SF Market Reset, The Energy Has Returned

Welcome back to The Real San Francisco Podcast.

In this Summer 2026 Market Signals episode, Alexander Fromm Lurie and Baxter Smith explore the forces shaping San Francisco right now—and why the city feels more dynamic than it has in years.

From the rise of AI and the return of office culture to tightening inventory, rising rents, and renewed confidence in the city, we unpack what’s driving today’s market and what it means for buyers, sellers, homeowners, and anyone paying attention to San Francisco’s next chapter.

Whether you’re actively considering a move or simply trying to understand where the city is headed, this conversation offers an insider perspective on the trends, psychology, and opportunities emerging across the market.

In this episode:

• Why San Francisco feels different right now
• How AI, job growth, and return-to-office policies are influencing housing demand
• Why single-family homes remain one of the most competitive segments of the market
• Where we still see value and opportunity across the city
• What buyers should be doing now to prepare for the second half of the year
• The strategies helping successful buyers and sellers navigate today’s market

The Real San Francisco Podcast explores the people, neighborhoods, ideas, and market forces shaping one of the world’s most fascinating cities.

Subscribe for market insights, conversations with local leaders, and stories from the front lines of life in San Francisco.

Transcript

SPEAKER_00 0:00

What does the market feel like right now? Well, it's like electric. It's like the nightclub where lines are out the door. There's a capacity constraint.

SPEAKER_01 0:06

I think there's a confluence of a lot of different things. AI is the big one, and everybody's talking about AI. Is there any value still left in?

SPEAKER_00 0:16

You know, what does it feel like today versus a year ago?

SPEAKER_01 0:19

It's a good question. Single family homes are leading the charge right now. That's supply and demand. There just aren't many of them. Yep. Everybody wants them. Yep. Stepping on each other to get them.

SPEAKER_00 0:29

Yep. But if you really want to win in this market, you gotta have.

SPEAKER_01 0:33

Welcome to the real San Francisco podcast, where the pulse of the city meets the truth of the market. We go beyond the headlines to bring you stories, data, and insider takes from those who live and breathe the city we love. Ready to get real? Here we go. This is our summer 2026 market update. It's been one for the record books. It's it's been a ride.

SPEAKER_00 0:55

Starting January 1, it has just been, it's felt like nonstop. I feel like I have not slept in 150 days. Um it's just been nonstop. And I think that's in I think that's indicative of San Francisco being backed.

SPEAKER_01 1:11

I think there's a lot going on. I think there's a confluence of a lot of different things. AI is the big one, and everybody's talking about AI, and oh, you know, is that true? This AI record is not true.

SPEAKER_00 1:21

And it is it is true.

SPEAKER_01 1:22

100% true.

SPEAKER_00 1:24

I'd say one third of buyers are AI. Minimal. Minimal.

SPEAKER_01 1:28

And then you've got just the resurgence of San Francisco. People, it's cool to live in San Francisco again. Yeah. Not that it doesn't haven't been, but perception-wise, yeah, the headlines now have turned to, you know, San Francisco is the epicenter. And I would agree. Yeah. I mean, we're just seeing an explosion of people and so many relocation clients. Yeah. More than we've seen over the last couple of years. People are coming in from New York, they're moving up from LA. Yeah. Yeah. And then coming back to the office. I think the back to the office mandates were huge.

SPEAKER_00 2:02

And that went into effect years ago, you know, at least over a year ago, but we've been seeing that uh people started to rent and then they're now wanting to buy, right? And so, and and rental inventory is hard to come by. We're at record highs for rents. Yeah. We're at record highs for purchases. No, when we sort of normalize for CPI for inflation, we're sort of roughly back where we were in 2019, um, right, because there was a lot of inflation since 2019 over the past seven years. But still, just looking at year-to-year appreciation of single-family homes, I mean, we've seen 25, 30%, in some cases, 35% appreciation, different pockets of the city, different types of products. It's um, it's really been robust. And it's a function of there being more buyers than sellers. Simply put, right? It's macro econ 101. It's supply to demand. Supply and demand. That's it. Just very, yes, yeah.

