San Francisco Real Estate Heats Up Fueled by AI Boom
San Francisco’s real estate market is showing signs of resilience, bucking the broader cooling trend seen across the Bay Area. A surge in single-family home sales, driven by the city’s artificial intelligence boom and renewed optimism about its future, has set the city apart from its neighbors.
The Bay Area housing market, encompassing condominiums and co-ops, has experienced a slight downturn, with sales from January to July 2025 declining by over 2% compared to the same period in 2024, according to Redfin data. However, San Francisco has seen a 5% increase in home sales, rising from about 2,870 transactions in 2024 to 3,010 in 2025. This makes it one of a few mid- and large-size Bay Area cities reporting growth during this period.
AI Driving Optimism in San Francisco
The rise of artificial intelligence companies in San Francisco has fueled growth in both the real estate and rental markets. The city’s typical home value, according to Zillow, is $1.27 million - slightly down by 1% from last year. However, some real estate agents see potential for imminent price increases as demand picks up.
"I don’t want to say (the market’s) hot, but it’s very, very, very warm", said Ruth Krishnan, a San Francisco real estate agent with Compass. She attributes the jump in sales to a combination of buyer optimism about the city’s future, a dip in San Francisco home prices, and the growing presence of AI companies. Buyers may also be acting quickly, anticipating that prices could soon climb higher.
Single-Family Homes Leading the Charge
Single-family home sales are the primary driver of San Francisco’s real estate growth. Meanwhile, condo sales remain stagnant, with some sellers hesitant to list their properties amid challenging market conditions. Redfin senior economist Asad Khan noted that condo listings in San Francisco and San Mateo County have actually declined, suggesting that some sellers may be withdrawing from the market due to difficulties finding buyers.
A May report from Redfin highlighted that more than a third of condos for sale in the San Francisco metropolitan area were at risk of selling at a loss. Despite this, Patrick Carlisle, chief market analyst at Compass, believes the condo market may eventually see a shift, particularly as competition for properties near tech offices increases. However, he noted that rents are likely to feel the biggest impact before any significant changes happen in the sale market.
Broader Bay Area Trends
Outside of San Francisco, few Bay Area cities have seen sales growth over the past year. Vacaville and Oakland stand out, with home sales rising by about 10% and 5%, respectively. However, these cities remain further from their pre-pandemic sales levels compared to San Francisco. In Oakland, increased inventory has softened the market, with sellers offering incentives such as covering buyers’ closing costs or subsidizing mortgage rates to attract interest.
San Francisco’s stronger recovery, particularly in the single-family home sector, reflects a city reinvigorated by its emerging role as a hub for artificial intelligence and innovation. While challenges like the broader affordable housing shortage persist, the real estate market’s recovery signals renewed confidence in the city’s potential as it continues to adapt to its evolving economic landscape.