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Development
San Francisco

San Francisco housing production declines 50% in 2022

Construction costs, interest rates hamper building as Bay Area region trends lower

San Francisco, Construction
(Illustration by The Real Deal)

Housing production in San Francisco took a sharp dip last year, and that trend could continue if the cost of building new homes remains untenable. 

In 2022, San Francisco completed 2,900 units, according to data recorded by the state’s Department of Housing & Community Development. That represents a 50 percent year-over-year decline from the 5,600 units delivered in 2021, first report by the SF Business Times. 

Rising costs and a series of interest rate hikes have created an environment that is unfriendly to housing construction in general, but residential development in San Francisco has proven especially challenging. 

There is no type of multifamily development that is financially feasible in San Francisco, the city controller’s office said in March. It suggested lowering the city’s inclusionary requirement, or the number of affordable homes required by market-rate residential developments. It is one of the measures Mayor London Breed and Board of Supervisors President Aaron Peskin said this week they would sponsor in order to jumpstart new housing.

San Francisco had the largest decline in housing development of any of the Bay Area’s 10 most populous cities. The only one that was worse was Vallejo which saw no new homes delivered this year compared to 18 delivered in 2021. 

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The Bay Area at large is trending negatively as well. The nine-county region recorded a more than 10 percent decline in year-over-year housing production in 2022, a Business Times analysis shows.

Other Bay Area cities also saw a significant decline. Oakland reported a decline in new deliveries of about 18 percent year-over-year from 4,135 in 2021 to 3,385 in 2022. Fremont recorded 1,397 deliveries last year, down from 1,635 in 2021. Also, Sunnyvale saw deliveries fall from 847 in 2021 to 643 in 2022. 

Some cities did report increases in year-over-year unit deliveries in 2022. San Jose recorded 1,710 deliveries, up from 1,213 in 2021, and Berkeley saw 828 units delivered last year, up from 295 the year before.

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— Pawan Naidu

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