What to Expect This Fall

With a lifelong background in real estate, I have a particular interest in the evolving dynamics of the 2025 market, especially as we navigate through this transitional period. Traditionally, my September commentary focuses on projections for the fall real estate market, which ushers in San Francisco’s second peak selling season.

Historically, our primary selling periods occur in spring, from February to June, and again in the fall post-Labor Day, extending through Thanksgiving. Summer tends to be quieter, as vacations impact the activity levels of buyers, sellers and agents, resulting in deferred transactions. Additionally, major summer events, such as the SF Marathon and Outside Lands Festival, often draw attention away from real estate activities.

As of July, the median sales price for single-family homes in San Francisco reached $1.71 million, a 5.2% increase year-over-year. This positive growth trend began two years prior. Sales volume has risen approximately 3.3%, and inventory currently stands at 1.3 months, indicating a robust market with relatively low supply.

The condominium and investment property sectors, previously affected more significantly than the single-family home segment, are also demonstrating signs of recovery, with increased sales and modest price appreciation observed this year.

Despite these improvements, uncertainty remains as leading economists offer divergent outlooks. Some contend housing prices have outpaced wage growth, suggesting either a necessary market correction or a substantial rise in earnings to maintain current valuations. Factors such as recent inflation, technology sector layoffs, elevated interest rates and stock market volatility support predictions of further price adjustments before significant gains can occur.

Conversely, other analysts highlight economic resilience: record-high performance in the stock market, sustained low unemployment, post-pandemic adaptation, moderated inflation, declining mortgage rates and indications from the Federal Reserve regarding prospective rate cuts in September. These indicators suggest the market may have stabilized, with an upward trend anticipated.

Both perspectives present valid arguments. The primary question is what to expect this fall. It is likely that the market will sustain its current trajectory; real estate activity continues as buyers and sellers remain engaged. As prices have moderated from their peak when many homeowners benefited from favorable mortgage rates – whether through purchases or refinancing – there is hesitation to sell, perpetuating low inventory levels for single-family homes. The interplay of supply and demand is thus supporting pricing, and potential interest rate reductions may establish a baseline for the forthcoming cycle.

A key area of focus is the investment property market, where high interest rates, rising insurance and utility costs and rent control measures pose challenges for revenue growth. Many listings persist on the market as they seek appropriate pricing. Nevertheless, there are potential opportunities for acquisition within this sector. Notably, rental rates have begun to increase, a trend that is advantageous should units become vacant.

For consumers, it is advisable to collaborate with an experienced real estate professional who is well versed in market trends and can provide strategic guidance aligned with individual objectives.

Sellers should be aware that properties are taking longer to sell and may require price adjustments. However, anticipated decreases in interest rates could shift conditions in their favor. With continued buyer interest, appropriately priced and marketed properties are still achieving strong sale prices.

Buyers are encouraged to proceed thoughtfully. Current prices remain elevated, but today’s steady interest rates present refinancing opportunities if rates decline further, potentially yielding long-term benefits. A comprehensive evaluation of all factors is recommended prior to purchasing. For those considering upgrading, the present market offers potential for strategic repositioning of real estate portfolios due to reduced competition.

Overall, the upcoming fall selling season is poised to provide valuable insight into the trajectory of the market as we approach 2026.

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.