If you're looking to live in and invest in San Francisco real estate, I recommend living in and investing in the west side. The west side of San Francisco is where there is strong economic growth. Rents and home prices are cheaper. The neighborhoods are safer and the schools are also better.
The west side of San Francisco has easy access to highway 280, which leads south towards Millbrae, Burlingame, San Mateo, San Carlos, Menlo Park, Palo Alto, Sand Hill Road, Cupertino, and more. These cities are home to the largest tech companies in the world, such as Apple, Meta, and Google.
If you have children, buying property on the west side of San Francisco is likely your best bet. There are plenty of single-family homes with yards on the west side. Then there's the proximity to the beach, Golden Gate Park, multiple playgrounds, pickleball courts at Carl Larsen Park, and Stonestown Mall.
San Francisco's west side is likely going to outperform all other parts of San Francisco for years to come. By 2035, I wouldn't be surprised if neighborhoods like Forest Hill, Golden Gate Heights, West Portal, and St. Francis Wood are deemed the most desirable places to live with the fastest home price increases in all of San Francisco.
These two neighborhoods have grander homes on double and triple-wide lots. To many, they are already nicer than Northside neighorboods such as Pacific Heights, Presidio Heights, Cow Hollow, Sea Cliff, and the Marina.
Primary Neighborhoods On San Francisco's West Side
The best neighborhoods on the west side of San Francisco include:
- Inner Sunset – popular neighborhood with close access to Golden Gate Park
- Outer Sunset – least expensive neighborhood on the west side
- Parkside – affordable option south of Sunset
- Golden Gate Heights – contains homes with valuable panoramic ocean views
- West Portal – has a BART station
- Forest Hill – larger homes on larger lots
- St. Francis Wood – larger homes on larger lots as well
The Richmond district is also on the west side, but it is less convenient as it is north of Golden Gate Park.
Four Big Economic Catalysts For San Francisco's West Side
As more people look to migrate to San Francisco's west side, here are four major economic catalysts that will support and boost home prices. As an investor, you want to be buying west side San Francisco before such catalysts complete for maximum home price appreciation.
1) Large school relocating to the west side from the east side
Good schools that remain good are one of the most important local economic catalysts for supporting home prices. In September 2024, the Chinese American International School (CAIS) will likely be relocating to a new 5.2-acre campus on the west side of San Francisco. It is moving from Hayes Valley, on the east side of San Francisco.
The campus was purchased in 2022 for $40 million and is currently going through a $30 million gut remodel. Chinese American International School is the oldest Mandarin immersion school in the country. It is also one of the best.
The school hosts grades preschool 2 through 8th grade. Preschool has four classes with about 16 students per class. Therefore, we're talking about 64 kids and about 60 incoming families a year.
Perpetual Demand For Rentals And Homes From Families
Out of the 60 new families, perhaps 30 families every year will want to move to the west side of San Francisco to be closer to the school. If you're a couple who just had a baby and are set on CAIS, then you will logically try to relocate closer to the school if you aren't already on the west side.
Of course, not every family relocating will buy property. Some will rent. However, whether these new families rent or buy, they will help support rents and property prices on the west side. Based on the cost to attend CAIS, the majority of families who want to attend CAIS will likely buy.
Younger families might start buying in cheaper west side neighborhoods such as the Outer Sunset and Parkside, then the Inner Sunset, Golden Gate Heights and West Portal, and then in Forest Hills and St. Francis Wood.
Existing Families May Relocate As Well
Then there are the existing 400+ families at CAIS, some of whom may relocate to the west side of San Francisco as well. The families looking to relocate probably have kids who are in the 3rd grade or younger. If you can see yourself owning a home for five years or longer, it makes it easier to buy.
I went to several open houses in Forest Hills and St. Francis Wood recently and bumped into five couples with kids who are considering attending CAIS or who are already at CAIS. So I think the hunt for west-side properties is already on in anticipation of the school's August 2024 opening.
However, most people tend to wait until the last minute before taking action. Therefore, I suspect there will likely be a big uptick in demand for west-side property once the school officially announces its opening. By the summer of 2024, the demand from these families for west-side homes should be intense.
The city even installed eight pickleball courts at Larsen Park, on 19th and Vicente Ave. Once these courts are installed, there will be even more demand for homes on the west side of San Francisco. I just wouldn't buy a home within a couple of blocks away due to the noise of pickleball and 19th avenue.
2) Expansion Of UCSF Hospital at 401 Parnassus Avenue
In March 2022, the University of California Board Of Regents approved and got approval for a $4.3 billion remodel of the UCSF hospital at 401 Parnassus. UCSF Parnassus will be an anchor employer on the west side of San Francisco.
UCSF Medical School, which is affiliated with the hospital, is one of the top medical schools in the country. In 2022–23, UCSF hospital was ranked as the 12th-best overall hospital in the United States by U.S. News & World Report.
The new facilities will increase the inpatient bed capacity from 499 to 682 beds, or by 37%. The result of this expansion also means capacity for 1,400 new employees once completed in 2030.
1,400 new jobs is huge! In addition, the wages for these new hospital jobs will likely be relatively high. We all know doctors, nurses, and administrators make six-figure incomes. But then there are also technicians, pharmacists, financial managers, physician assistants, therapists, and many more roles that pay six figures.
In fact, one of my tenants is a UCSF NICU nurse who makes over $180,000. And two USTA tennis teammates are UCSF doctors who will likely move to the west side.
If just 30% out of 1,400, or 520 new people go looking for housing on the west side, the demand curve for rentals and home purchases will go way up.
At any given moment, there are less than 20 attractive single-family homes for purchase on the west side. There are less than 40 attractive rental properties as well. Inventory, in general, is very low post-pandemic due to the locked-in effect. Homeowners have low mortgage rates and don't want to leave.
