August Market Update:
Rates Are High. San Francisco Isn’t Waiting.
Mortgage rates spent July near their highest point of the year, and in most of the country that would be enough to explain a slow market. Not here. San Francisco’s sales activity is being driven less by what rates are doing and more by what AI wealth is doing — and it’s showing up exactly where you’d expect: family-ready homes in the neighborhoods people move to when they’re staying in the city, not leaving it.
The numbers make the case. San Francisco’s median sale price is up 25% year-over-year. San Mateo County, catching some of that overflow, is up nearly 10%. The other eight Bay Area counties? Essentially flat — tracking the national market, not ours.
That’s the pattern we keep coming back to with clients: real estate here doesn’t move with the country. It moves with the city.
Why rates aren’t dropping yet: inflation fears — energy prices, tariffs, government spending — are keeping bond markets on edge. The one thing that would change that is a real slowdown in hiring, and the labor market, nationally and locally, is already sluggish without being weak. Low-hire, low-fire. Steady, not exciting.
Jobs matter here beyond the rate story, too. Some AI companies are hiring aggressively, and that hiring is concentrated in the city. The rest of the region is adding fewer jobs than it was. That divide shows up directly in housing demand — San Francisco first, the suburbs later, if at all.
For families weighing whether to stay in the city or make the move out: this is the market answering that question for you. Demand, and price growth, is concentrated where the wealth and the jobs are — not where the square footage is cheapest.
We’re tracking this closely month to month. If you’re thinking about buying or selling in District 4, let’s talk about what these numbers mean for your specific block.
— Montgomery & Lee
Market data: Compass Chief Economist Mike Simonsen