Mid-Year Real Estate Update

No one can predict the real estate market with certainty from year to year. As the first half of 2026 comes to a close, we have navigated the war in Iran, high gas prices, elevated inflation, rising mortgage rates and a stock market at record highs. In this column, I will review the current state of the local real estate market.

I analyzed single-family home markets in the Richmond and Sunset Districts, which often follow similar trends and compared them with San Francisco overall.

During the first six months of 2026, 92 single-family homes were sold in the Richmond, up from 79 in 2025, a 16.5% increase. The median price rose 17.6%, from $2,305,000 to $2,711,700, while the median days on market fell to 10. These figures point to a very strong seller’s market in the Richmond, with more sales, significantly higher prices and shorter marketing times.

In the Sunset District, 205 homes sold in the first half of 2026, compared with 198 in 2025, a 3.5% increase. The median price climbed 13.6%, from $1,650,000 to $1,875,000, while the median days on market remained unchanged at 12 days. Overall, the Sunset saw slightly more sales, substantial price appreciation and stable marketing times.

Across San Francisco, single-family home sales increased 2.1%, the median price rose 18.2%, and median marketing time declined by one day to 13 days, closely mirroring the trends in the Richmond and Sunset Districts.

Overall, the first half of 2026 showed a strong real estate market, with double-digit price appreciation and modestly higher sales across the board. Despite factors that typically weigh on real estate – such as higher mortgage rates, international conflict and inflation – the median price of San Francisco single-family homes surpassed $2,000,000 for the first time.

As I have often noted, market upcycles are never fully predictable, but some years will deliver double-digit appreciation. Unless the second half of 2026 brings a sharp downturn, this appears to be one of those years.

Real estate is a lagging economic indicator, typically following improvements in other indicators by six months to a year. Because leading indicators were positive last year, we expected a steadily appreciating market. Historically, peak prices tend to arrive in spring, as they did this year, then level off in the summer before strengthening again in fall.

Mortgage rates have hovered around 6-7% this year and are rumored to rise further amid inflation concerns. Buyers appear to be adjusting to this level, viewing it as manageable with the possibility of refinancing if rates decline. Meanwhile, all-cash offers have increased, driven by stock market gains and the influence of A.I.-related wealth. With SpaceX recently going public and OpenAI and Anthropic expected to follow, more cash is likely to flow into real estate.

Inventory remains tight because many homeowners who bought or refinanced at 3% to 5% interest rates are holding onto those low rates and choosing to rent their properties instead of selling. This limits listing supply, increases buyer competition and helps sustain high prices.

Prospective buyers often ask why San Francisco property prices remain so high. While rising interest rates can put downward pressure on prices, affordability, inventory, supply and demand and the influx of cash all shape local pricing. San Francisco real estate remains expensive, yet it is still positioned for further appreciation.

As always, if you are considering buying or selling, I strongly recommend consulting a realtor, accountant and possibly an attorney before making any major real estate decisions.

John M. Lee is a top selling broker with the JODI Group. For real estate questions, contact him at 415-465-0505 or johnlee@isellsf.com.