Happy New Year! Let’s kick off 2025 with a little dose of reality: While no one really knows what to expect from our incoming presidential administration, we can make some predictions about what’s ahead for the San Francisco real estate market. It’s going to be unpredictable, sure—but that’s what makes it exciting, right?
Here’s what I’m thinking: 2025 probably won’t look drastically different from 2024. But there are a few key trends happening in the Bay Area bubble that will definitely impact our local real estate market. So let’s dive in and see what might be coming your way in the next year:
1. Interest rates will chill at around 6%. Most economists predict rates won’t dip below 6% this year, but that’s actually good news. It’s still a far cry from the 7% peak of the last few years that we saw in late 2023. Dipping below 6%? Probably not happening anytime soon.
2. Home values won’t take any wild swings. Single-family homes will remain the real MVPs, holding the highest values in the city. Meanwhile, condos may be a little softer, but remodeled units with in-unit laundry, parking, and outdoor space will shine.
3. Sellers? Only if they really need to. We’re going to see fewer people selling “just because” in 2025. Instead, most sellers will be driven by major life changes—job moves, growing families, or maybe inheriting property with a stepped-up property tax basis. Indeed, most of my seller clients fell into one of those categories last year. So when you ask why the seller is moving, the answer will likely be something more personal and less about market timing.
4. Vacant three-unit buildings? They’re the new hot thing. Buyers are snatching up vacant three-unit buildings and getting creative—one unit for themselves, another for the in-laws or relatives, and even using the third as a work-from-home office. Plus, renting out one of the units can help offset that mortgage.
5. Buyers will still prioritize home office space. Hybrid work is here to stay, and buyers will be looking for properties that offer plenty of room for a dedicated home office. Because let’s be honest, the dining room table isn’t cutting it anymore.
6. Condos in big buildings will be more in demand. San Francisco is buzzing with the AI boom, with companies like OpenAI, Inflection AI, and Databricks setting up shop. And the city’s office market has been nearing stabilization over the past year, with vacancies tailing off. Buyers may very likely be seeking buildings in locations that will let them walk or bike to work—neighborhoods like SoMa, Hayes Valley, Yerba Buena, the Mission, Dogpatch and Mission Bay. And with so many condo buildings offering desirable amenities—roof decks, gyms, lounges—going from a rental to owning a unit in one of these buildings will feel like the ultimate upgrade (and investment).
7. Insurance will still be annoying. If you’re dealing with older buildings—think knob-and-tube wiring, certain brands of electrical breaker panels, or well-worn roofs—your insurance options are going to be limited (and pricey). Many companies are also backing off individual condo policies. Plan to spend a bit more on coverage, and let’s cross our fingers for a smoother ride in 2026.
8. Condo HOA dues will keep rising. Insurance, utility and general operating costs have all increased over the past few years, and 2025 will be no different. It’s common to see HOA dues of $1,000 or more per month in larger buildings. Buyers will need to factor in higher dues when it comes to getting preapproved for a loan.
I am officially open for business in the new year! Please get in touch with me, Eileen Bermingham of Corcoran Icon Properties (415.823.4656 | eileen@insidesfre.com) if you or anyone you know are in need of a buyer or seller consultation. I’ve been selling real estate in San Francisco since 2002 and I have a long list of clients who’d be happy to talk to you about their experience working with me. Now is a great time to strategize so you can tick “buy or sell real estate” off your 2025 bucket list.