Something ABNORMAL Is Happening in The San Francisco Real Estate Market
In this video, Austin Klar—formerly a lawyer and now a San Francisco real estate agent—provides a data‑driven market analysis for early 2026. He documents a severe inventory shortage (14% drop in single‑family homes, >30% drop in condos) and extremely low monthly supply (≈1 month for houses, 2.4 months for condos), indicating a deep seller’s market. The demand surge is attributed to historically low 30‑year mortgage rates (~6%), a liquidity boom from IPOs and VC equity cashouts, and improving city dynamics such as return‑to‑office, lower crime, reduced homelessness, and rising tourism. Price metrics show double‑digit year‑to‑date gains across all tiers (single‑family up ~12.6% average, condos up ~7% average) and faster sales (30% fewer days on market for houses). Even the ultra‑luxury $5M+ segment sees a 21% rise in escrowed sales and a 50% drop in effective supply. Klar advises sellers that it’s an optimal time to sell unless they need to upsize, citing recent off‑market and public sales that fetched significant premiums. For buyers, he stresses pre‑underwritten financing, minimal contingencies, rapid action, and willingness to price above comps, noting that cash offers are common but not uniquely advantageous. The video concludes with calls to action for further resources, newsletters, and personalized consulting.
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Something abnormal is happening in San Francisco's housing market, and it is soul-crushing news for anyone looking to buy a property in the city right now. An inventory crisis has reared its ugly head at the same time as interest rates are falling to the lowest levels we've seen in years. City population and demand for property is rising, creating a perfect storm of unrelenting competition and price growth that has made San Francisco the most brutal housing market in the country right now. This is Austin Klar, your lawyer turned real estate agent in San Francisco, and if you've had any exposure to San Francisco's housing market in the past few months as a a buyer, you are probably beyond frustrated. And if you're a seller, you're probably beyond ecstatic. In this video, I'm breaking down exactly what's happening in San Francisco's real estate market right now. What we're seeing with supply-demand dynamics, price reductions, the pace of sales, prices. So if you're thinking about buying or selling a property in the city, you have a head start on your research. Let's get right to it and start with the supply-demand dynamic because like any functioning market in any economy, supply and demand rule everything. From a pure supply standpoint, we have significantly fewer properties on the market right now compared to the same time last year. As of mid-February when I'm filming this video, only 193 single-family homes are available in the entire city, down from 225 at the same time last year. That's a 14% drop and pretty much in line with the lowest levels of inventory at this time of year that we've seen in the past several years. And that drop is even more staggering for condos. 384 condos on the market at this time of the year, down from over 550 the same period last year, an over 30% drop. And as you can see in the graph for the entire year so far, that black line representing 2026, far fewer condos have hit the market than we've seen in recent years. And while the city has upzoned a number of corridors for greater building, higher densities, there's no actual guarantee that new building actually occurs, that developers actually build more units. And the vast majority of what would probably be built, if anything, is going to be for rent, not for sale. So it's unlikely we're going to get a huge influx of supply anytime soon of new for sale condos, especially in those less dense areas like the north and western sides of San Francisco, Richmond, Sunset, Pac Heights, Presidio Heights, Lake Street, Seacliff, Marina, all those places. So the likelihood that things will drastically alter the supply imbalance is pretty low. So I think this inventory trend we're seeing, the inventory crisis that we're seeing in the for sale market is gonna continue for the foreseeable future in the city. Now, supply levels in and of themselves don't necessarily paint the full picture. If supply drops 30%, but demand also drops by 30%, there's no real effective change in, you know, the net inventory or the effective inventory levels. So what you really need to look at to understand the market and where it's potentially going are the effective supply levels, supply in relation to demand. And one of the best measurements for that is monthly supply. Basically, the idea behind monthly supply is if no new homes came to market, based on the pace of sales that we're seeing, how long would it take to sell out of all existing inventory? A lower number, meaning lower supply, indicates higher demand in relation to the number of homes that are available. A higher number means lower demand in relation to the number of homes that are available. A neutral market is typically in the 4 to 6 month range, a seller's market below that, and a buyer's market above that. And as I'll show you in a minute, we are fully entrenched in a seller's market for both condos and single-family homes in San And I think it's only going to get worse as we head into the busier spring selling season. Before I show you all the data backing this up, if you can do me a huge favor, if you like videos about San Francisco neighborhoods, lifestyle, current events, new developments, its incredible history, or all things San Francisco real estate, subscribe to my channel because I make videos about that stuff every single week. And if you're thinking about buying or selling a home in San Francisco and want to better understand how all the changes that we're seeing across the city are impacting our local real estate market, 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 numerous clients relocate from all over the country. I'd be happy to be a resource for you. I'll drop my contact info in the description below. Reach out anytime. Now back to the monthly supply data. Where do our effective inventory levels actually sit in San Francisco right now? For single-family homes, as you can see over the past 3 months, we are barely above 1 month of supply. That means if no new homes came to market, it would take about a month to sell out of every single single-family home that's available. That is incredibly fast and very indicative of a strong seller's market. And that figure for— the past 3 months, November 2025 through January of 2026, is actually down over 