North American prime property
After the fall: San Francisco is on the upswing
After a pandemic-era slump, AI-linked wealth is fuelling a surge in property values But can new housing and zoning reforms steady the boom and bust cycle?
Hugo Cox
Published FEB 6 2026
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RussianHillisanaffluentneighbourhoodonSanFrancisco’snortheasterntipwithelevatedviews ofthebay.Latelastyear,localagentPetraLangerlistedaone-bedroomcondoherefor$1.2mn. Shecrossedherfingersforanofferattheaskingprice;18monthsearlier,inthecity’sthen moribundcondomarket,a$1mnpricetagmighthavebeenmorerealistic.Butnowtherewasa newmood,andshewastestingthewaters.“Iimaginedacoupleofseniorsreturningtothecityfor retirement,orayoungerworkingcoupleseekingapied-à-terre,”shesays.Instead,thehomewas boughtbyafirst-timebuyer—a32-year-oldsoftwareengineerworkinginAIforoneofthemajor techcompanies—for$1.715mn.Itwasoneofnineoffers.
Barelytwoyearsafterthepandemicexodusandadropincityhousepriceshadnewspapers declaringTheFallofSanFrancisco,thecityispickingitselfup.Fannedbythehiringfrenzyand spirallingpaypacketsofAIcompanies,medianhousesalepricesrose12percentbetweenOctober andDecemberto$1.8mn,andtodaythecityhastheUS’sfastest-risingrents.Inneighbourhoods depletedbythepandemic,agentscomplainofashortageofhomesforsaleorrent.Renterswho oncetradedupgraduallyassalariesrosearefindingthemselvessqueezedbynewAIhiresarriving, alongsideworkersreturningtotheoffice.
Thehousinggulfbetweentechnologyworkersandeveryoneelseisreopening.Ayearaftertaking office,thecity’snewmayor,DanielLurie,hasscrappedsomeofSanFrancisco’smostsacrosanct buildingrulestospurhousebuilding.Butcanthecitylearnfromitspandemic-eraslumpand fashionamorestablehousingmarketfromthelatestsurge—oristhissimplythelatestturnina boom-bustcycleasoldasSanFranciscoitself?
San Francisco house prices are recovering after a sharp fall in 2023
Source: Compass
Thespeedofthisrecoveryisstrikingpartlybecausethedownturnwassoabrupt.Duringthe pandemic,SanFrancisco’stechnologyemployers,suchasGoogleandMeta,adoptedsomeofthe mostpermissiveremote-workingpoliciesofanysector,allowingstafftodecampenmasseto surroundingcountiesandneighbouringstates.IntheyeartoJuly2021,thecitylostroughly6per centofitspopulation,thesteepestfallofanymajorUScity;ayearlaterithadcontractedfurther.
Asdemandcollapsed,rentsandpricesfellsharply.Medianhousesalepricesdropped13percentin 2023;manycondoschangedhandsatpriceslastseenadecadeearlier.
ThereboundisnowpartlybeingdrivenbyasuddenconcentrationofAI-linkedwealth.AtOpenAI, whichisbasedinMissionBay,thecompany’s4,000employeeslastyearreceivedstockworth $1.5mnonaverage,ontopofsalariesandcashbonuses.AsecondarysharesaleinOctoberallowed currentandformerstafftosellroughly$6.6bnofequity.
MoneyisflowingintoahousingmarketunusuallyconstrainedbyUScitystandards:thereare roughly5,000homesalesinatypicalyear,anditsseven-mile-squarefootprintandtightzoning rulesleavelittleroomfornewconstruction.
Money is flowing into the housing market but strict zoning laws have constrained construction © Alamy
Theimpactismostvisibleatthetopendofthemarket.Salesabove$5mnjumpedby55percentin thefinalquarterof2025,accordingtoCompass,aUSestateagent,withthesharpestgainsinthe northernseventhrealtordistrict—thatwiththecity’smostvaluablerealestate,whichincludes PacificHeightsandPresidioHeights.Here,medianpricesrose20percentlastyear,to$6mn.
Furthersouth,demandhasspilledintomid-pricedfamilyneighbourhoodswellstockedwithlarge houses—suchasNoeValley,BernalHeightsandGlenPark—wherethosepricedfromabout $2mnupwardsarekeenlycontested.“NoeValleyisonfire,”sayslocalagentNinaHatvany.
