In this video, Austin Klar – a former lawyer turned San Francisco real‑estate agent – analyzes the dramatic boom‑bust‑recovery cycle of the downtown condo markets in Yerba Buena and South Beach. He begins by describing the neighborhoods’ geography, walkability, and the high‑rise, amenity‑rich condo stock built mainly between the 1990s and 2010s. He then outlines the pre‑pandemic market (2017‑2019) as relatively balanced, using metrics such as monthly supply (~4.3 months), days on market (≈46 days), and price‑per‑square‑foot (around $1,250). The pandemic triggered a sharp collapse (2020‑2023) as remote work, a suburban exodus, a flood of new inventory, rising crime/homelessness, and sharply higher mortgage rates drove demand to single‑digit absorption rates, monthly supply to >10 months, and price drops of 15‑30%. Since mid‑2024, the market has begun to stabilize and turn upward: inventory fell ~33% year‑over‑year, sales and pending listings rose, monthly supply is trending toward 3 months, absorption rates have doubled, days on market have flattened, and price‑per‑foot is up about 9% YoY. High‑end sales (e.g., Avery penthouse $11.25 M, Millennium Tower penthouse $9 M) illustrate renewed buyer confidence. Klar links this recovery to broader city trends—declining office and retail vacancies, reduced crime, rising tourism, and a surge of AI‑driven investment in nearby Mission Bay. He concludes that these condos now represent strong value plays for buyers, encourages viewers to contact him for personalized advice, and promotes his other videos on San Francisco’s broader market and the Millennium Tower.
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No two neighborhoods tell the boom, bust, and recovery story more than South Beach and Yerba Buena. These two downtown districts packed with luxury amenity condos and some of the city's best views of the bay were once the symbol of San Francisco's urban renaissance, close to Michelin-star food and a business district packed with professionals 5 days a week. But between 2020 and 2023, that pulse nearly flatlined. This is Austin Klar, your lawyer turned real estate agent in San Francisco and Marin County, and there are no two neighborhoods in San Francisco with better condo deals available than Yerba Buena and South Beach because of how how far home prices have fallen. Condos there routinely trading for less than what they sold 7 to 10 years ago. And in this video, I'm going over the reasons why, from the advent of remote work and a population exodus outside of the city during the pandemic, from a flood of new inventory and changing city conditions that all led to a downfall in demand for condos in the area. And I'll also go over how the positive changes we're seeing in San Francisco right now are stabilizing the market there. Let's get right to it and start with an overview of where these neighborhoods are located and the profile of properties in area because those are really important factors to the overall story. Yerba Buena and South Beach are located south of Market Street, east of SoMa, hugging the eastern waterfront along the Embarcadero. Together they form the city's most contemporary, vertical, and amenity-rich stretch of real estate and act as a bridge between the Financial District to the north and the burgeoning Mission Bay to the south, where a ton of AI companies are setting up shop. These two areas have some of the city's best weather because of their specific location along that eastern central waterfront, farther away from the cold fronts that come in from the Pacific Ocean to the west. And because the area is largely built on fill, it's relatively flat. So it is extremely walkable, even more walkable because of the incredible weather that you get by San Francisco standards in these two neighborhoods. They are steps from a ton of restaurants, a ton of commercial office buildings, and transit hubs like Caltrain, BART, and the Transbay Terminal. Most of the housing stock there was built between the '90s and the 2010s. A lot of high-rise glass, modern contemporary buildings, amenity-rich buildings, perfect for, you know, young professionals or downsizers. You also find, especially in the South Beach neighborhood, a lot of mid-rise and adaptive reuse, like loft-style buildings, old brick and timber buildings, former warehouse spaces that were converted into lofts, loft-style condos. These are as close as you can get to living in the city center. They are so close to like the downtown commercial hub of San Francisco. They are steps from Salesforce Tower, UCSF in Mission Bay and Chase Center in Oracle Park and all the incredible restaurants opening around there. They're walking distance to the Financial District, to Moscone, to the Ferry Building and Embarcadero. I actually used to live in South Beach when I worked as a lawyer in the Financial District, and I thought it was awesome. I could walk to work every single day. You have incredible views, maybe of the bay itself, maybe of the Bay Bridge or of downtown. You also have great community in these buildings because of all the amenity spaces there, people that you can meet in the lounge areas, pool areas, areas, gyms, what have you. So for such an amazing place, like, how did demand completely crater in these areas? What happened that caused these markets to completely shift? Before I get there, if you could do me a huge favor, if you like videos about San Francisco real estate, current events, new developments, history, and lifestyle, subscribe to my channel