SPEAKER_01 2:52

Simply put, it's supply and demand. And that is what's driving the market right now is we just do not have the inventory. We have an influx of buyers, and even we we have seen inventory tick up, but the absorption is just following behind it and increasing behind it. And so it doesn't look like it on its face.

SPEAKER_00 3:11

So, so uh, what does the market feel like right now? Well, it's like electric, you know, it is, it is. It's it's it's like um people want to get in. It's like the nightclub, which I thought I sort of graduated from, but we're back in it. It's like where lines are out the door and people are trying to get in there. Yeah, yeah. And there's there's a capacity constraint, right? For you know, the venue. It's the same thing for here, right? There's only one buyer per property who can be successful, and the rest are emboldened, sad, wipe, you know, dust their shoulders off and try again. And at a certain point, somebody says, I'm tired of losing. I want to win. And that's when you start to see homes like listed for eight that go for 15. It's you know, the these people who are winning are saying, you know what, I've lost too many times before. Or in some cases, I just want to play to win. Right. And so I would say it's electric right now. I'd say there's a lot of energy in the market in San Francisco. I'd say that um, you know, people are saying, I want in before all these companies go public. Right. Right. That's like a refrain I feel like I hear multiple times a day from buyers. So we ask the question every time we're working with clients at the beginning, we say, so you know, why now? And I would say at least half the answers are we don't think we're gonna be able to find a property once there's five extra people looking for this. Right, right. And and we would rather do this now, right?

SPEAKER_01 4:33

And I think there's that froth and that excitement in the market. And now we're also on the flip side of that, seeing some fatigue. Yeah. And I think that we, this is has been going on since the beginning of the year and some prior it started before today. For sure. And I think people now, because of those exponential jumps we're seeing in prices and the competition in the market, it's it's a tough market for a buyer.

SPEAKER_00 5:02

You know, what does it feel like today versus a year ago?

SPEAKER_01 5:05

Yeah, it's a good question, right? It's a good question.

SPEAKER_00 5:07

I I think I'd start with saying that a year ago, the market was feeling really good too, right? Like people wanted to be back in San Francisco, right? So a year ago, yeah, spring 2025, uh-huh, all right, the cities ushered in a new administration, right? New city hall leadership in in in and the impact of that was felt pretty immediately. Yeah. So the market, I feel like from December or really like November, December 2024 into January, February, March 2025 was like, it really jumped significantly. There was a perception, right? There was that things were changing, changing for the better. Back-to-work policies were starting to come, you know, come to a head, and people are coming back to the city. And um, of course, AI as it goes.

SPEAKER_01 5:49

I was just gonna say, it's interesting. As you say it was ramping, it was all ramping. It's interesting, it was like the beginning of all of those things that are really pulsing now. Yeah. And it's that we're and it's interesting to think about that because it was. I remember now we went down to Ocean Beach and it was right as the elections were going on, and it was talking about all of these things happening, and they were all happening at the same time. Yeah, and now we're seeing the fruition.

SPEAKER_00 6:17

The confluence of those things, and there's a compounding effect, right? Right. And you just stack it, and it's like one plus one plus one doesn't equal three. It's like it equals 10 or 100, right? And so we were feeling the early days of the excitement and the momentum in the market, and we were hearing those refrains that we're now hearing all the time. We were hearing early indicators that was saying, hey, we feel San Francisco's back. It's time to buy in. Right. It's time to buy in before it's 2x the price or 50% higher, right?

SPEAKER_01 6:45

You know, I think, and and here's a question that I think people would be interested in. Is there any value still left in San Francisco?

SPEAKER_00 6:52

Absolutely. We're still relatively inexpensive for global cities. We, I mean, you can look at so many cities across the world, right? Whether you're looking at England, whether you're looking at various cities in Australia, whether you're looking at um Hong Kong or Singapore. I mean, the list goes on. And our prices per square foot or square meter, however you're calculating it, is still far lower than so many of our sister and brother cities. Um, this is just, I think, the beginning. Replacement costs right now in San Francisco are still far higher than purchase price. That doesn't really make sense. In other words, like if you could buy something for 10, but you need to get insurance for 15 because it would take 15 million to replace it, that that's a $5 million delta. That's a that's a 30% delta, right? And so that's, I think we're gonna start to collapse on replacement costs in the coming year. Years, I think we're not far away from I've been we've been talking about this for years. I think the time will come, and the time is soon that we'll start to see parity with replacement costs and purchase price, and we'll see parity with um with with other global cities because we're relatively inexpensive to many of them.

