February 2025: San Francisco Real Estate Market Report
The start of 2025 has already brought some unexpected twists to the San Francisco real estate market. While home sales and new listings increased, they still remain low by historical standards. Meanwhile, median home prices continued to rise, up 4% year-over-year, despite interest rates staying stubbornly high. The luxury market is showing resilience, all-cash buyers are more active than ever, and market seasonality is once again proving its influence.
If you're considering buying or selling this year, understanding these trends will help you navigate the market with confidence. Let’s break down what’s happening.
Home Prices Are Still Rising
Despite higher borrowing costs, San Francisco's median house price rose 4% in 2024. While still below the pandemic peak of 2021, this increase shows the market’s ability to hold strong even in a high-rate environment.
What’s Driving This?
Low Inventory – The number of new listings increased slightly (5.5% from 2023), but it's still well below long-term averages.
All-Cash Buyers – More buyers are skipping financing, making them less sensitive to mortgage rates.
High Demand in Prime Neighborhoods – Areas like Pacific Heights, Sea Cliff, and Presidio Heights continue to see record sales.
Home Sales Are Up, But Still Below Historical Averages
In 2024, SF home sales rose 11.5% compared to 2023, a much-needed boost after the slowdown of the past two years. However, sales remain far below pre-pandemic levels, reflecting both affordability challenges and limited supply.
Luxury sales ($5M+) continue to make up a significant portion of the market, reinforcing the trend of high-net-worth buyers driving demand.
Mortgage Rates & Fed Policy: What’s Next?
Many expected mortgage rates to drop in late 2024, but instead, rates rebounded to 6.91% in early 2025, despite the Fed making small cuts to its benchmark rate. The Fed has signaled only modest rate cuts this year, meaning we may not see the sharp drop in mortgage rates that some had hoped for.
For buyers, this means:
✅ All-cash offers remain a competitive advantage.
✅ Sellers need to price realistically, as higher rates impact affordability.
✅ Spring 2025 could bring more market movement if economic conditions stabilize.
Market Seasonality Is Still at Play
January was slow, but that’s nothing new. Home sales typically hit their lowest point in the first month of the year, reflecting the slowdown in accepted offers during the holiday season. If history is any indicator, sales should pick up heading into spring, when buyer activity traditionally increases.
Looking Ahead: What to Watch in Spring 2025
Will more sellers enter the market? Inventory remains tight—will that change?
Will mortgage rates ease? The Fed is signaling patience, but any shift could impact demand.
Will SF home prices keep climbing? With low inventory, there’s still upward pressure on prices.
If you're thinking about buying or selling this year, let's chat about the best strategy for navigating these market conditions. Reach out anytime!
Until next month,
Marina
