San Francisco Housing Outlook 2025

Sydney Winstead • August 14, 2025

San Francisco Real Estate 2025: Housing Prices, Interest Rates, and Rental Rules to Watch

Federal Reserve Lowers Interest Rates: Impacts on Mortgage Rates in 2025

The Federal Reserve recently cut its benchmark interest rate by a quarter percentage point, bringing the central bank’s overnight rate to 4–4.25%. This adjustment, the first in nine months, has already contributed to a decline in mortgage rates, which fell to an 11-month low of 6.35% according to Freddie Mac. While mortgage rates typically follow long-term bond yields rather than the Fed directly, homebuyers in San Francisco and across the Bay Area may see slightly lower borrowing costs in the short term.


Economists caution that while the rate cut benefits potential buyers, rates remain above 6%, and further fluctuations are possible depending on inflation and economic conditions. For those considering a move, this development could make homeownership slightly more accessible, but staying informed on current rates is essential. Explore our full list of San Francisco and Bay Area listings to see what’s available in the current market.


How San Francisco’s Short-Term Rental Rules Could Impact World Cup Visitors

When the 2026 FIFA World Cup kicks off across North America next year, the Bay Area will be one of the global soccer hotspots, but San Francisco’s strict short-term rental laws could make finding a place to stay a challenge.


Under the city’s current rules, short-term rentals are only allowed if a permanent resident lives in the home for at least 275 days a year. That means many Airbnb and Vrbo listings aren’t an option, limiting the number of vacation rentals available. For an event as massive as the World Cup which is expected to draw millions of visitors, that shortage could drive up hotel rates and push soccer fans to look for lodging in nearby cities with looser rules, like Oakland, Berkeley, or Marin County.


Some host cities in other parts of the country may temporarily relax their short-term rental restrictions for the tournament. Whether San Francisco follows suit remains to be seen, but the decision could have a major impact on where visitors stay, how much they pay, and how the city benefits from the influx of tourism dollars. Read More Here!


Young Homebuyers Are Hoping for Lower Rates but It Might Not Happen

A lot of Gen Z and millennial homebuyers are crossing their fingers that mortgage rates will drop soon so they can refinance and lower their monthly payments. According to a new survey from Truework, about two thirds of younger buyers say refinancing is key to their financial future, which is about twice as many as baby boomers who feel the same way.


The catch is that most experts do not think big rate cuts are coming anytime soon. While we might see a small drop later this year, it is unlikely we will get back to the rock bottom rates we saw before 2022. That means many young buyers could be stuck paying today’s higher rates for years longer than they expected.


Making things tougher, home prices have jumped 31% since 2020, and starter homes now cost around $250,000, way up from $95,000 in 2012. Meanwhile, a lot of baby boomers are staying put. Many already paid off their homes or locked in super low rates, so they have little reason to sell.


The end result is that older homeowners are holding onto most of the housing supply, while younger buyers face high prices, fewer options, and no guarantee of lower rates ahead. Read More Here!

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*Rendering © Bjarke Ingels Group* Updated plans have been released for 35 South Second Street in Downtown San Jose, a mixed-use development designed by Bjarke Ingels Group (BIG) . The project, referred to as the Fountain Alley development , is scheduled for review by the San Jose Planning Director and reflects a shift from an earlier office-and-housing proposal to a predominantly residential program. Project Overview The revised plans call for two residential towers, rising 27 and 28 stories , with a total of 768 apartments and ground-floor retail. The development is part of a broader downtown San Jose master plan led by Westbank and Urban Community , which includes multiple residential and mixed-use sites throughout the city. The project will span approximately 831,600 square feet , including residential units, ground-floor retail, and basement parking. Bicycle parking is planned for 417 spaces, with vehicular parking located in a multi-level subterranean garage. Change in Use Earlier versions of the project included a stronger emphasis on office space. The updated proposal reflects a reconfiguration toward residential use, consistent with other recent revisions within the larger Westbank and Urban Community portfolio in downtown San Jose. A related site at 180 Park Avenue began demolition and excavation in 2022, though work was paused due to an archaeological discovery. Recent reporting indicates that plans for that site have also been revised to focus on residential units rather than office development. Design and Site Details BIG is serving as the project architect, with Bionic as the landscape architect. Renderings show residential towers with balconies, integrated landscaping, and a pedestrian-oriented plaza connecting South Second Street with surrounding streets. Exterior materials are expected to include aluminum, terracotta-toned glass-fiber-reinforced concrete, and curtainwall glass. The development site occupies approximately 1.25 acres along South Second Street, between Santa Clara Street and San Fernando Street, near the Bank of Italy Tower. Housing Mix and Affordability The project is proposed to include: 177 studios 413 one-bedroom units 152 two-bedroom units 26 three-bedroom units Approximately 5% of the units will be deed-restricted for very low-income households, utilizing California’s State Density Bonus law . Next Steps The project is scheduled for review at a Planning Director Hearing on Wednesday, December 17 , to be held virtually via Zoom with opportunities for public comment. Read more and see renderings here ➡ SF YIMBY
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New data from RentCafe shows rising competition across San Francisco, Silicon Valley, and the East Bay, with the region’s expanding artificial intelligence sector , tech hiring, and return-to-office trends contributing to stronger rental demand in 2025. Silicon Valley Leads the Region in Rental Demand Silicon Valley recorded the fastest leasing pace in the Bay Area, with apartments renting in an average of 36 days. Comparatively: San Francisco: 42 days East Bay: 44 days Silicon Valley also had the region’s highest occupancy rate at 95.5% , followed by: San Francisco: 94.6% East Bay: 94.1% Applicant demand reflects a competitive landscape shaped in part by continued AI industry expansion: Silicon Valley: 13 applicants per unit San Francisco: 11 applicants East Bay: 10 applicants Slow Construction and High-Tech Job Growth Intensify Competition Apartment inventory growth remains limited throughout the Bay Area: San Francisco: 1.43% growth East Bay: 1.63% Silicon Valley: 2.45% RentCafe notes that reduced construction activity, combined with strong demand generated by AI startups , machine-learning companies , and major tech employers expanding teams , is contributing to a tighter rental market. More Renters Staying in Place Lease renewal rates increased across the region: Silicon Valley: 56.3% East Bay: 52.6% San Francisco: 49.6% Higher renewal rates mean fewer units entering the market — a pressure point amplified by Bay Area job growth in artificial intelligence , software engineering , and cloud computing sectors . Bay Area Performance in National Rankings RentCafe’s 2025 national report shows: Silicon Valley ranked 13th hottest rental market in the U.S. San Francisco ranked No. 42 , up 23 spots from 2024. East Bay ranked No. 53 , up two spots. San Francisco was also identified as the second fastest-rising rental market nationwide, driven by increasing demand from tech and AI professionals , expanding AI research hubs, and larger in-office presence across major employers. How RentCafe Defines the Bay Area Regions San Francisco Region: San Mateo, Redwood City, San Rafael, Petaluma East Bay: Oakland, Walnut Creek, San Ramon, Vacaville Silicon Valley: Palo Alto, Mountain View, San Jose  Read more about the rental demand here!
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