After a year of relative outperformance in 2020, market conditions in Napa are likely to remain tight moving forward. The world-renowned tourism and winemaker- based economy saw strong growth before the pandemic, which drove up local demand, job gains, and home prices. More Bay Area renters turned to Napa as a viable option for housing during the pandemic, and those trends are holding in 2021.

A wave of new apartments delivered during the pandemic, but strong demand for suburban housing has pushed occupancy back to historic highs last reached in 2017 in the wake of a destructive fire season. With work- from-home trends appearing to have some staying power, Santa Rosa has been targeted by residents in nearby cost-prohibitive cities like San Francisco.

The tech industry fuels housing demand in San Francisco and produces substantial market volatility. Historically, the city outperforms during expansion periods, but it also suffers acutely in recessions. Those trends were repeated and exaggerated in the latest cycle.

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Asset values have swung upward again in conjunction with rent potential. In addition, cap rates are inching back down from a slight rise during the pandemic. Pricing is quickly approaching its pre-pandmic peak. San Francisco has retained its standing as the lowest cap- rate market in the country.