Real Estate Principals Series – Economic Outlook 2021 for the San Francisco Bay Area, California

February 04, 2021

By Michael Morris

EisnerAmper participated in its third annual real estate principals economic forecast presented by Patrick Kallerman, Research Director at the Bay Area Council Economic Institute. As a proud member, we are grateful to collaborate with the Bay Area Council; many of our firm’s clients and friends attended.

Patrick started with “2021, is there light at the end of the tunnel?” Below are some highlights from his presentation.

  • Two years ago (2019) was one of our economy’s best years yet; while 2020 was on track to be an economic boom to the greater Bay Area.
  • The stock market is not the economy, but(!): Dow is up 6%, GDP was doing great, and then took a 30% hit; now it seems to have mostly recovered.
  • Massive job losses, particularly for women, who have had to make difficult choices in balancing work and caring for their families. Only 40% of jobs have come back; the Bay Area now sits at 6.9% unemployment.
  • Real estate pricing continues to grow, as SF rents drop like a rock.
  • Lightweight vehicle sales seem to be a decent barometer for small business; sales for these is down considerably. This correlates; as small business is down double digit this past year.
  • Transportation and city budgets are slammed for years to come. Shortfalls in infrastructure and social services.
  • Common theme: COVID-19 has stymied our economy; specifically the folks that cannot work from home and our small business community.
  • Retail sales are brisk, but moved to online ordering.
  • We have enjoyed a 20-year run of job growth; this has changed dramatically this past year.
  • Exodus of big companies and high earners from the Bay Area including HP, Oracle and McKesson, along with a large group of high wage earners.
  • Still, of 245 U.S.-based unicorns, 114 are based in the Bay Area.
  • SF metro is the second highest outflow in the U.S., with Sacramento as a top destination, making the Bay Area a super geographic market.
  • Half of all Bay Area residents can work from home.

Bottom line: Consensus is we need mass vaccination to reopen our economy.

The Real Estate Principals Webcast Series features a variety of thought leaders throughout the year who address timey topics that are impacting the real estate industry on the West Coast. Learn more about upcoming events here.

About Michael Morris

Mr. Morris is a Director of Business Development, specializing in accounting, tax, and consulting services across a broad range of industries including financial services, real estate, and family offices.