Where should you live in San Francisco?Choosing a neighborhood with Zillow dataCollin ChingBlockedUnblockFollowFollowingFeb 11Moving to San Francisco would be awesome except for the cost of rent.
I use Zillow data in this project to find cheap/high-value rental opportunities in San Francisco.
The following analysis was scripted in R, and analysis is neighborhood-based.
Credits to Ken Steif and Keith Hassel for their great tutorial on exploring home prices in San Francisco.
Plots were inspired by them and I used their ggplot themes for my graphics.
Code for this project can be found here.
Neighborhood referenceMy analysis is done with respect to neighborhoods, so a visual reference of San Francisco’s neighborhoods and districts is helpful.
San Francisco home prices by yearNeighborhood home prices are stagnant between 2007 and 2011 due to the subprime mortgage crisis.
In the Shipyard, housing prices even decrease during this time period.
From 2012 onwards, housing prices take off.
This rise in housing grows in the center of San Francisco, then propagates outwards.
Housing is consistently most expensive near the Presidio and Twin Peaks areas.
This is a better view of change over time.
Housing prices decrease during the subprime mortgage crisis, then shoot up after 2012 and split into a trimodal distribution.
Comparing home prices and rentThe plots above includes all home types — condos, single-family, multi-family — and home sizes — 1-bedroom, 2-bedroom, 3-bedroom, etc.
The typical home price was a little under $1 million and typical rent was roughly $4,000 per month from 2010 to 2018.
There are also rare neighborhoods where the median home price exceeds $3,000,000 and median rent exceeds $6,000.
Home price and rent follow a similar distribution.
Average yearly home price explains 89.
5% of the variation in average yearly rent.
Still, rent can vary at a fixed home price: at $2.
5m, the minimum rent is $5250/mo and maximum is $9506/mo.
If someone offered me two $2.
5m homes to rent — one at $5250/mo and one at $9506/mo — I’d take the $5250/mo most cases.
In the scenario above, I fixed home price.
Say you fix your rent budget instead.
What is the highest home value you could get for that budget?.If you’re purchasing rental properties, what’s the highest monthly rent you could get for a fixed purchasing budget?.These questions launch us into the next analysis.
Price-to-rentThese are average neighborhood price-to-rent ratios from 2010 to 2018, where price-to-rent ratio isPrice-to-rent is home price divided by a years estimated rent.
You can view it as the estimated years to pay off a rental property.
Maximizing this ratio would give renters good value; minimizing this ratio (fewer years to payoff) would give landlords good returns.
If you’re renting an apartment, you want to maximize price-to-rent.
These neighborhoods have higher bang for rental buck.
Highest 10% neighborhoods are marked in the right panel.
If you’re investing in rental property, you want to minimize price-to-rent so you get quick returns on investment.
Lowest 10% price-to-rent neighborhoods are marked in the left.
For renters: highest price-to-rent neighborhoodsSaint Francis Wood, Sea Cliff, and Presidio Heights are high value neighborhoods to rent in.
Because they are affluent neighborhoods, home values are likely to be higher in those neighobrhoods.
If you can find reasonable rent in these areas, you’re probably getting high value from this renting situation.
As a sanity check, I found nice Craigslist listings in Saint Francis Wood and Presidio for about $1500/br, and the apartments looked nice.
That’s super reasonable for the area.
For buyers: lowest price-to-rent neighborhoodsBayview has historically high crime rates, but has grown $400k in average home price from $500k to $900k based on Trulia data.
There are coffee shops and eateries sprouting up in that area that cater to young professionals, making it a more accessible neighborhood with a cheaper price tag.
It looks like it takes roughly under 16 years to pay off a rental purchase in that area.
That’s as good as it gets in the city, and real estate property in Bayview is appreciating quickly, meaning higher selloff value.
Looking at change over time, we see that Downtown actually has the lowest current price-to-rent, so we should add that to list of rental property investment candidates.
ConclusionWe identified a few good starting neighborhoods to look to rent in from a value perspective.
Consider starting with Saint Francis Wood, Sea Cliff, and Presidio Heights.
From a buyer’s perspective, Bayview, Visitacion Valley, Downtown are good neighborhoods for purchasing rental properties.
I didn’t have much time to go in-depth in this analysis, but I’ll probably extend this in the future.
Things I’ll consider in future analysis:look at 3- and 4-bedroom apartments (more rooms tend to be cheaper)graph rent per square feet to find apartments that provide more space for less moneythink about looking at densities of nearby restaurants because convenience is importantLearning how to map was probably the hardest part about this project.
I studied the Urban Spatial for several days, and stepped through the code slowly.
Learning how geom_polygon() worked was helpful.
The function draws polygons by connecting points using the “group” aesthetic.
Feedback?.Drop a comment or dm!AppendixInformation that didn’t make the cut.
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