21% compared to November of 2024 to January of 2025. So that was already a competitive market, and the market for single-family homes in San Francisco has become even more competitive over the time period. And we saw an even bigger drop for condos. Over the past 3 months, monthly supply is at about 2.4 months, and that's a 27% drop compared to the same 3-month period, November of 2024 to January 2025. Effectively, what this means for both condos and single-family homes is that we have more buyers looking in relation to the number of condos and single-family homes that are actually available. So the effective supply levels and the absolute supply levels are lower and demand is higher. We are more entrenched in that seller's market than we were a year ago. Why is this happening? Well, there are several reasons for it. First, interest rates on average for a 30-year fixed mortgage, they're hovering at around 6% right now, and these are about the lowest interest rates we've seen in several years. Lower rates unlock more affordability for homebuyers, and it makes the prospect of sellers moving a bit less daunting. Of course, it's hard to convince a seller who has no mortgage at all, or who has a sub-4% mortgage to trade up and exchange that for a, you know, 6% mortgage. But it's a lot easier to do that than it would be to convince them to take on a 7% mortgage or an 8% mortgage, which are the levels that we had seen, you know, over the past couple of years. So really the only people who are moving right now are people who really need to move, you know, people who have kids and have outgrown their existing space, or somebody died, or there's a divorce, job relocation. There are a number of reasons why people have to move, but by and large, unless people really have to, they're not selling. So you have more potential buyers entering the buyer pool because affordability is being unlocked, but you don't necessarily have the same number of sellers entering the pool. And remember, when a seller sells, the vast majority of them also need to buy something. So they're not creating any net new inventory by selling their home. So lower mortgage rates is reason number one for the spike in demand that we're seeing. Reason number two, and this is specific to San Francisco, is the liquidity boom that we're seeing across the city right now. The IPO market is back. VC investment in San Francisco companies is back. And there have been several offerings for AI and other tech companies on the private market, providing employees an opportunity to sell their equity without actually going public or selling company outright. Just to put this liquidity boom into perspective, I submitted an offer for clients on a gorgeous condo on Lake Street. It was listed for just under $3.7 million. It got 11 offers selling for way over $4 million, and 8 of those 11 offers were cash offers, and all 11 of them were completely non-contingent. So there are a ton of buyers out there that have cash right now, and because of improving city conditions, which I'm going to talk about in a minute, they're more and more looking to invest in San Francisco real estate. What are What do I mean by improving city dynamics? There are a few different factors. Biggest one in my view, return to office. More companies are bringing more of their employees back to the office, some full-time, some part-time. So, you know, people who are getting new jobs are relocating here. People who already had jobs here and left during the pandemic are coming back. So population dynamics are shifting again, increasing the buyer pool against an already constrained housing supply. You also have crime at multi-decade lows, both violent and nonviolent. Unsheltered homelessness is falling. San Francisco's tourism is rising, conventions are coming back to the city. All the things that were going wrong with San Francisco during the pandemic are starting to go right again. So all of these factors are making it more palatable for people to invest in real estate or to seek out real estate in San Francisco. So that supply crunch that we're seeing is happening at the same time as a demand boom. And as basic economics would predict, that's why we are seeing what we're seeing from a competition and price growth standpoint. For single-family homes, we've seen massive moves year to date compared to the same time a year ago. Average sale price year to date up 12.6%. Median sale price up 12.7%, price per foot up 7.1%. For condos, we're seeing the same trend, although it's not quite as pronounced as it is for single-family homes because there is more effective inventory for condos than single-family. Average sale price for condos year to date up 7%, median price up 10%, price per foot up 4.6%. Those are huge gains in any normal year. And keep in mind that we haven't seen anything like this— in the condo market over the past several years because of those dynamics that were happening in San Francisco during and immediately after the pandemic. It really is a major shift from prior years, and as city conditions continue to improve and as demand increases, expect continued growth and competition, especially in the condo market. And not only are these properties selling for more money than they did a year ago, they're selling faster than they did a year ago. So far this year, days on market is down about 30% compared to the same period in 2025, and for condos, it's down about 9% compared to the same period in 2025. And these are all San Francisco-wide trends. We're also seeing it in even the luxury sector in the $5 million+ tier of the market, which is like the top 1% of San Francisco's real estate market. Over the last 12 months, there was a 21% increase in the number of single-family homes that got into escrow that were priced at, at least $5 million. And that's despite just a 1% increase in the number of new listings— in that price range. So a small shift up in the number of homes available, but a much larger shift in the number of those homes actually getting into contract. So again, demand outstripping supply. Monthly supply of homes over $5 million fell from 2.7 months to 1.3 months. So an over 50% decrease in the effective supply levels, meaning a much stronger seller's market than a year ago, which was already a strong seller's market. And the average price per foot of those houses rose about 5.5%, the median price about 8%. And those homes sold about 6 and a half percent faster than they did a year ago. So even at that ultra-luxury tier, the $5 million plus tier, all of these trends we're seeing broadly in San Francisco apply as well. It's all because the supply-demand dynamic significantly favors sellers right