Vantage Realty Market Update - February 2025

Buyers are Back!

Buyer activity is making a strong comeback in the San Francisco market—here’s what you need to know. After a period of uncertainty, we’re seeing renewed interest and confidence among buyers, creating fresh opportunities for homeowners, investors, and first-time purchasers alike.

Unfortunately, we don’t have the inventory to satisfy the increase in demand, as we look to the Months of Supply Inventory (MSI) metric for context. The state of California has historically averaged around three months of MSI, so any area at or around three months of MSI is considered a balanced market. With just 1.1 months worth of single-family homes and 2.8 months worth of condos available for sale at this point in time, San Francisco has become a sellers’ market.

Here are a few key trends we're noticing:

• Increased Buyer Activity: After the slowdown of 2023 and 2024, more buyers are stepping into the market, leading to busy open houses and the return of bidding wars. This includes buyers who are engaging with their brokers by signing a newly-required buyer-broker representation agreement before viewing homes via private appointment.

• Competitive Pricing: While San Francisco remains a premium market, current pricing is encouraging buyers to explore other neighborhoods more within their price range.

• Extra Preparation: Just because buyers are back does not mean that their standards have lowered. In fact, due to higher rates and decreased purchasing power, buyers have less liquidity to sink into a home after they’ve purchased it. Sellers need to polish their homes that much more to attract the desired bidding war.

Why Buyers Are Back

Several factors are contributing to the renewed energy in our market:

• Stabilized Market Conditions: Economic indicators and confidence in the local market are prompting buyers to re-enter the scene.

• Attractive Financing Options: Flexible financing solutions, such as adjustable-rate loan products, are making homeownership more attainable.

• Desire for Home Ownership: With employees returning to the office and lifestyle changes continuing to shape our priorities, many are seeking the stability and personal touch of home ownership in our iconic city.

Spotlight on Neighborhoods

As buyers return, certain neighborhoods are experiencing a renaissance. Consider exploring:

• The Mission District: Vibrant culture, eclectic dining, and unique housing options.

• Pacific Heights: Known for its historic charm, stunning views, and classic architecture.

• SoMa: Offering modern amenities and proximity to tech hubs, perfect for professionals.

• Mission Bay/Potrero Hill/Dogpatch: Thrive City and the surrounding area were on full display during the recent NBA All-Star weekend, and for good reason - the energy is palpable in this vibrant area surrounded by amazing outdoor space, from Bayfront Park to Crane Cove.

Tips for Today’s Buyers

If you’re ready to join the wave of buyers or are curious about the current market, here are some actionable tips:

• Get Pre-Approved: Strengthen your position by understanding your financing options.

• Research Extensively: Understand neighborhood dynamics, future developments, and market trends. Be especially mindful of the proposed new height limits along some corridors, as a state density program will allow developers to build more units than normal zoning rules allow.

• Partner with a Local Expert: Work with a real estate agent who knows the ins and outs of the San Francisco market.

• Stay Informed: Subscribe to market updates, attend local open houses, and participate in community forums to keep your finger on the pulse.

Final Thoughts

The return of buyers marks an exciting chapter for San Francisco’s real estate market. Whether you’re buying, selling, or simply watching the trends, now is a great time to be involved. If you have any questions or need personalized advice, don’t hesitate to reach out. We’re here to help you navigate the journey home.

Thank you for reading, and welcome back to a vibrant market where buyers are once again taking center stage!

For more updates and in-depth market analysis, subscribe to our newsletter or contact our expert team today.

Happy Home Hunting!

Buyers are Back

Fifteen percent of Americans are hoping to buy a home in 2025, the highest number since NerdWallet began their survey in 2019. Unfortunately, some of this year’s homebuying hopefuls are likely to be let down. Nearly one-in-six (15%) adult Americans equates to about 39 million people. But since 2020, around 4.9 million existing homes have been sold each year, on average (NerdWallet).

