Key Findings:

• 3-month rolling median house price: $1.7 million, up 12.4% YoY (single-month basis: over 16%)
• Active inventory as of Feb. 1: just 651 homes, down 27% from a year ago—lowest February count in 4+ years
• Only 185 houses listed for sale in San Francisco; Napa County (16% of SF’s population) has more
• 75% of houses selling over asking, with an average sale price of 112.5% of list price
• 46% of all sales closing over asking (up from 37% a year ago)
• Absorption rate 45% higher than January 2025; price reductions down 33% YoY
• Median 2-bedroom condo price: $1.3 million—highest since 2022, up ~8.5% YoY
• Bay Area raised an estimated $154 billion in VC in 2025—roughly 39% more than the next 10 cities combined
• 30-year mortgage rates near 6.11%, close to a 2-year low
• In the $2M–$3M range: 73% of sales over asking, average 26 days on market

What Does the National Market Look Like Right Now?

If you’ve been following national real estate coverage, the picture looks cautious but stable. Home prices across the country are barely moving—Redfin’s latest data shows the median U.S. home-sale price up just 1% year over year. Pending sales have been mixed, inventory growth is slowing down, and buyers in many markets still have time to negotiate. Mortgage rates are hovering near 6.11%—close to a 2-year low per Freddie Mac—gently nudging demand higher across the country.

“The national story is ‘buyers still have leverage,’” observes Sean Mamola, Global Luxury Specialist with Compass. “The San Francisco story is ‘if you see something you like, move fast.’ The gap between national headlines and local reality has never been wider.”

How Tight Is San Francisco’s Inventory?

While much of the country debates whether spring will bring a surge of new supply, San Francisco’s inventory just hit its lowest February count in over four years. As of February 1st, just 651 homes were on the market—down 27% from a year ago. To put that number in context, only 185 of those are houses. Napa County, with roughly 16% of San Francisco’s population, currently has more houses listed for sale.

The supply shortage is getting worse, not better. New listings coming on the market in January were down 19% year over year, meaning the already tight pipeline is tightening further. For buyers in neighborhoods like South Beach, Yerba Buena, Mission Bay, and Pacific Heights, this translates directly into faster sales and more competitive offers.

What’s Happening on the Demand Side?

The demand indicators are equally striking. The absorption rate in January—which measures buyer demand relative to the supply of available listings—was 45% higher than January 2025. Price reductions dropped 33% year over year, a clear sign that sellers are pricing with confidence and buyers are meeting them there (or above). And 46% of all sales closed over asking price, up from 37% a year ago.

For houses specifically, the numbers are even more dramatic. Fully 75% of house sales closed over asking, with an average sale price landing at 112.5% of list price. Houses are averaging just 27 days on market. In a city where only 185 houses are available to buy, that kind of competition was inevitable.

“One number that really jumped out this month: in the $2M–$3M range, 73% of sales closed over asking with an average of just 26 days on market,” notes Mamola. “That’s the sweet spot of SF real estate, and it’s moving fast.”

How Much Have SF House Prices Actually Increased?

The 3-month rolling median house sales price hit $1.7 million in January 2026, up 12.4% year over year. On a single-month basis—stripping away the smoothing effect of a rolling average—the median house price surged over 16%. That’s a different planet from the national picture, where prices are inching up roughly 1%.

Looking at longer time horizons, the appreciation story is equally compelling. Compared to 2019—before the pandemic—the median house price is up about 6%. Since 2014, it’s risen 57%. Since 2009, following the financial crisis, the increase is approximately 128%. These aren’t just abstract percentages; for homeowners, appreciation has been accelerating rapidly since fall 2025 as the effects of the AI startup boom ripple through the market.

Is the SF Condo Market Finally Recovering?

Yes—and the rebound is accelerating. The condo market, which took a significant hit during the pandemic years, is now showing real momentum. The median 2-bedroom condo price reached $1.3 million in January, its highest point since 2022, rising about 8.5% year over year. For buyers considering luxury condos in neighborhoods like South Beach, Yerba Buena, or Mission Bay, this trend is worth watching closely.

“The condo recovery has been one of the most encouraging stories over the last two years,” says Mamola. “With rents in rapid ascent from the influx of young AI workers, and the house market becoming almost impossibly competitive, more buyers are looking at condos as a compelling entry point into San Francisco’s luxury market.”

That said, the condo market still shows the lingering effects of the pandemic. Compared to 2019, the overall median condo price is actually down about 5%. But the trajectory has clearly reversed, and with appreciation accelerating since fall 2025, the gap is narrowing quickly.

Why Is San Francisco So Far Ahead of the National Market?

Nationally, those lower mortgage rates are gently nudging demand higher. In San Francisco, those same rates are colliding with something much more powerful: the AI startup boom. According to The Economist, the Bay Area raised an estimated $154 billion in venture capital in 2025—roughly 39% more than the next ten cities combined. That staggering concentration of capital is translating directly into housing demand, particularly from affluent buyers who are less sensitive to interest rate fluctuations.

Stock markets remain near all-time highs—the Dow Jones Industrial Index hit a new record in early February—and local AI startup valuations continue to climb, generating substantial employee wealth. Rents have also been rising rapidly with the influx of young high-tech workers eager to work in AI, a demand signal that feeds directly into the for-sale market.

“As has been the case for the past two years, more affluent buyers are playing an outsized role in demand,” Mamola explains. “These are buyers with significant equity positions in AI companies, stock market gains, and the financial confidence to move quickly. When you combine that with an extremely inadequate supply of homes, you get the kind of price surges we’re seeing.”

