When people first see the figure that San Francisco home values have risen by 7.6% in a year, they are often surprised. According to Zillow's ZHVI, as of May 31, 2026, the average home value is $1,393,773, which is a 7.6% increase from a year ago. In simpler terms, this means that the city, which was shaken by a massive population exodus at the beginning of the pandemic, has fully entered a recovery phase.

Other data shows a similar trend. According to Steadily, the median sale price as of June 2026 is $1,204,000, up 3.6% from a year ago. While the increase varies depending on the timing of the survey and the type of homes considered, it is clear that the direction is towards an increase rather than a decrease.

If the terminology is unfamiliar, think of it this way: when demand surges in a market with low inventory, prices naturally rise. San Francisco is currently in such a situation. There are only 216 single-family homes available for sale, which is a 44.62% decrease from a year ago. The inventory of condos has also dropped to 469, a decrease of 37.96%.

When converted to months of inventory, there is only 0.7 months of single-family homes and 1.8 months of condos available. Typically, a balanced market is considered to have 5 to 6 months of inventory, so San Francisco is currently one of the strongest seller's markets in California.

The speed of transactions supports this trend. Single-family homes sell in an average of 12 days, while condos take 16 days. This is a significantly faster pace than a year ago. Single-family homes are selling for nearly 25% above the asking price on average, and condos are selling for about 7% above.

Behind this trend is the lock-in effect. Existing homeowners who secured loans at rates of 3% to 4% between 2020 and 2021 are now hesitant to sell in the face of a 30-year fixed rate of around 6.6% (as of July 2026, according to Freddie Mac PMMS), which is exacerbating the inventory shortage.

For Korean families, schools in the Sunset and Richmond districts are often mentioned as areas of interest. While referencing GreatSchools ratings, it's important to note that school district boundaries can vary by address, so be sure to verify the assigned school for any desired property before purchasing.

For investors, in a market with such tight inventory, securing negotiation power may be more important than timing the purchase. With many areas showing low cap rates, it's advisable to decide in advance whether to focus on a long-term strategy based on price appreciation or one based on cash flow.

If you are an investor aiming for long-term price appreciation, you should carefully determine your level of leverage. The higher the loan-to-value ratio, the greater the monthly repayment burden in a 6.6% interest rate environment, and if vacancies or unexpected maintenance costs arise, cash flow can deteriorate quickly.

Looking solely at cap rates, many areas in San Francisco have lower rates than the national average. Therefore, many investors approach the market with a focus on price appreciation rather than pure rental income, and simple screening criteria like the 1% rule are often used only as a reference in this market.

If you are purchasing for personal use, you should also consider the property tax reassessment method. Given California's characteristics, where taxes are reassessed based on the purchase price, it is helpful to understand that the longer you hold a property, the greater the tax gap with new buyers.

The risk of vacancies should not be taken lightly. While rental demand remains steady in a market with low inventory, variables from the tech industry, such as layoffs or the rise of remote work, could cause rental demand to fluctuate. It is safer to conservatively estimate vacancy periods when calculating net operating income.

If you are coming from out of state, you should factor in California's property tax reassessment method and high insurance premiums in your calculations. This article is not investment or legal advice, and it is advisable to consult with a professional before finalizing any contracts.