San Francisco Bay Area Real Estate: What’s New in 2025

Jenni: Welcome to the Modern Family Finance Podcast, where we talk about all things money, Career and life.

Jenni: I'm Jenny, your host and SF Bay Area financial planner serving women and LGBT professionals. So I'm especially excited about today's guest because we share a lot in common, not just professionally, but personally as well. So Dan Risman Jones of Ascend Realty is based right here in San Francisco.

Jenni: Dan and I not only help people navigate life's big financial decisions. but we also share similar journeys as LGBTQ parents with young kids. And I first met Dan through his husband, Stephen, who is also his business partner. So he also works with, so somehow we have decided in our crazy heads, it's a good idea to work with our partners.

Jenni: And Stephen is also a Taiwanese American like myself. And we actually met when I was living in Taiwan. So that was really fun. And Dan's deep knowledge of the San Francisco Bay Area housing markets makes him an amazing resource. Ascend Realty works across the San Francisco Bay Area, Silicon Valley, and LA, and Dan focuses on SF, Alameda County, Marin, and San Mateo.

Jenni: Did I get that right, Dan?

Dan: Yeah, that, that is perfect.

Jenni: Awesome. So today we're going to dive into everything from Bay Area market trends, which everybody's always interested in navigating mortgage rates and insights also into retirement and downshifting for folks who are just kind of also you know, feeling outpriced from the barrier market. What are people doing?

Jenni: So Dan, I'm excited to have you on the show. Anything else we should know about you?

Dan: Anything else to know about me? You mentioned a lot of it. Business owner parent of dog owner avid skier. Now that it's the winter time. So an investor. So I also own a bunch of properties, so happy to answer all of that.

Jenni: Awesome. And we happen to both live in the same San Francisco neighborhood the outer sunset. So what is your favorite thing about living in SF? And you lived in, I know different places in SF.

Dan: Yeah. I've lived in on the East Bay in Oakland, lived in Noe Valley, Castro mission, and now over in the sunset relatively recently. So favorite thing, cause move to the sunset coincided with getting a dog, a energetic, lovely working dog that needs to go out on runs. Every day, maybe, maybe twice a day is all the outdoor space that we have out on this side of the city. daily runs and Stern Grove, Fort Funston, Golden Gate Park the reservoir the great highway that's kind of on my docket every day. And I love it out doing that out here.

Jenni: Me too. I just came from a run from the Great Highway. It's awesome. Okay. So, actually, I'm curious. Anytime you're in a party and people find out you're in real estate, what's the number one question that people ask?

Dan: The number one question, I mean, market, Market trends is always the big thing. What is, you know, what's happening in the real estate market. So we just are out of the holiday season. You can imagine that I'm answering that question multiple times a party, multiple times a weekend to network in San Francisco and real estate and the holiday scene, I'm going to like three or four Christmas parties a night over the weekend and answering that question a lot.

Jenni: So, I'm sorry, but I'm asking, I'm going to ask the same exact question because that's what people want to know. What's happening with the market trends in the Bay Area?

Dan: So no crystal ball. So just getting that right off the, off the bat. But kind of looking back at 2024, the way I describe the 2024 market is a really a year of recovery and a very stable marketplace. And I think going into 2025, it's probably going to be the first year since the beginning of COVID that we actually see a normal I use that, you know, in quotations, a normal San Francisco Bay area market.

Dan: I mean, with the beginning of COVID single family home prices just kept going up. You had everyone wanting to have their backyards, their big spaces, their own private areas. then. With the inflation and the increase of interest rates, single family home prices actually kept going up because a lot of sellers a lot of homeowners wanted to hold onto their property.

Dan: So inventor inventory decreased the opposite happened for condominiums. A lot of people want to get out of condominiums condominiums that were on the rental market. Investors were trying to sell. So the prices went down and the interest rates going up just cause. Condo prices to keep going down. So you had these two markets that almost always run together, you know, having this big gap between them. 2024 we saw single family home prices start to drop and market correct, probably about 10 percent over the course of the year. we saw condominium prices start to go up. Back up probably about 10%. So that gap has decreased dramatically last year. By the end of the year, the market was pretty stable.

Dan: And now I think we're going to see a pretty normal market going into 2025 where condos and single family homes, you know, kind of start. Moving together once again, after five years of having divorce from each other

Jenni: Got it. Okay. So, I mean, if you were looking, if someone is in the market to either buy or sell, like would you call this a buyer or sellers market? Is that even a term to use?