When Does the Spring Market Actually Start in San Francisco?

In many parts of the country, the spring real estate market kicks off in April. In the Bay Area, it often starts in February. With new listings in January already down 19% year over year and buyer demand surging, all the conditions are in place for a very heated spring market. Houses are already averaging 27 days on market, and competitive bidding has become the norm across most price segments.

“We anticipate one of the most competitive spring markets in recent memory,” says Mamola. “Buyers who are waiting for more inventory may find that the listings that do come on the market get absorbed almost immediately. If you’re actively searching, the time to engage seriously is now—not April.”

Strategic Implications

For Buyers

• Competition is fierce, especially for houses. With only 185 houses on the market and 75% selling over asking, preparation and speed are essential. Pre-approval, clear offer terms, and a willingness to move quickly are no longer optional—they’re baseline requirements.
• The $2M–$3M price range is the most competitive segment, with 73% of sales closing over asking and an average of just 26 days on market. Buyers in this range should expect multiple-offer situations.
• The condo market offers a potentially more accessible entry point. With the median 2-bedroom at $1.3 million and appreciation accelerating, condos in neighborhoods like South Beach, Yerba Buena, and Mission Bay represent value relative to houses.
• Don’t wait for the spring surge to begin—it’s already underway. Listing inventory will continue to rise through summer, but so will buyer competition.

For Sellers

• Pricing confidence is high and well-supported by the data. Price reductions are down 33% year over year, and the absorption rate is 45% higher than last January. This is an excellent environment to list.
• House sellers are in an especially strong position. With 1 month of supply and average sale prices at 112.5% of list, strategic underpricing to drive competitive bidding continues to produce strong results.
• The early spring window—February through April—often produces the best outcomes. Listing before inventory increases can maximize competitive dynamics.
• Even in the condo market, the trend is your friend. Rising rents and growing buyer demand from AI-sector workers are pushing condo values to their highest point since 2022.

For Luxury Market Participants

• The $5M+ market continues to show strong seasonal activity, with spring and fall historically the most active periods. The Dow hitting a new all-time high and surging AI startup valuations support continued demand at the top of the market.
• Bay Area venture capital concentration—$154 billion in 2025—is creating a new generation of affluent buyers whose purchasing power is largely disconnected from mortgage rate movements.
• Luxury buyers in neighborhoods like Pacific Heights, Russian Hill, and Nob Hill should anticipate strong competition for well-located, turnkey properties. Engaging early and establishing relationships with agents who have access to off-market opportunities is increasingly valuable.

Frequently Asked Questions

How does San Francisco’s price growth compare to the national average?

National median home prices are up approximately 1% year over year. San Francisco’s 3-month rolling median house price is up 12.4%, and on a single-month basis, it surged over 16%. The gap is driven primarily by the AI startup boom and an extremely low supply of available homes.

Why is San Francisco’s inventory so low?

Several factors are converging: new listings in January were down 19% year over year, buyer demand is rapidly absorbing what does come on the market, and many potential sellers are staying put due to favorable existing mortgage rates. As of February 1, only 651 homes were listed citywide—down 27% from a year ago.

What role is AI playing in San Francisco’s real estate market?

The Bay Area raised an estimated $154 billion in venture capital in 2025—39% more than the next ten cities combined. This wealth is creating a large pool of affluent buyers, rising rents from young tech workers, and a demand surge that is largely insulated from the factors slowing the national market.

Is this a good time to buy a condo in San Francisco?

The condo market is showing strong recovery momentum, with the median 2-bedroom price reaching $1.3 million—its highest since 2022 and up 8.5% year over year. With the house market extremely competitive (75% selling over asking), condos represent a potentially more accessible path into the market, particularly as appreciation accelerates.

What are current mortgage rates and how do they affect the SF market?

As of early February 2026, the 30-year fixed conforming rate averaged 6.11% per Freddie Mac—near its 2-year low. While these rates are nudging demand higher nationally, in San Francisco their impact is amplified by AI-driven wealth. Many affluent buyers in the city are less rate-sensitive, making cash or large-down-payment offers that sidestep rate concerns entirely.

When is the best time to list a home in San Francisco?

In the Bay Area, the spring market often starts in February rather than April. Given the current dynamics—extreme inventory shortage, surging demand, and 75% of houses selling over asking—the window from February through May typically produces the strongest results. Sellers who list early in the spring cycle often benefit from less competition among listings.

Ready to Navigate This Market?

Whether you’re actively searching, considering listing, or just trying to make sense of how these numbers apply to your specific neighborhoods and price range, a conversation can make all the difference. What does the gap between national headlines and local reality mean for your goals?

📞 Call or text: (415) 704-3640

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Sean Mamola is a Global Luxury Specialist with Compass, specializing in San Francisco’s premier neighborhoods including Pacific Heights, Russian Hill, Nob Hill, South Beach, Yerba Buena, Mission Bay, and Lower Pacific Heights. With a background in luxury hospitality and deep expertise in the Bay Area market, Sean helps buyers and sellers navigate San Francisco’s most competitive segments.

Data Sources:

• Local market data: Compass San Francisco Real Estate February 2026 Report (market data through January), NorCal MLS Alliance, Infosparks, Broker Metrics, Realtor.com Research
• National market data: Redfin Housing Market Predictions, NAR Existing-Home Sales, Realtor.com Monthly Housing Report
• Mortgage rates: Freddie Mac PMMS
• Venture capital data: The Economist (1/27/26), using data from Dealroom
• Financial markets: MarketWatch.com, Federal Reserve Bank of St. Louis (FRED)