San Francisco Bay Area, California The San Francisco Bay Area, consisting of nine counties surrounding the bay, is home to 7 million people—one-fifth of the State’s population and an increase of 3 percent since the 2000 census. Twothirds of the growth occurred in the Oakland and San Jose metropolitan areas. The Bay Area has been significantly affected by the economic slowdown and the downturn in high-technology industries. In 2002, all major employment sectors except government recorded declines. Nonagricultural employment declined by 2.6 percent, which is 90,300 jobs, or 3.4 million people. The San Jose metropolitan area accounted for 60 percent of the job losses in the Bay Area, because high-technology manufacturing, computing, and telecommunication companies made significant layoffs during 2002. The San Francisco metropolitan area accounted for slightly more than 33 percent of the Bay Area’s job losses. The unemployment rate increased from an annual average of 4 percent in 2001 to 6.1 percent in 2002. The bright spot in the Bay Area’s economy is the continued strength of the housing market, particularly sales housing. Homebuilding activity continued to increase. Single-family permit activity totaled 14,847 homes in 2002, an 11-percent gain over 2001. With lower land costs and a relatively more diversified industrial base, single-family activity in Oakland increased 27 percent to 7,361 homes. In the San Jose metropolitan area, development interest shifted from the weaker office and multifamily segments to single-family sales as permits reached 2,096 during the same period, a 31-percent gain. With historically low interest rates and a limited supply, the market for existing homes continued to be very strong. According to DataQuick, existing home sales volume in 2002 totaled 112,000 homes, a 22-percent increase over 2001. The largest percentage increase in sales occurred in the San Jose area, where sales increased 32 percent to 25,100 homes. The Oakland metropolitan area recorded the greatest number, 45,400 closings, an 18-percent increase. In San Francisco resale volume increased 27 percent to 19,100 homes sold. The median sales price in the Bay Area as of the fourth quarter was $413,000. Conditions in the Bay Area’s rental markets have eased somewhat. According to RealFacts’ survey of rental developments of 100 or more units, the Bay Area’s apartment vacancy rate in the third quarter of 2002 was 6 percent compared with 5 percent for the same quarter in 2001. In the third quarter of 2002 the San Francisco and Oakland metropolitan areas posted higher vacancy levels of 6.3 and 6.4 percent, respectively, compared with 4 and 3.4 percent, respectively, in the previous year. The San Jose metropolitan area showed some strengthening as its vacancy level declined from 8 to 6 percent during this period. The demand for luxury apartment units in the Bay area has weakened, and there has been a notable decline in rents for these units and concessions are commonplace. Developer interest in apartment construction has declined with the weaker market conditions. In 2002 multifamily permit activity totaled 8,187 units, 15 percent below 2001. Half of the new activity was in the San Jose and San Francisco metropolitan areas.

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