This recent spike is San Francisco home prices unlike anything seen in the city since 2022, but even now, prices are still below 2022 levels after adjusting for inflation.
Lea Suzuki/The Chronicle
San Francisco home prices reached a new record in March. Kind of.
The median sale price for single-family homes in San Francisco was $2.15 million last month, according to real estate brokerage Compass, clearing the previous high of $2.05 million in 2022. And it was a massive jump from the median of $1.65 million at the start of the year. Even the beleaguered condominium market saw prices near $1.4 million for the first time since 2022.
But that’s just homes that are selling.
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Patrick Carlisle, Compass’ chief market analyst, pointed to the wealth conjured by the artificial intelligence boom. Despite stock market volatility and the Iran war, the sort of events that usually cool the housing market, AI workers have continued to make the kind of pulse-quickening offers of Realtors’ dreams and middle-income buyers’ nightmares.
This recent spike is unlike anything seen in the city since 2022, but even now, home prices are still below 2022 levels after adjusting for inflation. What’s more, there are precious few homes to choose from, thanks to a longstanding housing shortage that’s only thinned further as homeowners hesitate to put their properties on the market.
That lack of supply drives up prices, but it also creates a bias. The San Francisco market has been hottest at the top, with some real estate agents struggling to find enough luxury homes for everyone who wants to buy one. The type of homes sold — pristine three-bedroom houses versus fixer-upper condos, for example — has a major effect on the median sale price in a given month.
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In other words, the record median sale price could reflect two different phenomena: First, that the typical home is also getting more valuable; and second, buyers are purchasing fancier homes more often.
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Some data indicates this may be the case. Last year, 60% of all S.F. homes (including condos) sold for less than $1.5 million, according to Compass. In the first quarter of this year, that share had come down to about half.
And real estate company Zillow estimated that the typical value of a single-family house in San Francisco — the estimated amount a mid-value home in the city would sell for — was about $1.45 million in February, the latest month for which data was available. That was certainly up from $1.38 million a year ago, but still much lower than the median sale price of nearly $2 million.
Unlike Compass’ data, Zillow’s estimates are smoothed to reduce errant spikes. But the home values would have to see a massive surge to break the $2 million mark.
Still, it’s possible Zillow’s data lags a reality that’s only visible at the point of transaction. Carlisle, the Compass analyst, said while high demand for nicer houses is “certainly part of the equation,” he also believes that competition is pushing up values — not just prices — very quickly across the board.
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All in all, it’s undeniable that San Francisco’s housing market has heated up. Home values have risen by about 5% over the past year after sitting flat for the preceding two years. And other data sources indicate that homes that do sell are going for way over asking.
Home values in and around San Francisco’s Glen Park and Richmond neighborhoods have risen at the fastest pace in the Bay Area, Zillow’s data shows. And real estate experts expect that when San Francisco’s tech startups — including OpenAI and Anthropic — go public, homes will get even pricier.