because I make videos about that stuff every single week. If you're thinking about buying or selling a place in the city and have questions about what all the changes we're seeing mean for you and the market that you're interested in, 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 people relocate here 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. Now back to how these two markets crashed and the start of their recovery. So let's go back a little bit further back to 2017 to give a little bit of perspective of how dramatically things changed. In 2017, the housing market in these areas was relatively neutral, not particularly buyer-friendly, but not particularly seller-friendly either. My favorite metric to visualize this is monthly supply. Basically, if no new inventory came to market, based on the pace of sales, how quickly would it take to sell out of all existing homes that are on the market? A neutral market is somewhere in the 4-month range. A seller's market is below that and a buyer's market above that. So the lower the number, the more seller-friendly, the higher the number, the more buyer-friendly. In Q3 of 2017, there was about 4.3 months of supply in these neighborhoods. So if no new homes came to market, it would take about 4.3 months, about 4 months basically, for all existing condos in these areas to sell out completely. Homes were taking on average about 46 days to sell. They were selling on average for about their ask price. So it was a relatively balanced market. And that remained the case in 2018 and 2019, but started to soften slightly heading into 2019. Home prices remained relatively steady. The average price per foot was $1,242 a foot in Q3 of 2017, $1,287 a foot in Q3 of 2018, and $1,272 a foot in Q3 of 2019. And during those periods, days on market fluctuated between like 40 to 46 days. Monthly supply actually fell in 2018, but then ticked up in 2019 because a ton of new condo inventory hit the market. From mid-2018 into 2019, we had several new high-end amenity buildings hit the market, like the Mira, like 181 Fremont, like the Avery. That created a lot of new inventory, new competition for all the other things that were trying to sell in the area. So increased supply made it softer market, a little bit more buyer-friendly heading into 2019. But it wasn't drastic yet. It was still relatively in line around 5 months of supply in that 2019 timeframe. But then came 2020. When the pandemic hit, the condo market in these two neighborhoods collapsed more so than any other neighborhood in San Francisco. Not only was the area flooded with a lot of new inventory from these brand new beautiful buildings that were coming on the market, but way fewer people wanted to live in these areas anymore. Why? Because the benefits of living there, like the proximity to offices and walkability to a ton of restaurants and event spaces, venues, all of that basically vanished overnight at the onset of the pandemic. COVID emptied office businesses shut down nightlife. People wanted backyards, people wanted home offices, things that a lot of these condos just can't provide. People also wanted cheaper cost of living, which they could get in the suburbs and get way more space as well for less money. And city conditions in particular near downtown also deteriorated. With so much less foot traffic in the area, crime rose, homelessness rose, tourism fell, conventions fell. All the things that you don't want to see happen started happening, and in particular had a special impact on these areas close to the downtown hub of the city. Basically, what made these neighborhoods so special ceased to exist. So what does that mean statistically? Absorption rates, which is the percent of available homes selling, fell to single digits by mid-2020, about 9.5%, which is extremely low, indicative of very low demand. Basically, less than 1 in 10 condos were actually selling. And that number was between 3 to 4 in the years leading up to the pandemic. Monthly supply jumped to 10.5 months by Q3 of 2020. The number of listings tripled while the number of sales fell. Days on market jumped into the 50s, the 60s, the 70s. And depending on the building, prices fell between 15 to 30-plus percent. It was a staggering loss for a lot of these owners. There are countless examples of condos that were selling in 2020, 2021, 2022 for way less than what they were purchased for in 2013, '14, '15, '16. There was so much inventory and so little demand and things were taking so long to sell that sellers had to cut their prices drastically to move homes. And the markets here didn't really pick back up that much after the pandemic was effectively over. In fact, they got worse as time went on because San Francisco had some lasting impacts post-COVID, like peaking office vacancies and retail vacancies Again, things that, you know, uniquely impact the downtown hub of San Francisco and the housing market in that area. And to top it all off, interest rates started to rise rapidly in 2022. Remember, that's when the Federal Reserve started hiking the federal funds rate to help stave off inflation. And those increases in turn caused the 10-year Treasury yield and in turn mortgage rates to increase as well, which completely gutted housing affordability and decreased demand overall. So just another factor to pile on to all the bad things that are happening influencing the housing market in this area in particular. But thankfully, that crash has started to stabilize and the market there is starting to