Dwelling in San Francisco since 2001 is a surreal expertise. I arrived a yr after the dotcom bubble burst, and town felt desolate, particularly downtown the place Credit score Suisse was headquartered at 201 Howard Road.
I used to be coming from New York Metropolis, which felt vibrant in any respect hours, together with at 5:15 am once I’d stroll from my studio at 45 Wall Road to Goldman’s equities workplace at 1 New York Plaza. (Nonetheless questioning whether or not stepping over the steam from these manhole covers was a terrific life selection.)
San Francisco, the cheapest international city on the earth, is tame by New York Metropolis requirements. However I like it for the climate, meals, range, and entrepreneurial spirit. Similar to how many people search monetary freedom with FIRE, many who come to San Francisco and keep search freedom of private expression. It is a ravishing factor.
You can be accepted in San Francisco for who you might be, maybe greater than every other metropolis on the earth. And I have been all over the place.
San Francisco Grew to become a Punching Bag Throughout COVID
Sadly, San Francisco bought dragged via the mud throughout COVID. It was town social media and the mainstream media beloved to hate. People beloved to zoom in on the Tenderloin, arguably the worst neighborhood in San Francisco, and declare the entire metropolis a hellscape. It was fascinating, and albeit just a little insulting, to look at.
Sure, crime ticked up throughout COVID, particularly automobile break-ins and shoplifting. However wasn’t that occuring all over the place within the nation?
It was irritating to really feel helpless as lawlessness unfold, with politicians seemingly sluggish to behave. And sure, we had city government corruption. Arduous to keep away from whenever you’re operating a $14+ billion annual finances.
However here is what the nationwide outrage machine bought spectacularly fallacious: the hate on-line was far worse than actuality. I saved getting messages asking if it was secure to go to San Francisco. In the meantime, I used to be taking day by day walks and drives across the metropolis and it was… simply regular life.
As somebody who has operated Monetary Samurai since 2009, I do know intimately how a lot hate exists on-line. Feedback aren’t immediately accepted after they’re submitted due to the offensive and illiberal language that sometimes comes via. Throughout COVID, San Francisco hate from readers who lived elsewhere was coming in a number of instances per week.
The hole between notion and actuality was huge. And every time there is a notion/actuality hole that enormous, a savvy investor ought to concentrate. There may be all the time alternative.
If Individuals Do not Need to Make investments In San Francisco, I Will
The fantastic thing about a market is that there are all the time two sides. When everyone seems to be operating for the exits, somebody is promoting them their tickets out at a steep low cost and vice versa.
Shopping for Bay Space tech shares was one strategy. Not a pure play, however Google, my favourite quasi monopoly, was enticing when the worry was peaking. I additionally discovered publicity to San Francisco-based AI corporations like Glean Tech, Collectively AI, Harvey AI, OpenAI, Flock Group, Anduril, SpaceX, and Anthropic via conventional and public venture capital funds like VCX. when you lived in San Francisco, you bought an early heads up of what was coming.
However the best pure play on San Francisco? Shopping for a single-family residence within the metropolis to take pleasure in life and lift a household. It’s the safest way to play the AI boom.
I keep in mind the true property market peaking in 2022 as rates of interest shot up and the anti-SF narrative hit full steam. A house I had my eye on since Could 2022 – one a Google govt had backed out of at a better worth – got here again available on the market in Could 2023, proper at peak doom loop hysteria. By late 2023, I pulled the set off.
Affording a house you’re keen on in San Francisco has all the time been troublesome. Absolutely the costs are excessive, the competitors is cutthroat, and the quantity of wealth being created on this metropolis is obscene. When costs dip, the window is brief (1-2 years often). When costs rise, they have a tendency to rise in step capabilities via intense bidding wars, not progressively, however in lurches that depart hesitant consumers perpetually behind.
So shopping for a dream residence throughout the doom loop felt just like the S&P 500 practice lastly slowing down lengthy sufficient for us to hop on. As a result of when you by no means get on, you do not simply miss the journey, you watch the practice disappear over the horizon whereas costs surge out of attain.
For households like ours, it wasn’t simply an funding choice. It was a now-or-never second. Both we purchase throughout a interval of worry and uncertainty, or we threat getting priced out completely, barring some unlikely monetary windfall that conveniently lands in our lap.
The Crime Knowledge They Weren’t Telling You
Here is the factor in regards to the doom narrative: the precise crime information informed a very totally different story from 2023 onward. Violent crime and property crime each plunged.
The 2024 murder depend of 35 was the bottom since 1961. Property crime dropped 30% in a single yr. And by early 2025, violent crime in SF was down 22% year-over-year, the most important decline of any main California metropolis.
The media narrative was operating about 18 months behind actuality.
By 2025, practically each class had reversed sharply. And in 2026, the crime stats proceed to enhance.
The Dwelling Costs They Additionally Weren’t Telling You
Whereas the doom loop narrative raged, San Francisco actual property was quietly staging one of many nice setup alternatives of the last decade. Costs had softened from the 2022 peak as charges rose. A bear market in shares ensued. Sellers have been motivated. Competitors was muted.