SPEAKER_01 8:04

Right. I think relative is where, because if people look at just this market and look at the recent history, say, oh, you know, it's Noe Valley, it's going towards 2,000 a foot. And I think that that seems excessive in relative terms, looking at a focused lens in just the past few years. But to your point, exactly, if you back it out, look more macro, yeah, look at the globe and where things are going. And I think people always ask us that too of is this something that if I buy at this price, am I gonna lose money? And I think anybody that tells you they know, you know, and has a crystal ball, I would question. But the way things are going, we saw an apex, you know, I think 22 turned. We saw things. Everybody asked, where's the bottom? Where's the bottom?

SPEAKER_00 8:53

2023.

SPEAKER_01 8:54

Right. And and now, and again, you don't know what's gonna happen tomorrow. We've learned that in the last five years.

SPEAKER_00 9:03

But if things keep going the way they're going, yeah, I think I think we have, I think we're sort of inning three or four in our sort of nine inning cycle. But this might be, you know, we might be in extra rounds and extra innings, right? Like with all the confluence of these factors that are driving demand and interest in the market, we might have a 12-inning game. We might have a 15-inning game. But I would say a cycle is usually three or four years, or a couple years into it, we have another, you know, two years left-ish. But again, this may be a very different cycle. It's hard to predict. Look, if you're looking to buy a home for your life, um, it's like most people don't day trade. You hold the asset for a long time. And if you're planning to be here for five, 10, 15 years, okay. So maybe you're buying it at a good time, or maybe you're paying a little bit more, but it will even out and appreciate over time, right? That's that's the guidance that we like to give the clients.

SPEAKER_01 9:50

Let's talk about market sectors, property types, because single family homes are leading the charge right now. That's supply and demand. There just aren't many of them. Yeah, everybody wants them. Yep. They're stepping on each other to get them.

SPEAKER_00 10:06

Yep. Yeah.

SPEAKER_01 10:06

But then some people looking at single family homes, those condos that live like single families will give you more square footage for a better value. I think it's uh, you know, it's interesting across those different property types.

SPEAKER_00 10:22

Yeah. And then, you know, house-like condos, you know, like our listing at 2468 Broadway, you know, you got 4,000 feet across three levels, big views, no parking, but it lives like a single family home. It's a condo. I mean, the interest there has been incredible. Incredible. Right. We're already in contract millions of dollars, you know, well over 50% above our list price, right? Um, and that's a story for another day. But I think uh homes, house-like condos, house-like residences are just accelerating through the roof. But I think people just want to be here in San Francisco. So I think rising tides lift all ships. Yeah, that's the truth. Let's let's talk about who are like the personas or the profiles of the buyers right now of the market. Right. Let's let's talk who are, you know, of course, there's the perennial tech profile, right? And and that also encompasses AI as well, right? But I think for the purpose of this conversation, we can say tech and we can say AI. Those are two distinct, overlapping types of people, or at least their backgrounds.

SPEAKER_01 11:19

And I think it it runs the gamut in San Francisco. And again, the micro markets in San Francisco and the different neighborhoods, and I think your different neighborhoods command different buyer profiles, you know, downtown in the high rises. Yes, you get your families, but is it more of the, you know, young, you know, kind of urban professionals? Absolutely. Whereas Noe Valley, you're getting more of your families, and that's family driven. You're seeing, you know, 80% maybe families there. Um, so I think it's interesting as you look at these different neighborhoods and these different micro markets, your different buyer profile there. Uh, but I think that again, it's AI and tech, and with now offices coming back into the city, this San Francisco coming back. I I'd say that's something that I mentioned earlier, but the relocation, there are a lot more people coming in to San Francisco, relocating for work or you know, otherwise. Let's talk about summer strategy.

