like this house much. All of them wanted a bit more space, both inside and in the backyard, and none of them were willing to settle for just anything. They knew there was value in Walnut Creek; they could just afford to browse before urgency forced their respective hands.

So that’s the rub. You can find a place here. Are you willing to wait for the right one to open up and able to fight tooth and nail for it?

No? OK, then let’s check out downtown San Francisco for you. 

Downtown San Francisco

What have you heard about this place? Did you hear that it is populated by nothing but homeless zombies? Did Dave Chappelle tell you that Batman needs to come here to kill the people taking a dump on the sidewalk?

Well, I daresay you will not die a violent death if you buy a home here. In fact, you might just find yourself a bargain. While the more popular parts of San Francisco proper are as competitive and pricey as they’ve ever been, downtown San Francisco has been victimized by the pandemic, mass office space defections from the work-from-home revolution, stores closing due to a lack of foot traffic and some general safety concerns that have been amplified to make it sound like this place is more dangerous than Bakhmut. 

That’s just a touch inaccurate, and also disingenuous. The real story is that downtown San Francisco — and I mean this with absolute respect — sucks. Pre-pandemic, developers built a s—tload of pricey condos in this part of town, anticipating that interest rates would never go up and that wealthy young tech professionals working at Twitter, etc., would want to live right where the action was. Then the pandemic hit. There is no action here anymore; Patrick Carlisle, chief market analyst for Compass in the San Francisco Bay Area, told me that downtown is the weakest market in not just the Bay Area but the entire country. “It’s a complete flip from five years ago,” he said. “People, they just left.”

That was evident from my time there. Most of the open houses I attended downtown were barren, but none of them had early birds taking advantage like in Walnut Creek. Between open houses, I saw some poop on the sidewalk and marked it down on my bingo card, but it wasn’t like I was strolling down Bourbon Street at 3 a.m.

You know what I didn’t see? A f—king restaurant.

There were long stretches of downtown San Francisco where I couldn’t find a single bite. Not a restaurant. Not a corner store. Not even a goddamn Panera. I wasn’t in Walnut Creek anymore, that’s for certain. Famished for lunch, I could only spot an organic grocery store that was barely open, with half the lights off and food on the refrigerated shelves that looked like it had been there since 2008. I had a yogurt, a banana and a granola bar. An airport lunch. I did not linger.

Some of the homes I toured were similarly incomplete, especially in the heart of SoMa, where one agent told me that only 12% of sales happen within 30 days. None of these homes had offer dates, and it was easy to see why. One place I toured had a carpet so lumpy it felt like the floor beneath it was made of old waterbeds. Another had a keypad with a cage welded to it, making it nearly impossible for me to ring the bell to get in. Another had a single enormous tree growing right outside its windows. This was the only tree on its block, planted there to give buyers a view of something, anything, other than their immediate environs. Another place’s bathroom door opened up to a cabinet sticking out right along the adjacent wall, where anyone over 5-foot-6 (me) could easily bonk their head on it. All of these homes were “cheap” (priced between $379,000 and $499,000), but few of them were places you’d be EXCITED to move into. 

I could feel that lack of excitement, especially in a one-bedroom I toured on Natoma Street. This place had been on the market for so long that its owner had given up and was going back to renting it. I asked the agent why it hadn’t sold. “Definitely the area,” he told me.

And while he was certainly right about the neighborhood being undesirable, many of the apartments I toured in SoMa did themselves no favors. They had real “my first apartment in 1999 Manhattan” energy to them. But they were selling for under $1 million, if you could warp your sensibilities enough to deem them a good value. You could even find parking on the street if reserved spaces weren’t included with your purchase. As another agent told me, “parking is doable in SoMa,” mostly because no one wants to go there.

SFGATE columnist Drew Magary explores condos for sale in San Francisco on May 14. (Douglas Zimmerman/SFGATE)
SFGATE columnist Drew Magary explores condos for sale in San Francisco on May 14. (Douglas Zimmerman/SFGATE)

I did tour two fancier places in the neighborhood. One was a live/work loft on Russ Street, located directly across from an abandoned warehouse that was perhaps an old towel factory. For a cool $1.7 million, you got a modern townhome with an office space on the bottom floor, a fireplace in the master bedroom and a Jacuzzi. Another home had not one but two parking spaces included in its $1.3 million asking price. The agent repping that one told me that it had potential buyers and that all of them already lived in SoMa. 

There are small pockets of downtown — specifically, little niches in SoMa — with an actual grocery store nearby, plus in-building amenities like conference centers and gyms. But all of them have about as much character as Bancroft Village does. I’ve seen developments like this in plenty of other cities, including Boston, Washington, D.C., and Manhattan. All of them are located in former dead spots, and all of them are the urban equivalent of living at Bancroft Village: isolated, boring and indistinguishable from one town to the next. 

This was also true of the three homes I toured by Salesforce Tower. All of them are located in discreet alleys that once ensured a touch of privacy for its residents but likely now set off alarm bells for any skittish buyer worried they’ll get jumped and have all of their prescription medicine stolen. They were fancy inside but not distinctive, and people here pay for distinctive. I toured a $5 million pied-a-terre that had been on the market for so long that the agent dejectedly told me, “I stopped counting,” when I asked how many days it had been sitting empty. Over on Guy Place, I gawked at a luxurious $7.5 million home that is bisected by its own $3 million guest residence. Both were now on the market as separate homes. Five years ago, Billy Google would’ve happily lived in one of these sleek “Succession”-style joints. But Billy Google doesn’t live downtown anymore. 

Tour company owner Ira and his wife, Jennifer, were realizing as much at the open house on Guy Place. They were moving to San Francisco from Boston, scouting out neighborhoods — and the homes within them — where they could raise a coming baby. While they were checking out one of many upper levels of the main house, I heard Jennifer say to her husband, “This isn’t quite what I was expecting.” I couldn’t tell if she was talking about the house or about the happenin’ part of town it’s situated in. But when I formally interviewed the two of them in the kitchen later on, the answer became clear.

“I don’t know that this area is the one,” Jennifer told me. “I think I’ll probably take it off the list.”

Could you tell me why?

“With a financial-services-heavy focus here, it’s devoid of any sort of neighborhood feel. We have a small financial area in Boston, and it feels similar.”

That’s the heart of the Downtown San Francisco Problem. This area is not Everything That’s Wrong With Liberal America. It’s just a boring-ass downtown, the kind that virtually every other American city has, and it suffers mightily when you compare it to the diversity, vitality and value of all of the neighborhoods right next to it, across the bay and well beyond. 

Sometimes people WANT to live somewhere boring. Somewhere just like anywhere else. In Walnut Creek, they’re willing to outwit and outspend every other buyer to do so. But who moves to downtown San Francisco to be bored? No one. When people move to this part of town, they want San Francisco, and a strange mix of forces has all but drained the San Francisco out of it entirely. That’s the problem here, and it’s not easily fixed.

San Francisco, a proud city, will have to reckon with this truth at some point, rather than pretend some unique and existential socioeconomic crisis is at hand. In the meantime, there’s little to do about downtown for buyers and sellers because no one likes living in this kind of urban dead zone and because you can’t gentrify what’s already been gentrified. All anyone can do is wait and hope that San Francisco rebounds in full. If history is any indication, this is a decent wager to make.

And when it does rebound, you won’t be able to afford a f—king thing.