For anybody who purchased throughout that window, late 2022 via 2023, the mathematics has been sort. The tech increase, the AI boom, and the continual housing scarcity that makes NIMBY-ville San Francisco structurally troublesome to construct in have all conspired to push costs larger over each significant time horizon.
In hindsight, the chance window was apparent. Nevertheless it nonetheless took braveness to purchase a multi-million dollar home that may eat your FIRE number when the media was telling you about doom 24/7.
Though costs all the time really feel costly right now, the fact is, sooner or later, most actual property purchases right now will probably seem like bargains due to inflation and common inhabitants development.
If you happen to attempt to purchase a single-family residence priced within the frenzy zone (as much as $3.5 million), you’ll probably face some severe competitors. Right here’s one other instance of a transformed home in an alleyway that went means over asking.
Extraordinarily Grateful For The Doom Loop Narrative
Since late 2023, the doom loop narrative has quietly evaporated.
Crime is measurably down, not simply from peak, however in lots of classes beneath pre-pandemic ranges.
We’ve got a brand new mayor in Daniel Lurie who’s independently rich sufficient that he isn’t as beholden to the particular pursuits and metropolis contractor foyer that turned San Francisco’s public funds into one thing resembling organized crime with higher parking.
The AI increase has solely accelerated, with a few of the largest names planning to IPO inside the subsequent 12 to 24 months. In the meantime, mega funds maintain rising throughout the enterprise capital business, driving additional development.
If I hadn’t invested in tech and personal AI corporations since 2023, I am undecided I might afford my residence right now if it got here to market at present costs. Bidding wars for the houses tech executives and AI employees need are one thing else proper now.
I additionally take into consideration all of the individuals who remained in San Francisco throughout the pandemic. Due to their loyalty, they have been rewarded with higher raises and promotions. Entrepreneurs most likely gained simpler entry to funding as relationships blossomed. They have been additionally capable of lock in favorable rents and purchase extra inexpensive houses earlier than folks began flocking again.
The doom loop is totally a increase loop. And many of us who stayed have made thousands and thousands extra in consequence.
Embrace the Subsequent Doom Narrative
The following time the world assaults your metropolis – from the consolation of their sofa in a state they’ve by no means left – embrace it. Discover the narrative. Test whether or not it matches actuality on the bottom. The broader the hole between notion and actuality, the larger the chance.
Possibly it isn’t a single-family residence. Possibly it is a rental property promoting at a pandemic-era low cost, or a stake in a downtown workplace constructing when everybody declares workplaces useless (once more). Or perhaps it is simply locking in an unbelievable long-term lease as renters flee town. Even making use of to higher faculties, extra spots open up when households depart.
Search for local economic catalysts in micro-neighborhoods. AI campuses, transit investments, neighborhood anchors opening or returning, hospital expansions, and college remodels. These have a tendency to maneuver costs earlier than the nationwide narrative catches up.
The individuals who fled San Francisco throughout COVID at the moment are discovering out the arduous means what they missed. Their work relationships weakened from being out of sight. They can not get again to rent-controlled flats at their previous costs. And so they undoubtedly cannot purchase houses at doom loop costs. Leaving felt rational within the second. Staying turned out to be the higher long-term transfer.
I am genuinely grateful for the San Francisco doom loop. The media and nationwide politics handed this dual unemployed family a extra comfy future as a result of alternatives bought cheaper and we took benefit. Now that the increase loop narrative is in full swing, enabling us to stay free.
So to everybody studying: embrace the hate! All the things strikes in cycles. Downturns do not final eternally, and neither do upturns. Benefit from the increase loop, stay humble, and maintain one eye open for the subsequent time the narrative breaks from actuality. That is when the true cash is made.
Reader Questions
Any San Francisco residents keep via COVID and endure the continuous hate and doom loop narrative from the media, acquaintances, and individuals who’d by no means set foot within the metropolis? How did you take care of all of the vitriol, and did you benefit from the disconnect between notion and actuality?
If you happen to missed the doom loop shopping for window, what’s your plan now that costs are surging once more? For these exterior the Bay Space, has your metropolis ever been via its personal doom loop narrative, and did you’re taking benefit or sit on the sidelines? And eventually, how lengthy do you assume this increase loop will final?
New Doom Loop Funding Suggestion
There’s at the moment a mini-doom loop narrative occurring with actual property in Sunbelt cities. Nevertheless, with underbuilding since 2022, when rates of interest began getting jacked up, there can be an undersupply of housing beginning in late 2026 for a number of years. Because of this, count on to see each rents and property costs begin to rebound in locations like Austin.
If you wish to take benefit, check out Fundrise, my most well-liked non-public actual property platform that invests primarily in residential and industrial actual property within the Sunbelt. They’re additionally investing extra in information facilities for the AI buildout and gained extra capital to reinvest after a profitable funding in VCX.
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