SPEAKER_00 12:18

Summer loving.

SPEAKER_01 12:19

Going into summer, people leave the city, they forget about real estate, they go to other places, enjoy the warm weather. That's sometimes in San Francisco and sometimes not.

SPEAKER_00 12:29

But not everybody.

SPEAKER_01 12:31

Those that want to buy a home.

SPEAKER_00 12:32

Those who want to buy a home, even if they're away, they are getting their things in order. They are building the foundation for success. If they're looking to buy before the end of the year, now is the time to just get things in order. It's all the things that we've already discussed, right? It's it's getting your team together, right? Your real estate team. Lock in your real estate partner now, right? To your financing partner. Or if it's cash, make sure that's organized, right? Um, if you have an entity, set that up, get that right. I mean, there's there's there's a link to start paying attention to the market.

SPEAKER_01 13:06

Start tracking, start looking at it.

SPEAKER_00 13:08

Yeah, know what money can buy, know how fast things go. Yeah, right. Uh, make sure that you have access to off-markets, not just on markets. Most agents are focused on the on-market inventory. That's where most of it sells. But if you really want to win in this market, you gotta have a winning playbook. It's as simple as that. There's some sport teams that just do it well year after year, and there's some that just don't. And there's a playbook. It's the players that you have around you and the right strategy executed flawlessly. And that's what's so important.

SPEAKER_01 13:37

Inventory does come on in the summer. And so it's being ready, it's being prepared. And if it's going to be the fall, then you're ready from day one or you're ready from day zero. You know, you're prepared ahead of time. Yeah. That when the inventory starts hitting, you're ready to go after it. And it's not, you know, a lot of people they come back and they're settling in and they're they're missing things. It's about being focused, having that system, having your team, and being ready to jump when that home comes along.

SPEAKER_00 14:07

100%. And it starts with the real estate agent team. Why? Because that real estate agent team is at least what we do for our clients, is we help them organize around winning strategy, develop that. We take what's worked for hundreds of our clients and customize it because no client's the same, everybody's different, and customize it for them. And that's what needs to be done. But build that first. It's like you don't want to, you know, build the plane while you fly it, ideally, right? Ideally, we're taking off with the fuel in the tank, with clear skies, with a real, like a compass that's like our North Star. Like we want those things set ideally so that we can really be focused on the things that we need to evaluate on a case-by-case basis. That's right. For instance, like when we come across a new home, like we got to diligence that home. We don't, we didn't know about that home before. We don't want to have to be worrying about things that we could have done ahead of time, like figuring out how we're gonna pay for it, like figure out how, you know, do we like the neighborhood? Do we like these blocks, et cetera?

SPEAKER_01 15:07

The takeaway is that those that prepare in the summer are winning in the fall. That's right. Especially with this market. You know, all that we've talked about about being so competitive, limited supply. So, you know, that one that comes along, you don't want to miss it because you don't know if there's gonna be the next one. And when will that be is an unknown. So you want to be prepared. That's right.

SPEAKER_00 15:28

100%. I want to close with a few things. One, if you're looking to buy this year, now is the time, if you haven't already, to build a plan that works, that's rooted in success. That's a playbook that winners use. If you have not developed this playbook yet, you don't yet have a real estate agent partner and team, reach out to us. We'd love to chat with you. The market's gonna move quickly. We only have a couple months left of this year of real strong market activity. And so prepare, right? Prepare, prepare, prepare. Also, the market is electric now, and we think it's gonna just yeah, just keep going. It's just gonna keep going too quick. Especially with the IPOs. This is the new norm. And I think we're just gonna continue to set another, there's gonna just be another rung of how like the intensity and the competitiveness. So it's time to step up. Let's get your systems, get your plans. Let's do this together. Reach out.

SPEAKER_01 16:20

Thanks for spending the time. Uh, if you found this helpful, reach out, sign up for our newsletter, like, subscribe. We hope that we keep you informed on the market, and we'll see you on the next one.

SPEAKER_00 16:32

See you soon.