San Francisco Market Update | January 2026

San Francisco Market Update

January 2026

Clients, friends, and colleagues:

In 2025, Bay Area real estate markets started the year seeing strong buyer demand, but had the wind taken out of their sails by the political/economic uncertainty that soared in early spring. Then, in mid-late summer, stock markets rebounded to hit new highs, and interest rates begin 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 back from being the weakest market in the Bay Area to the strongest. Stupendous amounts of new wealth are being created (with several IPOs planned for this year, including Open AI, Anthropic, Stripe, Databricks, and more), 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 sales 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 - peak of the low interest rates and pandemic purchasing frenzy. We are currently sitting at ~$1.8M).

The luxury home market is particularly competitive, and in our most expensive district - which includes Pacific & Presidio Heights, Cow Hollow and Marina - median house and condo prices already 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 heated 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 very heated indeed.

NOTE: This report includes an image link to our comprehensive review of district and neighborhood values and market dynamics.

If you have any questions, please feel free to reach out to me directly.

Wishing you all a wonderful 2026!

Warmly,

Ron