San Francisco Residential Property Market Report: 2025 Review and Early 2026 Outlook
- Eun Young Lee
- Feb 9
- 2 min read
As we reported previously, the San Francisco residential real estate market ignited last fall in 2025, fueled by easing interest rates and enhanced loan options for homebuyers. These included lower fixed-rate mortgages and the increased availability of flexible products like 5/7-year fixed-to-variable loans, which helped unlock pent-up demand after years of sluggish activity.
The year 2025 delivered robust performance across the board, particularly in our own Sotheby's International Realty offices. We saw a 13% increase in the number of transactions, a 5% rise in average sales prices, and an 18% jump in combined transaction volume.
The momentum has carried into early 2026, with the market appearing even more heated. Every offer we've submitted for buyers has encountered multiple bids, including one that escalated $1 million over asking and another $700,000 above list. We've even heard anecdotal reports of a sale price soaring $2.1 million over asking! This buyer frenzy extends to single-family homes in desirable neighborhoods and condos across diverse parts of the city. Extending this observation, early 2026 data shows continued low inventory, driving fierce competition, with buyers out in droves in San Francisco. Lower interest rates and stock markets at all-time highs are amplifying demand (both for sales and rentals!), particularly from tech relocations, setting the stage for new record median prices in 2026. Condos are rebounding faster than anticipated, with absorption rates doubling year-over-year, though houses remain the hottest segment.
Looking ahead, experts forecast a more optimistic year with improving affordability and balanced conditions due to anticipated increases in inventory of listings for sale in the spring, but San Francisco's urban revival, tied to AI and economic recovery, will keep overbidding commonplace.
And for those Single Family Properties that have seen a decline in value over the last several years, application enrollment is open for an Informal decline in value Assessment Review: Applications accepted now until the March 31 deadline, through the SF Office of the Assessor-Recorder. The cost is free. If you would like market comparable data, we would be happy to assist you with that. Please reach out to us for an analysis of current market value.
Read more about the application process here:
Per the SF.gov website:
State law (Proposition 8) allows for a temporary reduction in assessed value in cases where real property declines in value. A decline in value occurs in any year in which the current market value of real property is less than its current assessed value (factored base year value) as of the lien date, on January 1.
If you think that the taxable value of your residential property is greater than the market value, file an informal review. The review process is open from January 2 to March 31. Note, market value is the price a property would sell for when it is put up for sale in a competitive and open market.
The free informal review with the Office of the Assessor-Recorder is now open until March 31. Only residential properties are eligible, and the Office of the Assessor-Recorder does not accept filings by third parties:
single family dwellings
residential condominiums
townhouses
live-work lofts and
cooperative units
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