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San Francisco Market Update February 2024

Newsletters Laura Pallin March 1, 2025

Buyers Are Back!
Buyer activity is making a strong comeback in San Francisco—here’s what you need to know.
 
After a period of uncertainty, buyer confidence is rebounding, creating new opportunities for homeowners, investors, and first-time purchasers alike.
 
Using the Months of Supply Inventory (MSI) as a benchmark, it's clear that inventory is not keeping up with demand. California’s historical average is around three months of MSI, yet San Francisco currently sits at just 1.1 months for single-family homes and 2.8 months for condos, reinforcing that this remains a sellers’ market.
 
Key Market Trends
  • Rising Buyer Activity: After the slowdown of 2023 and 2024, more buyers are stepping into the market, leading to busy open houses and the return of bidding wars. The newly required buyer-broker representation agreement for private showings has had little to no impact on buyer engagement.
  • Competitive Pricing: While San Francisco remains a premium market, current pricing is prompting buyers to explore alternative neighborhoods within their budget.
  • Seller Preparation: Buyers haven’t lowered their standards—if anything, higher rates and reduced purchasing power mean they have less liquidity for post-purchase upgrades. Sellers should ensure their homes are well-prepared to attract competitive offers.
Why Buyers Are Back
Several factors are contributing to the renewed energy in our market:
  • Stabilized Market Conditions: Economic indicators and confidence in the local market are prompting buyers to re-enter the scene.
  • Attractive Financing Options: Flexible financing solutions, such as adjustable-rate loan products, are making homeownership more attainable.
  • Desire for Home Ownership: With employees returning to the office and lifestyle changes continuing to shape our priorities, many are seeking the stability and personal touch of home ownership in our iconic city.
Spotlight on Neighborhoods
As buyers return, certain neighborhoods are experiencing a renaissance. Consider exploring:
  • The Mission District: Vibrant culture, eclectic dining, and unique housing options.
  • Pacific Heights: Known for its historic charm, stunning views, and classic architecture.
  • SoMa: Offering modern amenities and proximity to tech hubs, perfect for professionals.
  • Mission Bay/Potrero Hill/Dogpatch: Thrive City and the surrounding area were on full display during the recent NBA All-Star weekend, and for good reason - the energy is palpable in this vibrant area surrounded by amazing outdoor space, from Bayfront Park to Crane Cove.
Tips for Today’s Buyers
If you’re considering purchasing a home:
  • Get Pre-Approved: Strengthen your position by understanding your financing options.
  • Research Extensively: Understand neighborhood dynamics, future developments, and market trends. Be especially mindful of the proposed new height limits along some corridors, as a state density program will allow developers to build more units than normal zoning rules allow.
  • Partner with a Local Expert: Work with a real estate agent who knows the ins and outs of the San Francisco market.
  • Stay Informed: Subscribe to market updates, attend local open houses, and participate in community forums to keep your finger on the pulse.
Buyers Plan to Buy
Fifteen percent of Americans are hoping to buy a home in 2025, the highest number since NerdWallet began their survey in 2019. Unfortunately, some of this year’s homebuying hopefuls are likely to be let down. Nearly one-in-six (15%) adult Americans equates to about 39 million people. But since 2020, around 4.9 million existing homes have been sold each year, on average (Source: NerdWallet).
Months of Supply Inventory
San Francisco is a strong sellers' market right now. With only 1.1 months of supply for single-family homes and 2.8 months for condos, there aren't enough homes to meet demand. Since a balanced market in California usually has about three months of supply, buyers are facing tough competition, likely leading to higher prices and fewer chances to negotiate.
Mortgage Rate Projections
The latest expert forecasts suggest that mortgage rates are expected to settle around 6.5% by the end of the year, meaning they may not drop as much as some buyers had hoped (source: Keeping Current Matters). If you need to move, options like rate buydowns, adjustable-rate mortgages, assumable loans, and longer-term financing can help make homeownership more affordable in today’s market. And if you're looking to sell but need liquidity before your next purchase, reach out to me to discuss bridge loan solutions or buy now, sell later programs designed to ease the transition.
