How Trump's Planned Market Crash Impacts the San Francisco Housing Market

Every single person in the country is feeling the ripple effect and whiplash of constantly changing policies about tariffs. Liberation Day in April of 2025 brought sweeping tariffs against allies and enemies alike, driving the cost of goods up for pretty much everything that we might be using on a day-to-day basis. And it caused significant volatility in the stock market, with fortunes vanishing, reappearing, and vanishing again and reappearing again overnight. And a question I've been getting every single day from buyers, sellers, investors, and people not interested in doing any of that who just want to know what the heck is going on at the national level. How is it going to impact our local market? Are buyers even out there looking? Are developers out there actively seeking projects? Has the market hit pause with all of the uncertainty and volatility that we're experiencing at the national level? This is Austin Klar, your lawyer-turned-real estate agent in San Francisco and Marin County. And in this video, I'm breaking down how everything happening at the national level is impacting our local market, how we're dealing with that constantly shifting policy and volatility and what you can expect going forward as we continue to grapple with that uncertainty. By the way, if you like videos about day-to-day life in the Bay Area, current events, new developments, and everything going on with San Francisco and Marin County real estate, make sure to subscribe to my channel because I make videos about that stuff every single week. Now let's get right into how what's going on at the national level is impacting our local real estate market. I promise I'm not going to get political. I'm not here to talk about whether these policies make sense or what I would change. I'm here to just give the facts and make predictions based on what I'm seeing in the actual data. So let's get right to it. And there are two separate markets that we need to talk about. We need to understand how these potential policies at the national level might impact our local real estate market. And it's the new home sales market and the existing home sales market. So homes in progress, new construction versus homes that are already built. And we're going to start with new construction. When President Trump signed those tariff orders in April, a chain reaction set off that had a direct impact on the cost of materials that we need to build houses. According to a recent study by the National Association of Home Builders, Canada accounts for approximately 85% of all softwood lumber imports into the United States and almost a quarter of total supply in the entire country. Additionally, you have a bunch of raw materials and components used in building— gypsum, steel, aluminum, home appliances— all of them are sourced from nations across the globe, including a large proportion from Mexico, and goods from both Canada and Mexico, as well as many other countries, are subject to these new tariffs if they are ultimately implemented. And because the importer pays these tariffs, the increased cost of goods is being directly borne by our home builders in the United States. For example, during an earnings call for the third largest home builder in the United States, PulteGroup, the CEO indicated that he does expect tariffs to have an impact on the company's margins, unless of course the increased costs are passed on to consumers. Now, I don't know about you, but I don't have a lot of faith that the largest home builders in the country with the most leverage are going to be out of the goodness of their hearts absorbing the increased costs caused by tariffs. I suspect that they will be passing at least some of those costs onto consumers, AKA onto home buyers. And the reason they can get away with that, especially in San Francisco, is because of how little new construction we actually have available in San Francisco. We already have the slowest pace of building of most major metropolitan areas in the country. In fact, as of the end of 2024, SF lagged behind similar metros in terms of the pace of building and was at a 12-year low in production. The cost of building combined with high rates and the extremely long timelines to get anything approved in the city have led to an extreme shortage of new housing projects in San Francisco. And with costs getting even higher, to the extent these tariffs are actually implemented, without an attendant interest rate relief on the other side, without rates actually coming down, it's becoming even harder for projects to pencil, which means we won't have a significant uptick in new supply that is all of a sudden going to alleviate price pressure. So the already slow pace of building that we've been experiencing in San Francisco for years might actually get even slower, and it's not going to alleviate our supply constraints anytime in the near future. And that supply constraint creates outsized demand for the existing supply. And that demand-supply imbalance is going to get even more entrenched as more people move back to the city because more major companies are asking their employees to return to office, because we have an influx of new AI companies setting up shop here and bringing a ton of new jobs back to San Francisco. And because we're seeing positive trends on crime and homelessness, the things that led people to leave the city are now trending