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 an awesome well being alternative.)
San Francisco, the most cost-effective worldwide metropolis on the planet, is tame by New York Metropolis requirements. However I like it for the climate, meals, range, and entrepreneurial spirit. Identical to how many people search monetary freedom with FIRE, many who come to San Francisco and keep search freedom of non-public expression. It is a good looking factor.
You may be accepted in San Francisco for who you’re, maybe greater than some other metropolis on the planet. And I have been in every single place.
San Francisco Grew to become a Punching Bag Throughout COVID
Sadly, San Francisco received dragged by way of the mud throughout COVID. It was town social media and the mainstream media cherished to hate. People zoomed in on the Tenderloin, arguably the worst neighborhood in San Francisco, and declare the entire metropolis a hellscape. It was fascinating, and admittedly a little bit insulting, to observe.
Sure, crime ticked up throughout COVID, particularly automotive break-ins and shoplifting. However wasn’t that taking place in every single place within the nation?
It was irritating to really feel helpless as lawlessness unfold, with politicians seemingly sluggish to behave. And sure, we had metropolis authorities corruption. Exhausting to keep away from while you’re working a $14+ billion annual funds.
However this is what the nationwide outrage machine received spectacularly flawed: the hate on-line was far worse than actuality. I stored getting messages asking if I used to be OK and whether or not it was protected 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. Simply since you’re watching a present in black and white does not imply the world is not in colour.
As somebody who has operated Monetary Samurai since 2009, I do know intimately how a lot hate exists on-line. Feedback aren’t immediately permitted after they’re submitted due to the offensive and illiberal language that sometimes comes by way of. Throughout COVID, San Francisco hate from readers who lived elsewhere was coming in a number of occasions every 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 listen. There’s 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 working for the exits, somebody is shopping for 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 concern 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 by way of conventional enterprise capital and public enterprise capital funds like VCX. Should 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 most secure solution to play the AI increase.
I bear in mind the actual 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 value – got here again in the marketplace in Could 2023, proper at peak doom loop hysteria. By late 2023, I pulled the set off.
Affording a house you like in San Francisco has all the time been tough. 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 normally). When costs rise, they have an inclination to rise in step capabilities up by way of intense bidding wars, not progressively, however in lurches that go away hesitant consumers perpetually behind.
So shopping for a house through 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 in the event you by no means get on, you do not simply miss the experience, you watch the practice disappear over the horizon whereas costs surge out of attain.
For households like ours, it wasn’t simply an funding resolution. It was a now-or-never second because the youngsters had been nonetheless younger. Both we purchase throughout a interval of concern and uncertainty, or we danger getting priced out completely from our dream residence, barring some unlikely monetary windfall that conveniently lands in our lap.
The Crime Knowledge They Weren’t Telling You
Here is the factor concerning the doom narrative: the precise crime information advised a totally completely 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 working about 12-18 months behind actuality.
By 2025, practically each class had reversed sharply. And in 2026, the crime stats proceed to enhance.
The House 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 had been motivated. Competitors was muted.
For anybody who purchased throughout that window, late 2022 by way of 2023, the maths has been type. The tech increase, the AI increase, and the continual housing scarcity that makes NIMBY-ville San Francisco structurally tough 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 greenback residence that will eat your FIRE quantity when the media was telling you about doom 24/7.
Though costs all the time really feel costly at the moment, the fact is, sooner or later, most actual property purchases at the moment will seemingly appear like bargains because of inflation and common inhabitants development.
Should you attempt to purchase a single-family residence priced within the frenzy zone (now as much as $3.5 million, up from $2.5 million throughout COVID), you’ll seemingly face some severe competitors. Here is one other instance of a transformed home in an alleyway that went manner over asking. These aren’t huge properties on giant heaps with views. They’re simply the sort of properties a typical household of 4 would hunt down.
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 have now 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 among the largest names planning to IPO throughout the subsequent 12 to 24 months. In the meantime, mega funds hold rising throughout the enterprise capital trade, driving additional development.
If I hadn’t invested in tech and personal AI corporations since 2023, I am undecided I might afford my residence at the moment if it got here to market at present costs. Bidding wars for the properties 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 through the pandemic. Due to their loyalty, they had been rewarded with higher raises and promotions. Entrepreneurs gained simpler entry to funding as relationships blossomed. Traders received in earlier on higher phrases. And everybody was in a position to lock in favorable rents and purchase extra reasonably priced properties earlier than folks began flocking again.
The doom loop is absolutely a increase loop. And most of the individuals who stayed have made thousands and thousands extra simply by staying a short while longer.
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. Verify whether or not it matches actuality on the bottom. The broader the hole between notion and actuality, the higher the chance.
Perhaps it isn’t a single-family residence. Perhaps it is a rental property promoting at a pandemic-era low cost, or a stake in a downtown workplace constructing when everybody declares places of work lifeless (once more). Or perhaps it is simply locking in an unbelievable long-term lease as renters flee town. Even making use of to higher colleges, extra spots open up when households go away.
Search for native financial 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 are actually discovering out the exhausting manner what they missed. Their work relationships weakened from being out of sight. They can not get again to rent-controlled residences at their previous costs. They usually undoubtedly cannot purchase properties 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 twin unemployed household a extra comfy future as a result of alternatives received cheaper and we took benefit. Now that the increase loop narrative is in full swing, enabling us to stay free for longer.
So to everybody studying: embrace the hate! The whole lot strikes in cycles. Downturns do not final ceaselessly, and neither do upturns. Benefit from the increase loop, keep humble, and hold one eye open for the following time the narrative breaks from actuality. That is when the actual cash is made.
Reader Questions
Any San Francisco residents keep by way of 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 cope with all of the vitriol, and did you make the most of the disconnect between notion and actuality?
Should you 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 by way of its personal doom loop narrative, and did you are taking benefit or sit on the sidelines? And eventually, how lengthy do you suppose this increase loop will final?
New Doom Loop Funding Suggestion
There’s at present a mini-doom loop narrative happening with actual property in Sunbelt cities. Nevertheless, with underbuilding since 2022, when rates of interest began getting jacked up, there will likely be an undersupply of housing beginning in late 2026 for a number of years. Consequently, anticipate to see each rents and property costs begin to rebound in locations like Austin.
If you wish to take benefit, try 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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