From 2004 to 2007 only an average of 2,220 units were built. From 2008 to 2012 a mere 1,710 units were built [1]. New construction has been impossible. It looks like it's picking up slightly, but not nearly as much as it would in a fair market.
If you look at most big, established cities (Chicago, New York), the bulk of the housing stock tends to have been built in the construction booms of the 1960's-1980's. New construction is a good, but a city will suffer from its bad housing policies for decades after those policies are fixed, because the process of bringing housing supply in line with housing demand is a very slow one.
As an analogy, consider roads: in the D.C. metro area, road construction is about 10 years behind where it needs to be given the population surge, and they have been building flat-out for a decade now. Imagine if they had spent the last 20-30 years not constructing new roads even as the region grew dramatically in population. That's the state of the San Francisco housing market, and indeed the housing markets of most cities that had policies in place over the last several decades that were hostile to development.
What forrestthewoods, api, and zanny are saying is that too few units have been getting built for many years. What you are saying is 'wait, they are coming'.
The first is most certainly true. The second may be true, but we'll have to wait and see how it impacts pricing. For now, you can't live in a building permit.
There were plenty of foreclosures and short sales in 2010-11, indicating overbuilding (be it because of over-buying / over-lending, regardlesss) in the previous few years (2006-2008).
The article is from 2012. There are 140 projects under construction RIGHT NOW.
There weren't many foreclosures. San Francisco represented less than 1% of foreclosures in California despite being 20% of the population, and outcomes for foreclosures didn't end up in the homes being sold as much as it did in the rest of the country.
For example (not in 2010-2011 range) in 4th quarter 2011 Sacramento lost 2200 homes to foreclosure vs. 160 for SF.
Foreclosures don't indicate overbuilding, they indicate that people can't afford to pay for their homes.
These don't indicate overbuilding. It just means you are off the cliff as soon as your cash flow turns negative.
Buying a house in this area is like condemning yourself to walk around with a huge sword hanging above your head.
Declining prices are much more due to changes in the economy (in this case, a recession), not the housing supply. Aggregate incomes and wealth dropped a lot during that time.
If you were looking for something that indicated overbuilding, I would look for declines in the ratio of rents/sale prices to median metro income. If housing is getting cheaper compared to incomes, that means supply is catching up to or outstripping demand. This could happen regardless of boom, bust, or stagnation.
From 2004 to 2007 only an average of 2,220 units were built. From 2008 to 2012 a mere 1,710 units were built [1]. New construction has been impossible. It looks like it's picking up slightly, but not nearly as much as it would in a fair market.
[1] http://www.sfgate.com/bayarea/article/S-F-apartment-construc...