March 2025: San Francisco Real Estate Insider

As we start the second week of March, the local market is really heating up. Single family homes and well-located condos are selling quickly. More sellers are now coming online (part seasonality; part desire to capture an aggressive buyer) and I expect to see the new inventory promptly absorbed. 

An example of a hot market; I listed a four bedroom, three bath home in Sea Cliff on February 21st. Over the weekend open houses we had close to 100 buyer groups through the home. We promptly set an offer date for March 3rd and received seven offers. The winning bidder paid in excess of 22% over the asking price. That leaves six highly qualified buyers looking for a home in Sea Cliff (but there is nothing to buy). You can extrapolate this across numerous San Francisco neighborhoods and see a lot of very active, aggressive buyers looking to set a new high comp on a sale today. 

Speaking of new listings, using the San Francisco & San Jose Metro Areas (seven counties) as a large sample size for the greater Bay Area, the number of new listings in February rose 27.5% year-over-year. This was the highest month of February count since the end of the pandemic boom. The "mortgage lock-in effect" appears to be quickly weakening and sellers are starting to “let go.”

Looking at interest rates, the average contract interest rate for a 30-year fixed-rate mortgage (with conforming loan balances) decreased to 6.73% from 6.88%. 

Interest-rate expectations have shifted markedly: traders now expect three more rate cuts this year, up from just one in January. The reaction goes against expectations as tariffs are inflationary and ought to reduce the number of cuts. But, slowing economic growth is becoming a big worry, perhaps explaining the counterintuitive moves.

Looking at the Bay Area as it relates (or not) to the rest of the US single family home market, I have a few charts that show the huge gap in median values as well as income needed to purchase a home in specific markets. 

First, the median national sales price is slightly over $400,000. For reference, the median sale price in San Francisco is $1,625,000. The median price in San Mateo County (the most expensive in the Bay Area) is $1,995,500.   

Below is an illustration of the qualifying income required to buy a median-priced house with a 20% down payment at the prevailing interest rate in selected U.S. metro / markets. Very generally speaking, a "median house" has three-bedrooms, two-baths and has 1500 to 1800 square feet of living space.

That is it for now. Have a great weekend. If you are thinking of a move, let’s put a plan in place to make the most of your asset. Likewise, if you have friends or colleagues looking to get into the market, feel free to pass my name along. 

Call or email, anytime.