San Francisco approves far fewer housing permits even as rents spike from AI jobs and return-to-office trends. Permits dropped from 20 per 10,000 residents before the pandemic to just 8 now, largely because construction costs soared due to inflation and high interest rates.
Permits for multifamily housing in San Francisco are now below the levels we saw during and even before the pandemic. That's right, even though rents have been increasing over the past year because of increased demand from the AI boom and return to office, we've been building less. Specifically, according to data from the Census Bureau, San Francisco approved approximately 20 permits per 10,000 people before the pandemic, 16 permits per 10,000 people during the pandemic, and just a little over 8 after the pandemic. It's because the actual cost of construction is too high. Construction costs are rising just generally. We have inflation, we have potential tariffs, but interest rates are also really high. So even with the very positive developments we've been making to streamline the approval and permitting process, we're still not getting enough units. And this trend, if it continues, will just exacerbate rent growth because more people continue to move back to the city. Let me know what you think in the comments and follow me for more Bay Area real estate.
