San Francisco real estate market booming as suburbs stay stagnant
The Bay Area's housing market depends entirely on which side of the bay you're standing on right now.
In San Francisco, buyers are locked in an all-out bidding war for available homes. But in many suburban communities across the region, it's the opposite problem - houses are sitting, prices are dropping, and sellers are struggling to find buyers.
Take a townhome in Dublin. It's seen a price reduction - again - after sitting on the market since May of last year. That's 14 months and counting.
Cross into San Francisco, and it's an entirely different story.
A San Francisco real estate frenzy
A somewhat average home in the the city's Sunset District recently sold to a doctor after just three days on the market, for roughly $2.4 million - nearly 40% over asking.
"There's literally - I can't remember in the last 25 years - a better time to be a seller in San Francisco," said Butch Haze, a Compass real estate agent who described homes drawing "10, 15, 20 people all attacking" them.
Haze points to a mix of forces driving the surge: limited inventory, all-cash buyers, and a fresh wave of AI-driven wealth flowing into the region.
"On a scale of cold to hot, where is San Francisco's housing market right now?" Haze was asked.
"Yeah, it's the hottest in the country," he said.
He added that while many workers left the city during the pandemic, San Francisco is now seeing a resurgence, with companies and employees moving back into the heart of the city.
A different story in the suburbs
But Haze says elsewhere in the Bay Area, many would-be buyers are choosing to rent instead.
"We think we have a hot real estate market? The rental market is unbelievable," he said.
Another Compass real estate agent, Michael Wilhelm, said that trend can be seen in the East Bay right now.
"What I'm seeing in the East Bay is people are very price-sensitive to interest rates," Wilhelm said.
He added that many of his East Bay clients are opting to wait rather than buy. "They kind of took a pause and said, you know what? I'm going to wait for a year. If the right home pops up, then, you know, I'm willing to lose my deposit," Wilhelm said.
Mortgage rates are now at their highest level in nearly a year, fueled by expectations of higher inflation amid the ongoing war in Iran. Data shows the housing market is actually cooling in Contra Costa and Solano counties.
Still, Wilhelm believes the East Bay's slowdown won't last.
"I think as this next season begins in the fall, you'll start to see more of those AI buyers come into the East Bay that have gotten priced out of San Francisco," he said.
He's also hopeful mortgage rates will ease. "As people get more certainty, then you'll start to see people saying, you know what? This is where we're going to call home," Wilhelm said.
The Federal Reserve meets July 29 to decide whether to lower interest rates. It's a decision many aspiring homeowners across the Bay Area are watching closely.
