Clients, friends, and colleagues:
In 2025, Bay Area real estate markets started the year with strong buyer demand, but had the wind taken out of their sails by political and economic uncertainty that surged in early spring. Then, in mid-to-late summer, stock markets rebounded to hit new highs, and interest rates began a sustained decline, initiating a shift in the psychology of buyers and sellers that is still developing.
In San Francisco, however, the market has been supercharged by its AI startup boom, a dynamic that dramatically accelerated this past fall. After years of social, economic, and demographic challenges, the city has shifted from being the weakest market in the Bay Area back to the strongest. Stupendous amounts of new wealth are being created, with several IPOs planned for this year, including OpenAI, Anthropic, Stripe, Databricks, and others, and market conditions may well exceed those last seen in the IPO boom of 2019. Demand is far outpacing the supply of homes for sale, and we expect the city’s median house sale price will reach a new high in 2026 (for reference, the highest median sale price for single-family homes in SF was just over $2M, achieved in May 2022 during the low interest rate and pandemic purchasing frenzy; we are currently sitting at approximately $1.8M).
The luxury home market is particularly competitive, and in our most expensive district, which includes Pacific and Presidio Heights, Cow Hollow, and Marina, median house and condo prices hit new peaks in 2025. The condo market, though not as heated as the house market, has begun a substantial recovery fueled by high-tech workers flocking to the city.
As 2026 begins, interest rates are near multi-year lows, stock markets are at or close to all-time peaks, and rent prices continue to increase. Early in the new year, it is common for buyers, re-energized to move forward with major life decisions, to jump back into the market faster than sellers list their homes for sale. This disparity of increasing demand versus a low supply of new listings usually runs through spring, typically making these months the most competitive selling season of the year. Last year, this was upended by the tariff shock. Barring new, unexpected economic alarms, we expect this spring to be particularly heated.
If you have any questions, please feel free to reach out to me directly.
Cheers,
Faye