now. So what does this mean practically for buyers and for sellers? Let's start on the sell side. Is it a good time to sell? The answer to that really depends on your specific situation. Are you a seller that doesn't need to buy another house or a seller that is looking to downsize? Then I think it's a fantastic time to sell. This This is far and away the most seller-friendly market that we've seen in the city in years. So if you're selling right now, you really can capture top dollar for your property. And if you're not buying another one, great, you get to keep all that money. And if you're buying a smaller one, you'll probably have a lot of money left over still. I just sold a condo in Presidio Heights off market for sellers who didn't need to buy something else. The place needed a ton of work, electrical, floors, paint, lighting, staging, you know, a bunch of other things. And even without public marketing, doing any of that, you know, renovation work,. We got 2 competing offers completely off market, sold it for $150K over ask. They bought it in the '90s for a few hundred grand and walked away with just under $2 million. And that's basically their retirement. They weren't going to buy anything else. My neighbor's house in Pacific Heights was listed for under $6 million and it just got multiple offers. It was 5 offers over $7 million and ultimately sold for $8 million. So over $2 million over ask in less than 2 weeks on the market. That was being sold by the heirs of the prior owners. So, you know, it was a total windfall for them. Just goes to show we're seeing this at every tier of the market, like I talked about earlier, not just for small homes or homes in like the $2 or $3 million range, not just for condos, it's every tier of the market, even the super luxury tier. Now, if you're a seller that has to upsize, it's a little bit of a different equation. It's sort of a catch-22. Yes, you can get top dollar on the sale of your existing home, but then you have to go and compete for a larger, more expensive property and pay top dollar for that one, you know, against potentially multiple other parties competing for it. And you might be waiting a while because like I talked about earlier, there's not a lot of inventory on the market right now. I've got a client who owns a gorgeous condo in Pacific Heights, but since buying it now has 2 kids and works from home, so the family has outgrown it. They need to upsize to, you know, a much larger condo or a single-family home in the area. And they've been looking for the better part of a year and can't find what they want. It's really hard to find that thing that works for you, especially on the north side of the city where inventory is even more scarce than in the broader San Francisco. And when they eventually do find it, I guarantee they're not gonna be the only ones in town looking for that property. So if you're a seller in the market right now, it's, it can be great news for you, but it can also be debilitating for you because you have to go buy something else. All right, that's the sell side. What about the buy side? Well, on the buy side, you just need to be doing everything you possibly can to make your offer as compelling as possible. Getting financing fully underwritten before submitting an offer if you're getting a loan, probably removing contingencies, not waiting to see places that might be of interest until the weekend. You have to get in right away and start your diligence. Get your vendors there, start running the insurance traps, and be prepared to wait because there isn't a ton of inventory. Off-market deals happen, but they are incredibly rare. And it's not like you're gonna be getting some killer deal by buying something off-market. Sellers in San Francisco are smart. They know if they bring their property to market, they're gonna get a lot of money. So you have to really convince them to sell outside of the normal process by offering a very compelling opportunity for them. So unless you magically are able to find that off-market deal, it does happen. Like I said, I just sold one recently. Chances are you're gonna have to compete with several people and even that off-market deal I talked about, there was still competition. If you're a cash buyer, you do have an advantage over people getting financing because you can close faster, but cash isn't that special right now because of that liquidity boom that I talked about. You will not be the only cash offer in town on a compelling property. And no matter if you're cash or financed, you know, when you're thinking about valuation, you cannot base your value purely off comps. Markets appreciate because sales happen over and above prior sale comps. Pricing continues to move up. If everything sold in line with comps, markets would never appreciate. Sometimes Sometimes there's a 10% premium. Sometimes it's even more than that. It's going to be property dependent, neighborhood dependent. So it's really important that you get into the details and analyze where the market is now, not just where it was 6 months ago when these comparable homes sold. You need to get comfortable with being uncomfortable and pushing the limits on pricing. It's going to be like this for a good bit of time in San Francisco. So you need to be ready and you need to stay ready. Well, there you have it. That's everything going on in San Francisco's housing market right now. The city's comeback is firmly underway and unfortunately that's putting significant strain on an already constrained housing market. If you're thinking about making a purchase or selling your property and you want a deeper dive into a specific geographic area or with regard to a specific property type, reach out to me. I've lived in San Francisco for over 13 years and I've helped numerous people relocate here from all over the country. Happy to be a resource for you. I'll put my contact info in the description below. Reach out anytime. And if you like videos about San Francisco real estate, lifestyle, current events, new developments, its incredible history, then subscribe to my channel because I make videos about that stuff every single week. And if you want to learn more about San Francisco's comeback, what's going on with crime, homelessness, office, retail, tourism, all of those things, I've got a separate video on all of those. I'll link that in the description below. Go check it out. And if you want the biggest headlines in San Francisco delivered directly to your inbox, I've got a weekly newsletter that does just that. The link to subscribe is in the description below. I would love to have you on there. Hope you enjoyed the video, and I'll see you in the next one.
