San Francisco’s housing market draws attention from buyers, sellers, and investors due to its high prices and competitive nature. Shaped by tech industry shifts, limited supply, and economic changes, the market is complex. This article answers whether housing prices are dropping in San Francisco, provides current trends, historical context, and 2025 forecasts.
Current San Francisco Housing Market Trends
As of July 2025, San Francisco’s housing market is cooling but stable. Key data points include:
- Median Home Prices: Sources vary. Norada Real Estate reports $1.705 million in June 2025, up 3.3% year-over-year. Redfin notes $1.3 million in December 2024, up 12%. Realtor.com lists $1.1 million, down 12%.
- Price Declines: Single-family homes fell 15.4% from May 2022 to $1.39 million (2019 levels). Condos dropped 14.7% to $986,000 (2015 levels), per Wolf Street.
- Market Dynamics: Redfin scores competitiveness at 83/100. Homes sell in 43 days (down from 50 in 2023). About 45.4% sell above list price; 12.6% see price cuts, up 21% year-over-year.
- Inventory: Bay Area’s Unsold Inventory Index is 2.7 months, up from 2.0 last year, indicating more homes available.
| Metric | Value | Source |
|---|---|---|
| Median Home Price (June 2025) | $1.705 million | Norada Real Estate |
| Median Sale Price (Dec 2024) | $1.3 million | Redfin |
| Median Listing Price (Dec 2024) | $1.1 million | Realtor.com |
| Single-Family Price Drop | -15.4% ($1.39 million) | Wolf Street |
| Condo Price Drop | -14.7% ($986,000) | Wolf Street |
| Days on Market | 43 days | Redfin |
| Homes Sold Above List Price | 45.4% | Redfin |
| Homes with Price Drops | 12.6% | Redfin |
Key Takeaway: Prices are down from 2022 peaks, but the market remains competitive with more inventory and negotiation opportunities.
Historical Trends in San Francisco Real Estate
San Francisco’s housing market has a history of cycles, per Compass:
- 1983-1995: Post-recession boom doubled prices in six years, followed by an 11% drop and stagnation.
- 1996-2008: Dotcom bubble boosted prices (170% for low-tier homes, 119% mid-tier, 84% high-tier). The 2008 crash cut prices by 60% (low-tier), 42% (mid-tier), and 25% (high-tier).
- 2012-Present: Recovery started in 2012, surpassing prior peaks by 2019. Prices peaked in 2022 before recent declines.
Key Insight: The current correction mirrors past cycles, with recoveries typically lasting 3-4 years.
Why Are Housing Prices Changing?
Several factors drive San Francisco’s market trends:
- Tech Industry Shifts: Tech layoffs reduced demand, with 26,200 information sector jobs lost (20%) from August 2022 to November 2024 (Wolf Street). Remote work also impacts urban demand.
- Affordability Issues: Median prices of $1.3-$1.7 million and mortgage rates at 6.74% (30-year fixed) make buying tough (Norada Real Estate).
- Limited Supply: Zoning laws and geography restrict new construction, supporting prices despite declines.
- Interest Rates: High rates curb demand, but a forecasted drop to 6.1% by 2026 could boost activity.
2025 Housing Market Forecast
Experts predict modest changes for San Francisco:
- Norada Real Estate:
- July 31, 2025: -1.0%
- September 30, 2025: -3.2%
- June 30, 2026: -6.1%
- National Association of Realtors (NAR): Expects a 3% price rise in 2025 and 4% in 2026, with 6% more sales in 2025.
- Outlook: Moderate declines are likely, but a crash is not expected. Stabilization may occur by late 2026 if rates drop.
| Forecast Period | Home Value Change | Source |
|---|---|---|
| July 31, 2025 | -1.0% | Norada |
| September 30, 2025 | -3.2% | Norada |
| June 30, 2026 | -6.1% | Norada |
| 2025 (Overall) | +3% | NAR |
| 2026 (Overall) | +4% | NAR |
Key Takeaway: Expect slight price drops through 2025, with potential recovery by 2026.
Should You Buy or Sell in 2025?
- Buyers: More inventory and price cuts (12.6% of homes) offer opportunities, especially in condos. Explore tips for first-time homebuyers to navigate high costs.
- Sellers: Competitive pricing is key, as 45.4% of homes sell above list price. Learn strategies for selling a home to stand out.
Tips:
- Buyers: Target neighborhoods with price drops and use a mortgage broker for better loan terms.
- Sellers: Price realistically and consider a pre-listing home inspection to attract buyers.
Neighborhood Highlights
- Pacific Heights: Stable prices due to high demand.
- Mission District: Notable price drops, ideal for budget-conscious buyers.
- SoMa: Larger declines but signs of recovery with increased activity.
Conclusion
Housing prices in San Francisco are dropping modestly from 2022 peaks, with single-family homes at 2019 levels ($1.39 million) and condos at 2015 levels ($986,000). The market is competitive yet balanced, with more inventory and negotiation room. Forecasts predict 1-6% declines through 2026, driven by tech layoffs and high rates, but limited supply prevents a crash. Buyers can find deals in areas like the Mission District, while sellers should price strategically. San Francisco remains a strong long-term investment. For more insights, check what to expect in the real estate market in 2025.