Change in house price, 2024-25 (%)
Districts arranged from highest to lowest median house price in 2024
District 7 ($5 0mn)
District 5 ($2 5mn)
District 1 ($2.2mn)
District 4 ($1.9mn)
District 9 ($1.6mn)
District 2 ($1.6mn)
District 3 ($1.3mn)
District 10 ($1.1mn)
Source: Compass • Data for districts 6 and 8 excluded due to low residential house sales volumes
https://wwwft com/content/4d68a29e-4cf4-46da-8cf4-dbf69c1ac170?accessToken=zwAGSnI5llLAkc9NaKKeTPRG2tOM9Nv2nBrBcA
0: None 1: Northwest 2: Central West 3: Southwest 4: Twin Peaks West 5: Central 6: Central North 7: North 8: Northeast 9: Central East 10: South East
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Eventhecondomarket,longweigheddownbyexcesssupplyafterthepandemic,hasstabilised, rising1.3percentin2025.Lower-pricedsoutherndistrictssuchasExcelsiorandVisitacionValley havereboundedmoreslowly,thoughagentssayactivityispickingupasfamilyhomebuyerspriced outofthenorthlookfurtherafield.
https://wwwft com/content/4d68a29e-4cf4-46da-8cf4-dbf69c1ac170?accessToken=zwAGSnI5llLAkc9NaKKeTPRG2tOM9Nv2nBrBcA
Risingpricesareleavingsomebehind.“Thefirst-timebuyermarketisstillslow,”saysWillKlopp, CompassmanagingdirectorfornorthernCalifornia.Thisgroupisalsodisproportionatelyaffected byrisinghomeinsurancepremiumsinthefaceofCalifornia’sincreasingwildfirerisk,which absorbalargeportionoftheirincome,headds.Otherswhosawfallingcitypricesastheirchance tomakeapurchasewereheldoffbyhighermortgagerates,whichpeakedat7.8percentinOctober 2023.“Manyhavejustmissedtheirchance,”saysKarenChapple,professoremeritaofcityand regionalplanningattheUniversityofCalifornia,Berkeley.
TheAI-fuelledeconomicsurgeisreshapingSanFrancisco’srentalmarkettoo,alteringhow peoplesecureahomeandcompressingchoiceforthoseoutsidethetechnologysector—adynamic thatmattersinacitywheretwo-thirdsofthe372,000homesarerented.
Formostofthepastdecade,AlexandraTalleur,35,madeSanFranciscoworkbycalibratingher housingset-uptohercareer:multiplehousematesearlyon,thenfewer.“Icouldmakemysalaryfit theneighbourhoodIwantedbycompromisingonspaceandsharing.”Thatlogicbrokedownlast summer.LookingforaflatinNorthofPanhandle(NoPa),acentralneighbourhoodclosetoseveral parksboastinggoodtransitlinks,withabudgetof$3,000permonth,sheinsteadfoundsuitable listingsstartingat$3,500.Theyoftenwentformore:viewingsbecamebiddingcontests,witha dozenapplicantscrowdingsmallapartmentsandoffersescalating.Extendinghersearchtonearby Haight-Ashbury,shebid$75overthemonthlyaskingpriceforahomesheliked—butitwentfor severalhundreddollarsmore.“Itfeltlikeafeedingfrenzy,”shesays.
Whileshecouldtechnicallyaffordthehigherrents,Talleurbalked.DespiteworkingforalargeIT hardwarecompanysince2020,sheandherfriendshavefearedfortheirjobssincethefirst technologylay-offsslowedthecityeconomyin2022.ThenumberofunemployedSanFranciscans increasedfrom11,800inMay2022to20,274lastNovember.“Thethreatoflay-offsisintheair:in anygroupI’moutwiththere’susuallysomeonewhohasbeenlong-termunemployed,”shesays.
Aftermonthsofsearching,sheabandonedtheideaofastandardleasealtogether.Calledbackto theofficethreedaysaweekfromthisJanuary,shenowpays$3,000foratwo-bedroomsubletin NoPa,withtheleadtenantretainingaccesstothespareroomforpartofthemonth.“IfIcanfinda furnishedsubletthatiscomfortableandclean,maybeI’llneverneedatraditional12-monthlease,” shesays.
Censusdatafrom2024showsthatmorethanathirdofSanFranciscorentersspendmorethan30 percentoftheirincomeonhousingandafifthspendmorethanhalf.Therearefewervacant apartmentsthanatanypointsince2014,andjust311newrentalhomeswerebuiltbetween OctoberandDecember,accordingtopropertydatacompanyCoStar.Workaroundssuchas sublettinghavebecomealifelineformany.
Craigslist was once the place to find sublets, but now the market is so hot they don’t even make it on there. I got incredibly lucky
Alexandra Talleur, resident
Morethanhalfofthecity’srentalhouseholdsare rentcontrolled,whichlimitsincreasesforsitting tenants,butsubletsprovideacrucialcaponrent increasesformany(thepracticeispermittedand regulated;Talleurhasasubletagreementwithher leadtenant).Theyalsodeepenthecity’shousing inequality.Talleurfoundallhersubletsthrough personalnetworksratherthanopenlistings.
“Craigslistwasoncetheplacetofindthem,butnow themarketissohottheydon’tevenmakeitonthere.Igotincrediblylucky,”shesays.Withthe bestopportunitiesrarelymakingtheopenmarket,long-standingresidentswithsocialcapitaland timetosearchwinout,whilenewcomersorthosewithoutestablishednetworksfacethefiercest competitionandhighestprices.