San Francisco Months of Supply Inventory

San Francisco is a strong sellers' market right now. With only 1.1 months of supply for single-family homes and 2.8 months for condos, there aren’t enough listings to meet demand. Since a balanced market in California usually has about three months of supply, buyers are facing tough competition, likely leading to higher prices and fewer chances to negotiate.

Mortgage Rate Projections

Still waiting for lower mortgage rates? Here’s what you need to know. The latest expert forecasts say rates are expected to settle around 6.5% by the end of this year. And that means that they’re not expected to drop as much as you may have hoped. If you need to move, options like buydowns, adjustable rate mortgages, assumable loans and longer term loans can help homeownership be more affordable right now (Keeping Current Matters). And if you have a home to sell but are cash-strapped before your next purchase, talk with us about our great bridge loan options.

Scarcity of Inventory in San Francisco

In 2024, active inventory was a huge issue for the San Francisco market. There simply weren’t enough homes on the market to satisfy the demand. Unfortunately for buyers (fortunately for sellers), this issue looks like it will continue to persist in 2025. In the single-family home market in January, we saw 18.38% more new listings, 34.07% more sold listings and 10.34% fewer active listings on a year-over-year basis. In the condo market, we saw 12.62% more new listings, 17.71% more sold listings and 10.91% fewer active listings on a year-over-year basis in January.

Single-Family Home Prices in San Francisco

While varying sources will offer varying percentages, one thing is clear: the median price of a single-family home in San Francisco has increased year-over-year from January 2024. Per Realtors’ Property Resource (from public records and listings), there has been a 3.8% increase in value in the last 12 months with a January median price of $1,500,560. (Realtors Property Resource, Public Records)

Prices Per Square Foot for Homes in San Francisco

While it’s too early to predict how this metric will play out in 2025, if inventory remains constricted, we would assume that this will continue to bode well for sellers in San Francisco. In January 2025, the median price per square foot for a single-family home was $1,031, up 5.7% from the prior month (although that can partly be attributed to sales seasonality). It’s also up from the January 2024 median price per square foot of $968. (Realtors Property Resource, Public Records)

Condominium Prices in San Francisco

While varying sources will offer varying percentages, one thing is clear: the median price of a single-family home in San Francisco has increased year-over-year from January 2024. Per Realtors’ Property Resource (from public records and listings), there has been a 3.8% increase in value in the last 12 months with a January median price of $1,500,560. (Realtors Property Resource, Public Records)

Price Per Square Foot for Condos in San Francisco

While it’s too early to predict how this metric will play out in 2025, if inventory remains constricted, we would assume that this will continue to bode well for sellers in San Francisco. In January 2025, the median price per square foot for a single-family home was $1,031, up 5.7% from the prior month (although that can partly be attributed to sales seasonality). It’s also up from the January 2024 median price per square foot of $968. (Realtors Property Resource, Public Records)

Multi-Family Prices in San Francisco

Unlike single-family homes and condominiums, the multi-family properties have seen a dip in median value, at $1,721,000, which reflects a 6.8% decrease year-over-year (and the lowest value since August 2017 when it was $1,566,390). Elevated interest rates can be challenging with investors and multi-family owners, per the JP Morgan multi-family market update. And the cost of ownership has grown with insurance rates on the rise as well as general repairs and maintenance. (Realtors Property Resource, Public Records)

Overall Housing Sentiment Ticking Up Despite Affordability Concerns

Fannie Mae’s “Home Purchase Sentiment Index” increased 0.3 points last month to 73.4, which signals improvements in consumer optimism toward both home buying and home selling conditions, along with expectations that home prices will rise over the next year. The HPSI results are from Fannie Mae’s monthly survey assessing consumer sentiment toward owning and renting a home (currently, there’s a sharp increase in the number of respondents who believe that rental prices will increase in 2025), the current state of their household finances, views on the U.S. housing finance system and overall confidence in the economy.

Buyers Are Coming Back To Cities

After years of suburban and rural migration during the pandemic, cities have been making a comeback in the past couple of years. According to the National Association of Realtors (NAR), the percentage of people moving to cities has risen to 16%, the highest level in a decade. (Keeping Current Matters)