Growth Of Surrounding Businesses On The West Side
What's also positive about UCSF's expansion is the growth of surrounding businesses. There will be more restaurants, hardware stores, coffee shops, barber shops, nail salons, and more.
The growth of these businesses will bring in more renters and property buyers, driving property prices rents even higher. In other words, a boom loop.
3) Upzoning Of San Francisco's West Side For More Residences
Finally, to help solve the housing crisis in San Francisco and California, the state government has mandated San Francisco to build 81,000 new homes by 2031. This is never going to happen so quickly due to government inefficiency, government bureaucracy, corruption, and rising costs. However, the state mandate is a clear directional trend for more economic growth for San Francisco's west side.
Below is a map by Will Jarrett that highlights the proposed build out of San Francisco's westside for upzoning purposes. The idea is to build more housing along major transit corridors, e.g. Clement St, Irving St, Fulton St., Noriega St, Taraval St, 19th Ave, and around the Laguna Honda station. Height proposals for new buildings are generally for up to six stories. For more details, check out this article.
For those concerned about massive density, don't worry. The buildout of new homes will likely take decades and face a lot of red tape. But as a real estate investor, you want to know where the money is going long-term. And long term, there is develop towards the west side, which should bring in new businesses, new services, more residences, and higher real estate prices.
The west side clearly has a tremendous amount of room to grow. And it would be wise for San Francisco to develop two city centers, one on the west side, and one on the east side. The city can learn all the mistakes it made on the east side and make the west side so much better.
4) Massive Expansion and Development of Stonestown Galleria, Lakeside Area
Stonestown Galleria, situated on the southwest side of San Francisco, stands out as a bustling mall that continues to expand, a notable contrast to malls on the city's east side. Catering to families, the mall boasts new attractions such as a Regal movie theatre, a Sports Basement, and a growing food court.
By 2025, Round1, a Japanese counterpart to Dave & Buster's, will occupy the space formerly held by Nordstrom at Stonestown Galleria. Round1 promises an array of family-friendly activities including bowling, karaoke, and arcade games, ensuring a great time for all.
Plans are underway to redevelop and expand the surrounding parking lot of Stonestown Galleria. Brookfield, a Toronto-based company, is currently in negotiations to construct 3,500 homes in the area. Of these, 20 percent—amounting to 700 homes, including accommodations for seniors—would be designated as affordable housing. .
This $2 billion redevelopment initiative, which has been in progress for several years, aims to preserve the historic 775,000-square-foot Stonestown Galleria, originally built in 1952. The overarching vision is to cultivate a vibrant community surrounding Stonestown Galleria, complete with housing options, parks, and a plethora of recreational activities.
Features Of The Stonestown Galleria Redevelopment
The Stonestown redevelopment project will incorporate a childcare center as part of its plan. Encompassing six acres of green space, the project will feature parks, including a town square designed for outdoor dining, recreational activities, and a plaza intended to accommodate the neighborhood's farmers' market.
Additionally, a new “main street” will be established, lined with retailers, restaurants, and entertainment venues along 20th Avenue, spanning approximately 150,000 square feet.
The area would become similar to Santana Row, down in San Jose, a massive success that revitalized the area and boosted surrounding home prices.
Once the redevelopment plan is approved by the Board of Supervisors, construction of the project will likely take five-to-ten years to complete. When the project is completed by 2035, we could see surrounding real estate prices increase by another 50%+.
Buy Real Estate On San Francisco's West Side
San Francisco is recovering from the pandemic and will be a huge beneficiary of the artificial intelligence boom. Billions of dollars are currently being invested in AI companies in San Francisco. OpenAI is leasing a ~500,000 square foot office building in Mission Bay as well. Ripple, the private HR company, is leasing 120,000+ square feet of office space as well. The AI boom is real and will only continue for the next decade.
With COVID over, capital from countries such as China, Hong Kong, and Taiwan will also seek San Francisco real estate. COVID served to throttle foreign demand for U.S. real estate for three years. We should now expect hundreds of billions of foreign dollars to buy U.S. real estate once more.
With work-from-home here to stay, it's natural for there to be a greater migration to San Francisco's west side. The west side is home to thousands more affordable single-family homes. These homes are nearer Golden Gate Park and the ocean, which many enjoy.
The north side of San Francisco is too expensive for most to own a single-family home. You simply don't get much indoor or outdoor space for what you're paying. Meanwhile, the east side of San Francisco isn't as vibrant given the hollowed out downtown area.
The place where you want to buy real estate is on San Francisco's west side. Bidding wars are back as more people wisen up to buying west side San Francisco property.
Focus on buying single-family homes in Golden Gate Heights, West Portal, Forrest Hill, St. Francis Wood, Lakeside, and Parkside. In ten years, you'll be happy you did. And in 20 years, your children will be thrilled you had the foresight to invest in west side San Francisco real estate long before such massive developments were complete.
More Real Estate Recommendations
To invest in real estate across the country, check out Fundrise, my favorite private real estate platform. Fundrise runs over $3.5 billion across multiple funds that primary invest in the Sunbelt region where valuations are lower and yields are higher.
I've personally invested $954,000 in private real estate funds to diversify and take advantage of the demographic trend of relocating to lower-cost areas of the country. It's a multi-decade trend I want to invest in.
Invest In Private Growth Companies
In addition, consider investing in private growth companies through a fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment.
One of the most interesting funds I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI living in San Francisco! San Francisco is home to companies such as OpenAI, Anthropic, Databricks, Snowflake, Google, Meta, NVIDIA, and many more.
The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.
For more nuanced personal finance content, join 70,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. You can also subscribe to the FS podcast on Apple. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.Â