Home prices in San Francisco climbed to a historic high in March thanks to the metro’s unprecedented AI boom that’s creating well-paying jobs.
The median home sale price in San Francisco hit $2.15 million last month, up 18% compared to a year ago, exceeding the previous record of $2.05 million reached in April 2022, according to the latest market report from Compass cited by Bloomberg.
Condos also experienced robust appreciation in March, with the median sale price soaring 27% year over year to $1.36 million, coming just short of the April 2022 peak of $1,375,000.
For context, the San Francisco metro’s median listing price in March was $985,000, up 3.7% from a year ago, making the California market the nation’s third-most expensive behind San Jose, CA, and Los Angeles, according to the monthly housing market trends report from Realtor.com®.
At the same time, for-sale inventory in San Francisco has shrunk by 6% from March 2025, creating greater scarcity.
“The inadequate supply of listings, especially houses, has been severely constraining sales volume,” Patrick Carlisle, chief market analyst for the San Francisco Bay Area at Compass, writes in the report. “The disconnect between demand and supply continues to pressurize the market as buyers compete for scarce listings.”
AI wealth turbocharges sales
Carlisle attributes San Francisco’s dramatic price surge to “the new employment and wealth generated by the AI startup boom.”
The Bay Area—home to Silicon Valley—has long been a world-renowned hub of technological innovation, but in the past several years it has emerged as the epicenter of the AI revolution. This dominance is anchored by industry heavyweights such as OpenAI, Anthropic, Scale AI, Perplexity, and Glean.
Realtor.com economist Jiayi Xu says the AI-driven demand is concentrated at the housing market’s pinnacle—specifically premium, turnkey properties. This has created a K-shaped market, where tech wealth drives luxury prices to new heights while entry-level inventory vanishes.
This dynamic is reflected in the Compass report, which shows that March saw a record 22 luxury home sales over $5 million, up 83% from a year ago.
What’s more, there were 24 premium condos sold for over $3 million, up a staggering 380% compared to March 2025. This performance shattered the previous record of 17 sales set in August 2021.
“Would-be move-up buyers, priced out of the premium tier by AI competition, either stay put or get outbid and cycle back down, keeping their starter homes off the market, further shrinking an already thin supply of entry-level inventory and driving those prices up, too,” says Xu.
Meanwhile, San Francisco’s housing market has proven resilient amid the ongoing war in Iran, which has driven up oil prices and destabilized global markets, breeding widespread uncertainty.
“The economic changes created by the Iran war—such as rising interest rates and financial market volatility—have not affected the extremely heated market dynamics,” writes Carlisle.
While the stratospheric rise in San Francisco home prices may warrant caution, Xu says it does not mean the market is headed for a crash reminiscent of 2008, which was triggered by overleveraged buyers who defaulted when prices nosedived.
“Today’s AI buyers are largely paying cash or tapping deep equity, removing the forced-selling dynamic that turns a slowdown into a crash,” explains the economist. “Prices could still pull back—a cooling in AI hiring would take the heat out quickly—but a dramatic collapse is unlikely.”