Dan: in the Bay area, it's almost always a seller's

Jenni: Yeah.

Dan: It's just, it's, it's a relative term. We are getting, it's becoming more competitive for homebuyers 2024. Things did slow down and as a buyer, you could get more, it was less competitive. You had more opportunity. I think going into 2025, I'm already seeing a lot more competition out there, a lot more buyer demand.

Dan: And I think we're going to, this market is tightening up and it's going to be more of a seller's market. Even over the next month or so,

Jenni: Got it. Okay. And how would you kind of advise clients who are either thinking to buy or sell next year, this

Dan: I mean, the old real estate adage, it's always, you know, always a

Jenni: year?

Dan: but it really depends on, you know, what are you trying to get out of, get out of it, whether it's an investment property or, you know, your personal residence, almost always people, you know, You need to make the move when it makes sense for you. My partner and I, we moved from the mission to the sunset last year. It was not the ideal time for us to sell our home. It was our, we probably sold our house, our con our condominium out there for 100 to 200, 000 less than what it may have been at the top of the market. We still did quite well on it because we owned it for quite a, quite a while.

Dan: We had invested in it. We had remodeled it. but we sold it when it made sense for us and our family to sell it. And that allowed us to move out here to be closer to schools and what we needed in our life. So first and foremost, you buy or sell, especially a primary residence based on. Your own, you know, what, what's happening in your day to day life. But going into this year for 2025, I think the both it's a really, once again, a stable market. So. There is going to be some competition, probably not the crazy competition of 2018 when you saw 10 offers on a property or 2021 when you saw 1520 offers on, you know, single family homes. I don't think we're going to be in that.

Dan: So there is going to be competition, but not. Excessively. So and then for selling, think we are in an appreciating marketplace. So, you know, it's a good time. It's a much better time in 2025 to sell than probably in 2024 or 2023. Or even potentially parts of 2022.

Jenni: Got it. Okay.

Dan: being, it's becoming a more more solid time for sellers.

Jenni: Are there any top things that sellers should be doing to stand out to get more money for their properties?

Dan: Yeah. So the top thing especially that, that we're not in a super competitive marketplace. Is you want to make your home turnkey for a new home owner. here in the Bay area, we have, we work with a lot of high net worth individuals, people that work long hours that may be commuting an hour, hour and a half every each way, every day to their work. A lot of homeowners in San Francisco do not want to take on projects. So even small, even things from a homeowner standard point of view, maybe very small, very easy to take care of, not cost that much money or take that much time for a home buyer who doesn't know any better. That's a deal breaker for them. And I examples like changing countertop, replacing a backsplash, painting, refinishing floors, changing light fixtures. These are all pretty small, minimal items. Especially if you have an agent helping you do it. But for a home buyer, that can be the difference between buying or not an offer on that property. So making your home turnkey is really important. And me, I, I love colors. I love design. It bothers me so much when a that's been, you know, recently remodeled has had zero thought process put into what finishes and it's just all white. I think that that's really become an outdated thing from, you know, the Apple store. Style, everything has to be clean, white and pristine. Now people want color. They want, you know, pops of, you know, design in their, in their kitchens and in their baths. So spending a little bit of extra money to make that home stand out and memorable is important. If you're going to go that extra mile of prepping your home for sale.

Jenni: Got it. So one of the biggest challenge of folks buying today is mortgage rates. So I know you have no crystal balls, but how do you help clients who are like, well, maybe I should wait for the rates to come down. And what's your view?

Dan: So first off mortgage rates likely not coming down anytime, coming down much anytime soon. there may be some slight differentials in the interest rates. There might be a couple of drops. But they're not going back to the 3% probably in our lifetime, the, and then the interest rates and the prices are you know, they have an inverse relationship.

Dan: As interest rates go up, prices have traditionally come down. This was, you know, excessively shown during, you know, 2020. Condominium would drop 100, 000, 200, 000 in price you know, six months of the interest rates going up. And for me personally, I would, if you have the income to support it, would 100 percent rather pay a higher monthly mortgage than pay 200, 000 or 300, 000 more on a property. Long term, it's much more to your benefit to have that higher interest rate for lower price point going forward, though taking taking a step back at right when that happened, a lot of people left the market buyers didn't want to buy sellers were not willing to sell for a lower price point nowadays. buyers and sellers came back to the market and they're willing to start transacting again. because they know that this is the new normal and 2025 is not going to change that.

