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Housing costs in San Francisco are significantly higher than the national average, ranging from 171% to 190% above it.
For perspective, the median home price in San Francisco is $1.4 million, a staggering 245% higher than the national average. Also, a typical house in San Francisco costs $1,500,750, compared to the national average of $435,051.
But does this mean housing prices will finally drop in 2025? We don’t think so. Why? Let us explain with the latest data and forecasts.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) San Francisco's housing market is, actually, forecasted to grow at 2% to 3% annually
Recent forecasts indicate that San Francisco's housing market is expected to experience a modest annual price increase of 2% to 3%, signaling a shift from the rapid double-digit growth observed in previous years.
This deceleration suggests a move toward a more balanced market, but it does not imply a decline in prices.
Historically, San Francisco's home prices surged due to high demand and limited supply, leading to significant value increases. Currently, economic factors such as higher interest rates are tempering this intense growth, resulting in a slower yet steady rise in prices. For instance, in September 2024, the median home price in San Francisco was $1.4 million, reflecting a 5.3% increase compared to the previous year.
Additionally, the California Association of Realtors reported that, despite falling mortgage rates, buyer hesitation continues to impact the market, leading to fluctuating prices and slower sales in some areas. However, these fluctuations do not equate to a decline in overall home values.
Therefore, while the pace of price increases has slowed, the expectation remains that prices will continue to rise, albeit at a more sustainable rate.
Sources: The Luxury Playbook, Redfin
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2) The C.A.R. forecasts a 4.6% rise in California home prices for 2025, suggesting stability or growth in San Francisco’s market
Another forecast indicates that prices won’t drop in San Francisco in 2025!
The California Association of Realtors forecasts a 4.6% increase in California’s median home price for 2025, suggesting rising prices statewide, including in San Francisco, rather than a decline.
Demand remains strong due to job opportunities and lifestyle appeal, helping to keep prices steady. Additionally, San Francisco’s limited housing inventory, caused by zoning restrictions and high construction costs, buffers against potential price drops.
Overall, regarding this data, California’s projected price growth indicates stability or slight gains in San Francisco’s housing market for 2025.
Sources: California Association of Realtors, The World Property Journal
3) San Francisco's median home price rose 5.3% to $1.4 million, indicating strong demand likely to push prices higher in 2025
In September 2024, San Francisco's median home price reached $1.4 million, marking a 5.3% increase from the previous year. This rise indicates that demand for homes remains strong despite higher borrowing costs, with buyers still eager to enter the market.
Notably, "hot" homes in San Francisco are selling for roughly 16% above their list price and typically go pending within just 13 days.
Further emphasizing the demand,San Francisco’s housing supply remains tight. Only 317 homes were sold in September 2024, a slight increase from 315 in September 2023. This limited inventory fuels competition among buyers, often driving prices up as they vie for a small number of available properties.
Additionally, homes are selling faster: the average time a property spends on the market dropped from 33 days to 26 days over the past year. This faster turnover highlights active buyer interest and strong demand.
These factors—rising prices, low inventory, and quicker sales—suggest that San Francisco home prices may continue to increase into 2025, barring a significant rise in housing supply.
Sources: The Luxury Playbook, Redfin
4) With high rents at $3,500 and only 4.5% of rentals available, San Francisco’s housing shortage is driving property prices higher
San Francisco’s housing market is undeniably competitive.
In 2024, the average rent stands at $3,500 per month (which is quite high), paired with a low vacancy rate of just 4.5%. These numbers clearly indicate a high demand for rental properties and limited availability.
This tight rental market highlights the city’s ongoing appeal and creates upward pressure on housing costs.
With fewer rental options and consistently high prices, many prospective buyers are likely to see homeownership as a more viable long-term investment.
As we look toward 2025, the combination of strong demand, limited rental supply, and constraints on new housing development strongly suggests that property prices in San Francisco will continue to rise.
Sources: The Luxury Playbook, Zumper, Redfin
- Yes, it's actually a better idea to rent your place in San Francisco
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5) San Francisco homes sell in 15–26 days, indicating strong demand and limited supply, likely driving prices higher in 2025
San Francisco’s real estate market continues to show strong demand, as reflected in the speed at which homes are selling.
Redfin reports that homes now spend an average of 26 days on the market, down from 33 days last year, while Zillow notes that properties typically go pending within 15–17 days. Desirable properties, often referred to as "hot homes," sell even faster—some within just 13 days.
This data highlights a market where buyers are acting quickly, likely due to limited inventory. When homes sell rapidly, it signals strong buyer interest and competition for available properties. In such a scenario, limited supply coupled with consistent demand creates upward pressure on prices.
Looking ahead to 2025, this trend suggests that housing prices in San Francisco are likely to rise. A fast-moving market often indicates confidence among buyers and a willingness to meet rising costs to secure a home.
6) San Francisco’s record-low 1,643 listings in March 2024, down 25% year-over-year, signal rising 2025 prices
San Francisco’s housing market is facing an unprecedented inventory shortage, setting the stage for rising prices.
By December 2023, active listings hit an all-time low, dropping to just 1,643 by March 2024—far below pre-pandemic levels of 2,083.
In April 2024, new listings fell 25% year-over-year, leaving supply at record lows, with no signs of improvement through 2024.
This tight supply, paired with high demand, strongly suggests rising prices in 2025. Fewer homes mean increased competition, pushing prices higher.
With San Francisco’s limited housing stock and persistent inventory challenges, the market is primed for significant price growth.