down and people want to come back. So as far as the new construction market goes, the cost of building is getting more expensive. And because we have such little supply in San Francisco, you should expect the cost of homes with increased costs to build to go up. And because San Francisco is building so many new homes, it creates even more pressure on the existing home sales market. So on the market for homes that have already been built. And because the cost of building matters zero for homes that are already built, whether tariffs remain in place or are ultimately lifted once this pause period ends, it's sort of irrelevant. Instead, what really concerns people about the potential impact of tariffs on the housing market is how the volatility that has been caused by tariffs is impacting the housing market, less than the actual increased cost of goods. And as we all know, there are a lot of people in San Francisco who work in tech, and tech stocks have been getting hammered ever since these tariff policies have been announced, especially the ones against China, because a lot of Chinese goods and materials go into a lot of what these tech companies make. Phones, chips, you name it. And with people's stock fortunes vanishing and then reappearing and then vanishing again and then reappearing again, people want to know if that uncertainty and that whiplash have caused those buyers, the San Francisco tech market, to really hit pause on home searches. And are we going to see prices fall as a result? And the answer is really no, we haven't seen that yet. And I'm going to walk through the data proving that to you right now. It all harkens back to that supply-demand imbalance. So this graph right here shows the monthly supply of homes based on the pace of sales in SF, basically measuring how quickly all existing homes would sell out if no new homes came to market. Typically, anything between 4 to 5 months is considered neutral, a balanced market, buyers and sellers equal leverage. Below that is a seller's market, more favoring sellers. Above that, a buyer's market, buyers have more leverage. And the single-family home market in SF when these tariffs were announced was barely above 1 month. And the average days on market for a single-family home in SF was under 3 months. 3 weeks. There are so many people looking in relationship to the few homes we actually have on the market. There are many more people actually looking to buy in San Francisco because of those trends that I mentioned earlier. Return to office, new AI jobs, falling crime, falling homelessness, all the positive work that our new mayor has been doing with the city. There are more than enough buyers for the existing limited supply of homes that even if a portion of those buyers do take a step back because of what's going on in the broader market, there are other buyers available to take those buyers' place. And the real-time data demonstrates that. Remember that tariffs were announced early April, and you can see that the number of new pending contracts has increased since that time. The number of people getting into escrow has gone up. At the same time, inventory isn't growing. The number of new listings is actually falling. So we are getting further entrenched in our supply imbalance. So much so that there are actually fewer sellers out there right now cutting their ask prices compared to the same time in— in the past 3 years. And that percentage has actually fallen over the past 2 weeks since tariffs were announced. So have tariffs had a negative impact on the market for single-family homes in San Francisco? Not really. And I don't expect them to because of how few homes we actually have available compared to the significantly higher number of people looking to buy them. Okay, that's single-family homes. What about the condo market, which is a lot different than the single-family home market in San Francisco? And the answer is actually the same. So far, we haven't seen a negative impact on the condo market as a result of the tariff announcements. I think the condo market might be a little bit more vulnerable if we have sustained volatility, but we haven't seen that impact on the condo market, at least not yet. Like I said, the supply of condos is closer to neutral, but it's still in seller's market territory at around 3 months of supply. And in the nice parts of San Francisco, it's actually less than that. And the real-time data has shown that tariff uncertainty really hasn't impacted that market either. The trend line for inventory hasn't really shot up at all in the past month since tariffs were announced. And if there was going to be downward price pressure on condos, we would need —see that trendline move higher and higher, but it's actually trending lower than what we saw at the same time last year. The number of new pending contracts has also shot up each the past couple weeks after a slight downward turn at the beginning of April when tariffs were announced. Hard to say that's because of tariffs since we saw the same trend around this time period each the past several years, but even if it was because of tariffs, it's already bounced back. And just like with single-family, the number of new listings has fallen each of the past 3 weeks, meaning inventory is becoming more constrained. We have more people getting into escrow and fewer people listing. And the number of new listings sits at the lowest level we've seen at this time in the past