With another year coming to a close, it's time for our annual forecast and predictions post for the San Francisco real estate market in 2025.
As a top 1% SF real estate agent since 2002, with over 1,000 transactions and $1B+ in closed sales volume, we bring deep market insight to these predictions. And while past performance doesn't guarantee future results, our experience helps us identify meaningful patterns and trends to share with you. So, let’s dive in!
Few people realize that the mythical phoenix adorning San Francisco's official seal and flag carries a historical significance. In the early 1850s, six devastating "Great Fires" swept through the city, each time threatening to destroy the burgeoning Gold Rush boomtown.
Yet after each disaster, San Franciscans demonstrated resilience and rebuilt the young city bigger and better than before. In recognition of this spirit, city leaders chose the phoenix as our symbol in 1859, the legendary bird that rises renewed from its own ashes.
As we present our 2025 San Francisco real estate predictions, this symbol of renewal feels particularly fitting this year. San Francisco’s real estate market has historically demonstrated an extraordinary ability to reinvent itself and emerge stronger from challenging periods.
From the aftermath of the 1906 earthquake to the dot-com bubble, the 2008 financial crisis, and the recent pandemic, San Francisco has consistently proven its resilience. So, what’s next?
In just the past ~2 years, since the 2022 release of ChatGPT and the AI floodgates opening, the surge in artificial intelligence companies and local investment is fundamentally transforming San Francisco's real estate landscape. Major players like Anthropic, OpenAI, and Google DeepMind are creating new demand patterns across both commercial and residential sectors:
The influx of AI talent is already impacting specific micro-markets. For instance, properties within walking distance of major AI offices are seeing particularly strong demand.
According to The SF Standard, “San Francisco's office leasing activity this year reached its highest point since 2019... The expectation is that tenant demand will once again increase in 2025 as growth plans gain momentum.”
Many of our recent clients include AI researchers and engineers returning to San Francisco, drawn by the unparalleled combination of career opportunities and urban amenities.
More on this in our blog: How AI is Shaping San Francisco Real Estate
The data tells a clear story of market recovery:
San Francisco Real Estate Market Performance (12-month rolling average)
Our prediction is that the San Francisco real estate market will see continued growth in both new listings and closed sales in 2025, approaching pre-pandemic levels. This increased real estate market activity benefits everyone, from first-time buyers in San Francisco to move-up buyers to investors.
Industry forecasts vary for Q4 2025 mortgage rates (i.e. where rates will be one year from now):
At the end of 2024, current mortgage rates have been hovering around 7.1%. If rates follow the above predictions, the anticipated decrease to mortgage rates will significantly improve home-buying affordability in 2025, particularly in San Francisco where many buyers secure rates below national averages through jumbo loans and strong borrower profiles.
But will mortgage interest rates actually fall in 2025? Trump’s election victory has some economists less sure of a ‘soft landing’, with the new administration eyeing tariffs, deregulation, and other policies that could cause inflation to flare up again. In their December meeting, the Fed again cut inter-bank interest rates but showed hesitancy over additional cuts in the coming year (which actually caused mortgage rates to spike).
What will happen in 2025 depends on a complex web of at-times unpredictable actors—the president, Congress, the Fed—and global economic factors outside of anyone’s control.
As always, the best time to buy or sell a home is when it’s right for you. Your future, family, and finances are priority number one. And heck, there’s always a future refinance!
The shift to hybrid and in-office work is creating new housing demand patterns for SF real estate in 2025:
Some notable areas in San Francisco benefiting from this trend:
This trend is driven by multiple factors:
Some people may also return to San Francisco for personal or political reasons. After Trump’s 2024 election win, the prospect looms of further restrictions on abortion, anti-LGBTQIA+ and immigrant policies, book bans, and generally more socially conservative vibes.
We expect that some of the liberal-leaning folks who departed SF for red-state, blue-island cities, like Austin, Boise, or Miami, might soon decide it’s time to head back to the Bay Area.
In Texas and Florida, residents are grappling with rising insurance costs as climate pressures intensify. Many insurers are reducing coverage or withdrawing from these markets altogether due to the escalating risks posed by extreme weather events.
This is not to say that San Franciscans all think or vote the same way. In fact, the vibes are shifting to more moderate politics here. (Viva common sense governing!) Yet, the belief in personal freedom, and “all are welcome” remains a stalwart of our SF Fog Coast values!
It’s important to acknowledge that many Americans don’t have the luxury of moving on a whim. Still, the choice of where we call home is a deeply personal one, and politics inevitably factor in.
Those who can, might. This is good for SF!
We predict that the "Bank of Mom and Dad" will continue to play a vital role in San Francisco home purchases in 2025:
In our experience, this trend is particularly impacting these San Francisco housing market segments:
Read more on this topic here: Investing in Real Estate for Your Adult Children in San Francisco
San Francisco's real estate market in 2025 shows clear signs of renewed vigor. Like the phoenix on our city seal, we may be on the cusp of yet another transformation. The combination of potentially lower interest rates, strong tech sector growth (particularly in AI), and evolving work patterns creates compelling opportunities for both home buyers and home sellers in San Francisco this year.
Ready to discuss your 2025 real estate plans? Let's schedule a complimentary consultation to meet and explore your options. Fill out our Seller Worksheet or Buyer Worksheet to get started, or contact us directly any time.
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Learn more about Danielle Lazier & Vivre Real Estate. We look forward to hearing from you!