Sources: KinokoRealEstate, HousingWire
7) The 62% rise in $5M+ sales and 66.7% increase in $3M+ listings signal strong demand from high-net-worth buyers
The strong demand for luxury homes in San Francisco, evidenced by a 62% rise in sales of properties over $5 million and a 66.7% increase in $3 million-plus listings sold year-over-year in early 2024, suggests a trend of increasing housing prices for 2025.
This surge indicates that affluent buyers—many from the tech and creative sectors—are not only returning to the market but are willing to invest heavily, showing renewed optimism in the city’s long-term cultural and economic appeal.
When high-net-worth individuals begin purchasing at record levels, they drive competition across property categories, creating upward pressure on prices as demand intensifies, particularly in desirable neighborhoods.
Therefore, as the luxury market thrives, the ripple effect is likely to push housing prices across the board higher in 2025.
Sources: VivreRealEstate, DanielleLazier
8) Only 2,000 new units and 2.6% of inventory under construction in 2025 point to rising San Francisco housing prices
San Francisco’s housing prices are likely to rise in 2025 due to limited supply.
Only 2,000 new units are expected in 2024 and 2025, which isn’t much for a high-demand city. With demand outpacing supply, prices naturally go up.
Currently, 4,600 units are under construction, slightly below the five-year average of 4,700 units. This steady or declining pace means no relief for the tight housing market.
Additionally, the under-construction stock is just 2.6% of total inventory, far below the 4.6% national average.
With fewer new homes being added, competition for housing will keep driving prices higher.
Sources: Nai NorCal, San Francisco Planning, The Luxury Playbook
9) San Francisco's 3.6% unemployment rate signals economic stability and rising housing demand
San Francisco's unemployment rate has been steadily declining, reaching 3.6% in June 2024. This low rate indicates a robust labor market, with more residents employed and earning steady incomes.
Between April and June 2024, the San Francisco Metro Division added 8,700 jobs, continuing a pattern of steady employment growth.
Notably, sectors such as Leisure & Hospitality, Education, Health, and Government have been leading the area's job growth.
This diversification in employment contributes to economic stability and increases the number of potential homebuyers.
As more individuals secure stable employment, the demand for housing is likely to increase, potentially driving up home prices.
Sources: San Francisco Government, Employment Development Department
10) San Francisco's 2025 tourism projections include 23.9 million visitors, fueling economic and housing growth
San Francisco's tourism is set for a big boost in 2025, with 23.9 million visitors expected to spend nearly $10 billion.
This growth will energize the local economy, create jobs, and likely increase housing demand.
The Moscone Center will host 29 events in 2025, generating over 590,000 hotel room nights—a 30% jump from 2024. These conventions attract business travelers and professionals who might consider moving to the city, further driving demand for housing.
More tourists also mean higher demand for short-term rentals, which can limit long-term housing options, push up rents, and make buying property more appealing.
Overall, the tourism surge and convention activity are likely to lift property values in San Francisco.
Sources: SF Travel, CBS News, Poplar
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11) 114,200 immigrants expected in San Francisco by 2025 as foreign-born population reaches 35%
California's recent population growth, driven by a net gain of 114,200 immigrants in 2023, has significant implications for housing markets, especially in cities like San Francisco. Actually, San Francisco's population grew the most of any California city in 2023.
With foreign-born residents comprising about 35% of San Francisco's population, this influx contributes to the city's vibrant culture and economy but also intensifies housing demand.
As more people seek accommodation, property values and rental prices are likely to rise, suggesting a potential increase in housing prices by 2025.
Sources: axios, Public Policy Institute Of California, AP News
12) The Consumer Price Index (CPI) has increased by 2.4% year over year in San Francisco
Data from the U.S. Bureau of Labor Statistics and San Francisco's financial reports highlight the city’s steady economic growth.
The Consumer Price Index (CPI) rose by 2.4% over the past year, reflecting moderate increases in living costs like housing, food, and transportation. This growth points to a healthy local economy with strong consumer demand.
San Francisco’s unemployment rate, at 3.6% in June 2024, underscores a robust job market, particularly in the high-paying tech sector. As more professionals move to the city, demand for housing rises, driving prices higher.
With a balanced budget of $15.9 billion for FY 2024-25 and $15.5 billion for FY 2025-26, San Francisco remains financially stable.
This stability attracts businesses and workers, further increasing housing demand and positioning prices to rise in 2025.
Sources: BLS, City and county of San Francisco
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So, will housing prices drop in San Francisco in 2025? Not likely!
San Francisco's housing market is a complex beast, but the data suggests that prices are not going to drop in 2025. In fact, they're likely to keep climbing, albeit at a more moderate pace than in the past.
First off, the city is dealing with a classic case of high demand and low supply. With only 2,000 new units expected in 2024 and 2025, and a record-low number of listings, the competition for homes is fierce. This limited inventory naturally pushes prices up. Plus, the California Association of Realtors is forecasting a 4.6% increase in the state's median home price, which includes San Francisco.
Then there's the strong demand from both local and international buyers. San Francisco's job market is robust, with a 3.6% unemployment rate, and the city is expecting 114,200 new immigrants by 2025. This influx of people, combined with the city's appeal and economic opportunities, keeps the demand for housing high.
Lastly, the luxury market is booming, with a 62% rise in $5M+ sales. When high-net-worth individuals are buying, it often drives up prices across the board. So, while the pace of price increases might slow down, the overall trend is still upward. In short, if you're waiting for a price drop, you might be waiting a while.