San Francisco apartment construction projected to decline

San Francisco is among several metro areas expected to slow the pace of apartment construction by 2028, a new report finds.

Why it matters: The projected cool-down comes as a national shortage of homes to buy or rent is keeping housing prices high.

By the numbers: San Francisco completed construction of 38,060 apartments from 2019 to 2023, per a recent analysis by RentCafe .

• That number is poised to drop to an estimated 25,730 for 2024 to 2028 — a 12,330 difference.
• Meanwhile, a projected 5,078 rentals in the San Francisco metro area will be complete this year — of that, about 1,100 will be in the city proper.

Between the lines: The Bay Area has long struggled with apartment construction, including complications with permitting .

• Obtaining a permit in 2022 took an average of more than 600 days, according to a San Francisco Chronicle analysis of city permitting data.

Yes, but: Local and state officials have sought ways to cut down the red tape in recent years.

• The city also triggered a new state law this year that will expedite the permitting approval process for certain developments.

The big picture: A half-million-plus apartment units are expected to be built this year in the U.S., but the pipeline is slowing.

• A rush of new apartments , financed when interest rates were lower, helped recently to ease rent hikes .

Reality check: Most new apartments are amenity-packed and perched in sweet locations — not the affordable rentals many people want.

• The average U.S. asking rent in larger properties with multiple units cost roughly $1,700 in Q2, 19% higher than pre-pandemic levels, according to CoStar Group data.

What's next: As people postpone house purchases , less new apartment construction paves the way for landlords to raise rents .