Zip Code Spotlight – Bay View/Hunters Point (94124)
This post first appeared in the June edition of: Cirios Trends: In Search of Real Estate Opportunities
This month’s zip code spotlight falls on 94124, the Bay View/Hunters Point area of Southeast San Francisco. This area is well known as the most dangerous part of the city, but as we discuss elsewhere in this issue, that could change over the next several years as the Hunters Point Naval Shipyard is redeveloped.
Looking at the market behavior over the last few years reveals some interesting facts about prices in this area, particularly when compared to the three immediately adjacent zip codes, which represent more affluent parts of San Francisco.
First, prices in 94124 are lower by around 25-30%. Given the high crime rates in the area this should come as no surprise, but 94124 remains the most affordable part of San Francisco. An optimist would say that in an area which may see positive changes in the future, real estate values here have a long way to come up.
A second and perhaps more interesting point to note is that the price disparity between 94124 and its surrounding environs is growing. While the three surrounding zip codes have, like most areas, experienced price declines since the market peaked in 2007, 94124 has been hit even harder. Furthermore, the surrounding area has seen a meaningful recovery of around 10% since last year’s lows, while 94124 has been basically flat since that time.
What this means, historically speaking, is that real estate in 94124 is relatively inexpensive compared to its surrounding zip codes. To be sure, a big part of this is due to effects of the economic downturn, both in the form of high foreclosure rates in 94124 and spikes in the crime rate. However, when you look at the long term potential of the area for economic development and infrastructure improvement, this relative price drop could present a terrific opportunity. Furthermore, high foreclosure rates mean high levels of inventory, resulting in a wide selection of investment opportunities.
We at Cirios will be following this area closely over to the coming months to redevelopment efforts get underway.
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