As cities across the nation look to address a shortage of affordable housing options, a new kind of housing dilemma has sprouted in San Francisco: The city is running out of mansions to sell.
A wave of high-paying artificial intelligence jobs has flooded the Bay Area, turning San Francisco and San Jose, California, into the two fastest-selling home markets in the country, according to an analysis by Redfin.
In September, pending home sales in San Francisco hit their highest level since 2021, jumping 17% year over year, compared with the nation’s less than 1% increase, according to Redfin.
“San Francisco is seeing a homebuying boom among young tech workers who just got big signing bonuses with AI companies or other tech companies and are thinking about starting families,” Redfin spokesperson and real estate agent Ali Mafi said in a Redfin report. “A lot of people have more confidence in buying homes because they’re making more money, which means they’re spending less of their paycheck on housing costs.”
Redfin also credited return-to-office mandates from major tech companies for influencing the local homebuying surge. Office visits in San Francisco increased 19% year-over-year in September.
Home prices in the historically high-priced housing market have jumped, reaching a median of $1.85 million, the highest since June 2022, the San Francisco Standard reported.
A lack of supply looms large. San Francisco County was the only county in the Bay Area to not record an annual increase in housing inventory this past fall, according to the Standard.
“There aren’t a ton of homes for sale in the Bay Area because many prospective sellers here can afford to wait until the price is right,” according to Mafi at Redfin. “A lot of homeowners are considering selling but holding off until home prices go up and mortgage rates drop further.”
The homebuying spree comes in the midst of Mayor Daniel Lurie’s push to speed up housing development in the city through his “family zoning plan,” which aims to meet state requirements by adding 36,000 homes in the city’s north and west sides.
“Our Family Zoning plan makes room for housing for families near transit, schools, and jobs and gives our city more control, more flexibility, and more tools to get affordable housing built faster,” Lurie said in a June press release.
Critics of the plan have said it will lead to more luxury developments that could further price existing residents out of the city, the Associated Press reported.
