2025 Mid-Year R.E. Update

As the first half of 2025 concludes, we have faced several unique challenges including the impact of President Donald Trump’s policies – tariffs, inflation rumors, civil unrest and international warfare. In this column, we assess the current state of the local real estate market.

I have analyzed single-family home markets in the Richmond and Sunset districts, as these markets often show similar trends, and compared them against San Francisco data.

In the first six months of 2025, there were 79 single-family homes sold in the Richmond, compared to 90 in 2024, reflecting a 12.2% decrease. The median price increased from $2,087,500 in 2024 to $2,305,000 in 2025, marking a 10.4% rise. The median days on the market remained constant at 13. This indicates fewer sales, higher prices and consistent marketing duration in the Richmond.

Conversely, in the Sunset District, 198 homes sold in the first six months of 2025 versus 168 in 2024, an increase of 17.9%. The median price rose from $1.6 million in 2024 to $1.65 million in 2025, a 3.1% increase. The median days on the market stayed the same at 12 for both years. Therefore, the Sunset experienced more sales, increased prices and unchanged marketing period.

For San Francisco overall, the number of single-family home sales went up by 7.9%, the median price saw a 1.2% increase and the marketing time remained stable at 13 days, closely aligning with the trends observed in the Sunset District.

We can conclude that the first half of 2025 has seen improvements in the real estate market with stronger sales and higher pricing. Richmond’s data may be skewed due to fewer sales. Stock markets are nearing all-time highs despite tariff-related volatility, interest rates have steadied although they remain high compared to previous years, and inflation figures appear stable.

Real estate is a lagging economic indicator, typically following positive movements in other indicators by six months to a year. With leading economic indicators showing positive trends, we anticipate a steady real estate market moving forward. Historically, spring achieves peak prices, which then trend slightly lower through summer; this year follows that pattern.

The mortgage interest rate has consistently hovered around 7%. Buyers seem to be acclimating to this rate, accepting it as reasonable with future refinancing options if rates fall. Prices have adjusted accordingly after three years at this rate.

Contributing to market stability, homeowners who acquired properties or refinanced at 3% to 5% interest rates are holding onto their low rates, choosing to rent out properties rather than sell. This results in lower inventory listings and heightened buyer competition, thereby sustaining high prices.

Prospective buyers often question high property prices in San Francisco. While rising interest rates suggest potential price declines, various factors – including affordability, listing inventory, supply and demand – contribute to complex pricing dynamics. San Francisco real estate remains inherently expensive.

Typically, only 10% to 15% of households can afford to purchase homes in San Francisco, usually representing high-income earners. Analyzing this demographic offers insights into market directions. Given the stock market’s record highs, increased net worth among stock investors, low unemployment rates and higher income levels, the market does not appear short on buyers, supporting stable prices.

As always, if you are thinking about buying and selling, I would strongly recommend that you consult with a Realtor, accountant and perhaps an attorney prior to making any major real estate decisions.

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at 415-465-0505 or email johnlee@isellsf.com.