San Francisco Market Update | August 2025

San Francisco Market Update

August 2025

Clients, friends, and colleagues:

Happy upcoming Labor Day weekend! As a reminder, our fall market starts right after Labor Day, kicking off our highest inventory selling season of the year (based on past data). As we get into the market update, let's start with a quote from the New York Times:

"San Francisco has had its share of tech companies since the dot-com boom, but the money pouring into artificial intelligence has lately supercharged the city's tech profile... last year, SF companies raised nearly $35 billion in VC funding. The change is visible. Rents are climbing again. City buses are filling back up. And the face of San Francisco is starting to look younger. The city is tech industry's hub for artificial intelligence." The New York Times, August 2025

If you've fallen along with my updates, you'll know I report on our city's hustle and bustle with my boots on the ground. I've been running to the gym nearly every weekday morning since I purchased downtown in February 2021; from the post-pandemic zombie-town to the new hybrid work environment. It was a slow trickle for quite some time, but in the past few months, the difference has been substantial. Tons of bikers and walkers to work now fill my path, providing my cherished nuisances of city living. Our city is coming back alive, and while our downtown prices (condos) don't reflect it much yet on the entry-level side of the market, our rental prices definitely do. As rents increase (over 10% year to date, leading the country), we will start to see more first time buyers enter back into our condo market. And imagine if interest rates continue their recent fall too. Th gap in the rent vs buy analysis will start to close for many.

Over the past couple years, the AI boom has most dramatically affected the housing markets in Silicon Valley with their established players like Nvidia. San Francisco, though home to major AI firms like OpenAI and Anthropic, has been affected, but much more modestly - but that is now rapidly changing. The AI industry is exploding in the city, with dozens of new startups making San Francisco their home, and the city has become a powerful magnet for those eager to participate in perhaps the biggest technological/economic revolution of our times. Just as in the dotcom and recent high-tech booms, they are doing so due to the network effect, i.e. the tremendously dynamic synergies of being within a half mile - or even a hundred yards - of each other. That is a huge plus for the best and brightest flocking to AI, for companies growing fast, and for the intense cross-fertilization of ideas characterizing the industry.

This has shifted the SF housing market into one of the strongest in the Bay Area, diverging from the cooling trends seen in most other counties and the country at large. Unlike most other markets, the supply of listings is dropping, price reductions are declining, and home prices are starting to climb year-over-year. And these are very early days for the AI boom in the city: If trends continue on course, hiring accelerates, startups grow, and privately held companies eventually move toward IPOs, the explosion of new wealth will likely be astounding.

If you have any questions about specific neighborhoods or properties, feel free to message me directly. I'm always here to help.

Sincerely,

Ron