several years for condos. So these citywide trends that we're seeing right now, more return to office, new jobs being created by the AI boom that's happening in San Francisco right now, positive trends with crime, with homelessness, and all the hard work that our mayor is doing to make this city better, are having an outsized impact on the real estate market compared to the volatility and uncertainty that has been caused by the recent tariff announcements. And remember, all of this is happening against a backdrop of really high interest rates near 7%. They haven't really gone down much lower than that or above that. They've been hovering around 7%, give or take, you know, 20 to 30 basis points in either direction over the past several months. And still the market has remained pretty resilient to what has happened because of tariffs. And just anecdotally, none of my clients have pulled back because of tariffs. I don't have clients who were previously looking to buy something in the $1.5 million range in the $3.5 million range, even the $7 million range, who have said, I'm going to take a break because of what's going on in the market. It's quite the opposite. Everybody's still out there looking to transact. Are there people who have probably said we're going to hold off because of what has happened either to their personal stock portfolios or because they're just nervous about what's going on? I'm sure that has happened. Very likely has happened. But have enough people done that such that the supply-demand dynamics that we're seeing in the city would shift in the opposite direction and lead to a price correction? Not even close. So what does that mean for you? If you're thinking about selling and you're worried whether buyers are actually out there looking, they definitely are. It depends on what you're selling and where you're selling it and how well you prepped your property and what you're pricing it at. But for the properties that are in good locations and they're prepped well and priced well, they're moving incredibly fast. And you have an advantage right now because the number of new listings, as you saw earlier, is falling. There's less competition for your listing out there. And if you're thinking of buying, unless you have been priced out of the home that you want because of changes in your stock portfolio or personal net worth, you should still be thinking about buying, assuming you find something that is right for you and the timing is otherwise right, because there's no indication that some major price correction is coming anytime soon. Finding something you like in this market is incredibly difficult, and unless we see significant change in all of the trends that I just went over, with crime, with homelessness, return to office, falling office vacancies, you shouldn't expect a reduction in prices that's at all meaningful anytime soon. Quite the opposite. Through the first quarter of 2025, prices for both condos and single-family homes are up, and nothing in the data is suggesting anything happening in the future in the opposite direction. Now, if you're investing, it's a little bit more tricky. Long-tail construction projects are really hard to model right now because it's hard to model construction costs with any sort of certainty, given the complete unknown regarding whether these tariffs are actually going to remain and be implemented. So those types of projects that are, you know, long-term construction projects, bigger development plays, those might actually be on the market for longer. And the benefit of that, if you are an investor, is that you might actually have an opportunity to get them at a lower price. But it does make it hard to model when we don't know whether tariffs are going to be implemented or not. Short-term remodel projects a lot different. It's a lot easier to model projected costs on a short-term basis. And the rental market right now in San Francisco, because of all those things that I talked about with more people moving to the city and the lack of new building, it's actually really strong and getting stronger. So there are potential opportunities out there for investors, even with the uncertainty and volatility caused by potential tariffs. Well, there you have it. That's what I'm seeing in the local market right now. We're just a few weeks past Liberation Day at the time that I'm filming this video, and the data is constantly changing, and I'm staying on top of it so you don't have to.. If you ever have questions about what's going on and what it means for you, definitely reach out to me. I was a lawyer at one of the biggest law firms in the world before getting into real estate, and I've helped people relocate to San Francisco from all over the country. I'd be happy to be a resource for you. I'll put my contact info in the description below. Reach out anytime. And remember, if you like videos about the real estate market or you wanna stay up to date on current events, new developments, or all things day-to-day life in San Francisco or Marin County, make sure to subscribe to my channel because I make videos about that stuff every single week. And before you go, I've got another video about all the positive changes we're seeing in San Francisco, and in particular in downtown San Francisco, which was hit pretty hard by the pandemic. Go check it out. I'll link it up top in the description below. I hope you enjoyed the video, and I'll see you in the next one. Bye.