Inthefaceofsuchdivides,SanFrancisco’snewhousinglandscapehassharpenedoldquestions aboutwhothecityisreallyfor.
Suchsoul-searchingwasafeatureofthe2024mayoralelectionandthenewmayor,Lurie,istoday dismantlingapillarofSanFrancisco’sprogressiveplanningtradition,withsweepingupzoning.It allowstaller,denserbuildinginaffluentwesternandnorthernneighbourhoodssuchastheSunset andRichmond—areaswherehistorichousinghaslongbeenprotectedfromdevelopment.
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Followingaperiodwherestatehousinglawswere widelyignored,California’sstateattorney-general RobBontahassteppedupenforcementtooverride localzoninganddismantlebarrierstonew multifamilyapartmentblocks.Thishasincluded suingseveralcitiesforfailingtoadoptcompliant housingplans.SovexedwereCaliforniastate officialswithSanFrancisco’ssluggishhousebuilding thattheyimposedaJanuarydeadlineforasuitable rezoningplan.Ifmissed,thestatewouldhavelet developersbuildincontraventionofmanylocal zoningrestrictions.
Thepandemic-eraslump,andtherapidinflationthatfollowed,loomslargeovertoday’smayoral andstateinitiatives.Sharpfallsexposedhowquicklydemandcoulddropinacitysotightlytiedto thefortunesofasinglesector,whiletherecoveryunderlinedhowlittleslackthemarketcontained, thankstoyearsofunder-building.“There’sjustverylittlemarginforerrorhere,”saysChapple.
2/9/26,
Thecyclealsoprovidedpoliticalcapitalforreformasresidentsturnedagainstprogressive measures(suchascommittingdeveloperstoprovideaproportionofaffordablehomes)thathadso clearlyfailedtodeliverprogressiveoutcomes(moreaffordablehousing)duringthebumperyears.
“Youdon’tgetaffordableunitsifdevelopersdon’tbuildinthefirstplace:20percentofzerois zero,”saysBenMetcalf,whoheadstheTernerCentreforHousingInnovationatUniversityof California,Berkeley.
It’s been boom and bust since 1849. Do people ever learn?
Karen Chapple, professor emerita of city and regional planning at the University of California, Berkeley
Thebuildingreformsarelikelytomakeadifference, buthowmuchisunclear.SanFrancisco’schief economist,TedEgan,estimatesthatwithoutdeeper regulatorychangestospeedconstruction,thecity maydeliverbarely11percentofthenewhomesby 2031tokeepontrackwithstaterequirements.High buildingcostsremainanotherbrake,compounded byafederalcrackdownonimmigrants(41percentof
USconstructionlabourersareforeignborn,accordingtotheHomeBuildersInstitute).“Inflation inlabourandmaterialsisarealhairballofaquestionthathasn’tgotenoughattention,”says Metcalf.
Whetherthoseconstraintscanbeovercomewilldeterminewhetherthisperiodofhouseprice growthleavesamoreresilientmarketinitswake—orsimplysetsthestageforthenextturnina familiarcycle.
SanFrancisco’sboom-and-bustpropertymarket—anditssocialsignificance—isageold. Ayearafterthegoldrushof1849,thecityhadgrownfrom2,000to35,000,becomingthewest’s firsttruecity.Butby1855,thelocalDailyAltaCalifornialamentedtheburstingof“merelya bubble...[which]hasvitiatedthemoralsofthewholecommunity”.
Whatlessonsitevertookfromthesecyclesisanopenquestion.WhenChapplefirstworkedinSan Franciscoasaplanninginterninthe1990s,“allthetalkwasabout[rezoning]toincreasehousing supply”,shesays.Plansfocusedontheeastofthecity;proponentshopedtoexpandittowestern neighbourhoodswhenpublicsupportgrew.ButsoontheUSeconomyslumped,propertypricesfell acrossCaliforniaandtheinitiativeswereshelved.Bythelate1990s,theinternetfrenzywaspulling start-ups,creativesandventurecapitalbackintothecity,andrentswereontheriseagain.“It’s beenboomandbustsince1849.Dopeopleeverlearn?”saysChapple.
ForPatrickCarlisle,chiefmarketanalystfortheBayAreaatCompass,suchcyclesarebakedinto thecity’seconomicDNA,yokedasitistotransformativetechnologieswhoseimpactpeopletendto overestimate.“FromrailroadstoradiotothefirstITboom,SanFranciscohasalwaysseen exuberancethatispronetobecomingover-exuberance.”
Today,despitethelureofitsdramaticnaturalsetting,proximitytoworld-classuniversitiesand distinctivewest-coastculturalenergy,thecity’spopulationremainsbelowitspre-pandemicpeak. LocalslikeTalleurmightcrosstheirfingersthatitstaysthatway.
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Hugo Cox