Limited Supply
In 2024, limited inventory was a major challenge for San Francisco’s real estate market, with demand far outpacing supply, and as we move into 2025, this trend shows no signs of reversing—good news for sellers but a continued hurdle for buyers. In January, the single-family home market saw 18.38% more new listings, 34.07% more sold listings, and 10.34% fewer active listings compared to the previous year, while the condo market followed a similar pattern with 12.62% more new listings, 17.71% more sold listings, and 10.91% fewer active listings year-over-year. With more homes selling and fewer remaining on the market, inventory remains tight, keeping San Francisco a strong sellers’ market.
Single-Family Home Prices
While different sources may report varying figures, one thing is clear: the median price of a single-family home in San Francisco has increased year-over-year since January 2024. According to Realtors Property Resource, which compiles data from public records and listings, home values have risen 3.8% over the past 12 months, bringing the January 2025 median price to $1,500,560. (Source: Realtors Property Resource, Public Records.)
Price Per Square Foot–Single-Family
While it’s too early to predict how this trend will unfold in 2025, if inventory remains tight, it will likely continue to favor sellers in San Francisco. In January 2025, the median price per square foot for a single-family home reached $1,031, reflecting a 5.7% increase from the previous month, though some of this can be attributed to seasonal fluctuations. More notably, it marks an increase from $968 in January 2024, further reinforcing the strength of the market. (Source: Realtors Property Resource, Public Records.)
Condominium Prices
As with single-family homes, different sources provide different data, but all sources show condo prices also on the rise, year over year. Per Realtors’ Property Resource (from public records and listings), there has been a 2.2% increase in value in the last 12 months with a January median price of $1,022,310. (Source: Realtors Property Resource, Public Records)
Price Per Square Foot–Condominiums
While we’re seeing more sales activity with condos, the price per square foot is down year over year to $924. That may be attributable to sales seasonality, so we’ll keep an eye on this line to see how the spring season unfolds. (Source: Realtors Property Resource, Public Records)
Multi-Family Home Prices
Unlike single-family homes and condominiums, the multi-family homes have seen a dip in median value, at $1,721,000, which reflects a 6.8% decrease year-over-year (and the lowest value since August 2017 when it was $1,566,390). Elevated interest rates can be challenging with investors and multi-family owners, per the JP Morgan multi-family market update. And the cost of ownership has grown with insurance rates on the rise as well as general repairs and maintenance. (Source: Realtors Property Resource, Public Records)
Housing Sentiment
Fannie Mae’s “Home Purchase Sentiment Index” increased 0.3 points last month to 73.4, which signals improvements in consumer optimism toward both home buying and home selling conditions, along with expectations that home prices will rise over the next year. The HPSI results are from Fannie Mae’s monthly survey assessing consumer sentiment toward owning and renting a home (currently, there’s a sharp increase in the number of respondents who believe that rental prices will increase in 2025), the current state of their household finances, views on the U.S. housing finance system and overall confidence in the economy.
Buyers Returning to Cities
After years of suburban and rural migration during the pandemic, cities have been making a comeback in the past couple of years. According to the National Association of Realtors (NAR), the percentage of people moving to cities has risen to 16%, the highest level in a decade. (Source: Keeping Current Matters)
Keep In Touch
The return of buyers marks an exciting shift in San Francisco’s real estate market. Whether you're buying, selling, or simply keeping an eye on trends, it's a great time to be involved. If you have any questions or need personalized advice, I’m happy to help.
 
Thank you for reading, and welcome back to a vibrant market where buyers are once again taking center stage!
 
For more updates and in-depth market insights, subscribe to my newsletter, reach out anytime, and feel free to share this with anyone considering a move.
 
Happy house hunting!
All information deemed reliable but not guaranteed. If your property is listed with a real estate broker, this is not a solicitation of brokerage services. Laura Pallin, License 01947999, Vantage Realty.
 
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