San Francisco is one of the country's oldest and most storied cities. This anchor of the Bay Area has witnessed the Gold Rush, the Summer of Love, and the hi-tech revolution.
Now, a shift is taking place. During COVID, the city had one of the highest outbound migration rates in the country, perhaps due to its high concentration of remote-work-friendly companies, rising cost of living, and shuttering of several major offices. And while the trend has begun to reverse, the populations now moving into San Francisco are not quite the same as those who left.
With the pandemic and its associated restrictions in the rearview mirror, we check in on the effects of this out-migration and see what lies ahead for the city.
San Francisco Seeing Growth Again
San Francisco has had the distinction of being one of the most expensive cities in the country for years. Still, despite its rising home prices, the city was an attractive and compelling destination for tech workers and creatives alike, and its population had been increasing steadily year-over-year. There were challenges forming as well, most notably, expensive housing costs sending some residents out of the city in search of more affordable real estate. Some companies also chose to move their offices to more regulatory-friendly states such as Texas or Florida.
But all these trends were kicked into high gear as the pandemic set in and offices shuttered. Many San Franciscans found that, without needing to go into work every day, there were fewer reasons to remain in the Golden Gate City. The city’s population declined by around 3.9% between October 2019 and September 2020.
Recently, however, the San Francisco population decline appears to be slowing – and perhaps even reversing. While the population of San Francisco County is still below pre-pandemic levels, 2022 saw population growth ticking upward again, increasing 2.2% from March 2021 to September 2022.
Who Are the New San Franciscans?
But although San Francisco’s population is now on the rise, demographic data indicates that the city is not necessarily returning to its pre-pandemic character. Analyzing the median household income (HHI) of the top 10 counties feeding inbound migration to San Francisco reveals that many people moving in come from areas with median HHIs lower than the median San Francisco County HHI of $127,000 annually. This may indicate that the city is undergoing a shift away from constantly increasing rental prices and becoming more welcoming to a more diverse population.
The city is still known for its high real estate prices, but that may change soon. Rental prices in San Francisco have stagnated, while rent costs across the country are skyrocketing. These prices may help attract more young people moving into the city – a real estate listing firm found that Gen Z is most interested in living in San Francisco or nearby San Jose.
And San Francisco has historically been known for its eclectic population of artists and creatives, many of whom have bemoaned being priced out of the city for decades. The city has committed to bringing more artists back, piloting a universal basic income program for creatives. As a more diverse mix of people moves into the city, San Francisco may see a return to its roots as a hotbed of art and creativity.
Where Do All the Former San Franciscans Go?
Analyzing the destination counties that are welcoming people leaving from San Francisco also leaves room for optimism regarding the future of the region. Most of the people leaving San Francisco stayed close to home – nine out of ten destinations for departing San Franciscans were within California and mainly concentrated in the Bay Area. This indicates that, while people are indeed leaving, they may simply be seeking a bit more space and affordable housing while staying close to family, friends, and the powerful Bay Area economic region.
And the one non-California destination, Suffolk County, MA (which includes Boston), provides some insight into forces driving outbound migration from San Francisco. Suffolk County is also known for being quite pricey (although its median HHI is significantly lower than that of San Francisco County) but has another draw for San Franciscans – its high concentration of tech companies and academic institutions. It may be that those departing San Franciscans are keen on trying out a new city and pace of living while sticking to their job field.
The State of San Francisco
San Francisco has seen a challenging few years, but things may finally be turning around. Tourism is starting to catch up to pre-pandemic numbers, conventions and events are returning to the city, and young people are looking to move in. And the region is still an economic powerhouse – the San Francisco Bay Area GDP growth for 2022 (based on historical models and the latest available economic data) was the highest in the country at 4.8%, according to the Kenan Institute, and the city’s GDP ranks third in the nation, after New York and Los Angeles. These numbers show that, despite losing population and important companies, San Francisco is still one of the country's most powerful economies, and there is plenty of reason to be optimistic about the city's future.
Still, the city has a ways to go. The pandemic saw many of its major tech anchors either shuttering offices or going remote, and though new investments in biotech industries are underway, San Francisco may need to find a new industry to draw in new talent and residents. But this state of flux can also be positive for the city, allowing it to reinvent itself and attract a creative and diverse mix of people.
For more data-driven insights, visit placer.ai/blog.
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