reverse course. The downward momentum that we saw during the pandemic caused by these changing city conditions, caused by increasing mortgage rates, is starting to reverse. I've got a separate video going over all the positive changes we're seeing in the city, showing that San Francisco is doing a complete 180 over the past year from its doom loop narratives, and it's starting what people are calling the boom loop. Falling office vacancies, falling retail vacan— sees falling crime, falling homeless encampments, rising tourism, both recreational and business tourism, rising conventions, hundreds of billions of dollars being invested in new companies in the city, in particular driven by AI, and all the new jobs that those companies are bringing into the city, especially in the areas immediately surrounding downtown. I'll link that video in the description below. Go check it out if you're interested in learning all the positive things happening in the city right now. And what we can see pretty clearly in the data is that These changes are having an impact on San Francisco's housing market across the board. It's a generally stronger market than it was a year ago, but in particular, it's having a direct impact on these two neighborhoods that are very close to the commercial hubs of the city. Zooming in on the data just over the past 15 months or so shows very clear renewed demand in Yerba Buena and South Beach. Specifically, inventory has fallen sharply year over year, down about 33% from 160 to 108 active listings. Yet despite the drop in inventory, sales activity like the number of sold and pending listings is up, indicating more buyer engagement starting at least the middle of this year. For Q3, 36 sales versus just 14 the same time in 2024, and 42 pendings compared to 25 in Q3 of 2024. New listings remain low as well, which means tighter supply as demand rises. 42 new listings in Q3 of 2025 versus over 60 in the same period of 2024. So you have fewer residents looking to leave the area than you did a year ago. Monthly supply and absorption rates also indicate a trend toward a neutral and even seller-friendly market in some instances. Monthly supply in these areas is trending toward 3 months compared to almost 11 at the height of the pandemic. Absorption rates have more than doubled since last year, meaning we're having substantially more turnover of condos than we did a year prior. Days on market so far this year is flat compared to prior years where it was consistently constantly rising, and condos in these neighborhoods are selling on average for about 95% of list price compared to 94% a year prior. So the bargaining power for buyers in these neighborhoods is starting to dwindle as demand rises and supply falls. It's basic economics. The percentage of homes cutting their list price has also fallen substantially compared to the last several years. So there's more demand for these homes, these condos, at current prices and at current interest rates than last year. And with respect to pricing, if you look at things on a per-foot basis, the average price per foot for 3 of 2025 is up about 9% compared to the same period in 2024. And just anecdotally, we've had several very high-end sales this year in the area. One of the penthouses at the Avery sold for $11.25 million. One of the grand penthouses at the Millennium Tower sold for $9 million. One of the 3-bedrooms at 1 Stewart Lane sold for $9 million. Even at the infamous Millennium Tower, sales are rising. After 8 closings in 2022, we've had 17 in 2023, 13 in 2024, and 22 so far in 2025. I think that building is super undervalued right now, given its history, which, you know, as time goes on, it's going to become further and further into the past, less of a concern for new buyers. So I think values there are prone to go up in the coming years as history gets further behind us. I've got a separate video all about the Millennium Tower's history and what's going on with the building right now. I'll link that in the description below as well. Go check it out. Anyway, overall, the metrics that we use to show where demand sits in relation to existing supply show tightening supply at the same time as growing demand, so a stronger market. And if city trends continue the way we expect them to and what they've done over the past year, if more investment comes into the city as it has over the past year, then you should expect the market in these areas in particular to get stronger. These are some of the best value play condos in the city right now, given how far values fell during the pandemic. And there are so many improvements going on in the area, so much new investment happening in the area, and a lot of people coming in specifically looking at these areas. If you're thinking about purchasing a condo in these neighborhoods or any other neighborhoods in San Francisco and want to learn more about what all the changes we've been seeing mean for these local markets, 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. I'd be 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, current events, new developments, history, lifestyle, make sure to subscribe. subscribe to my channel because I make videos about that stuff every single week. And before you go, make sure to go check out those videos I mentioned on the changes that we've seen in San Francisco broadly over the past year and on the Millennium Tower. Those are linked in the description below. I hope you enjoyed the video, and I'll see you in the next one. [FOREIGN LANGUAGE]