Jenni: Tell me about like the mortgage rate problem. So we have people I've talked to plenty of people who are like they bought a starter home. They were able to lock in that 3 percent mortgage. They want to upgrade, but they feel totally stuck. And they're like, how do we ever, Is there a way to kind of keep our mortgage or something like that?

Jenni: And I know the general answer is no. On the internet you can find terms about something like assumable mortgage. Like in reality, well first of all, what is an assumable mortgage? And two, in reality, is that even really feasible in the Bay Area?

Dan: So an assumable mortgage is a mortgage that one homeowner has and when they sell the property, the next homeowner is able to take it over or assume it. The benefit of this is if you had a mortgage at 3 percent and you're going to sell the property. Then you might be able to get a higher price point because you can promise the next homeowner a lower interest rate. So once again, it goes back to your month, you know, what, what is your actual monthly payment, not what is the price of the property so that that is what an assumable mortgage is in. And I have, I have had a lot of questions about this. I have a lot of, investors. A lot of random people calling me who have never seen a property.

Dan: I got a phone call two days ago from this woman in Hawaii who all she does is call every agent asking if they have a property that has an assumable loan on it and that's their job and I'll never hear from her again. but in the Bay area, there's very few loans that are assumable. I think a lot of VA loans are assumable, but we don't have a lot of those in the Bay area, especially in San Francisco and the actual process of assuming a loan can take much more than the normal 30 day period to buy a house and not all sellers are willing to go through that process. So in, you know, 15 years of doing this, I actually have not, though I've had a lot of conversations about it, I've never actually gone through the process of getting, of doing an assumable loan because it's just not something that happens. Day to day in this area,

Dan: unfortunately, if you're if really your your life plan is to move, there's No way to really keep your assumable low, keep your loan, keep your interest rate that I'm aware of your new property. There may be ways to get around moving if what you need is more space. If you're in a single family home and you're able to develop into an unused attic, develop into a basement you have, maybe you have a detached garage that you could build out into office. I had one client. was in a condominium, but they had their own private yard.

Dan: They love their space, have a good interest rate. They actually got us a prefabricated storage shed. And when I say storage shed, like it's a beautiful shed with nice walls. And, you know, it looks like, you know, it looks like when you're, you're, you're style, Apple store style shed. But it's a hundred square feet and they just craned it over their house. And put it in the backyard and that became their office and that helped that stopped them from moving because now they had that extra space that they needed. So there may be ways to get around actually selling if you really are tied to your home because of the interest rate, you may be able to develop your property into more space.

Jenni: Yeah, well, I love that. It's also very personal because we're about to undergo a pretty significant home improvement ourselves to create more living space. But speaking of that, like, so for folks who are in that situation, how should they think about, like, I often get the question of, well, like, how much should I put into the house?

Jenni: So let's say the house. is a million dollar house in a neighborhood. They can actually afford more now, but you know, there's this interest rate problem. They don't really want to move. They can't find anything better without actually spending two million. They want to develop it, but they're like, look, if I put five hundred thousand, I'm going to be the most expensive house in the area.

Jenni: Does that make sense from an ROI perspective? Like, how do you think about how much you should or, you know, I realize it's personal, but like from a real estate investment perspective, how do you think about that?

Dan: Well, I get, I get two different parts of that question. I say, first and foremost, talk to your trusted real, your trusted realtor. If you don't have one, feel free to reach out to me. But I do that often for my clients who are going through a remodel, a development project. For me personally, I'm feeling I'm a, I'm a real, they're real estate agent for life, and if they have questions about refinancing or remodeling, I'll go in there and I'll tell them, you know, I know you're not planning on selling this year, but if you sell in five or 10 years, this is the, this is what's important. For the value of your property. This is the most important thing to do. this may be just extra or, you know, gravy on the side. If you want to put your money in, your bath, you know, do a hundred thousand dollar remodel of your primary bathroom, you know, that's nice. you going to get all that money out?

Dan: Maybe not. you develop your basement for 400 square foot, and you can sell it for a thousand dollars a square foot, that's gold. I definitely go in and talk to my past clients, my friends all the time and give them advice on their remodel. And a lot of agents will do that if you have someone that you work with. and then on the second aspect of that question is, is it worth doing it? There's the project that you do for selling. And there's a project that you do for living in it. And if this is really a home that if you can do this project, you can get five years or 10 years more in that home. Maybe it doesn't make financial sense on an ROI standpoint to do it, but on a lifestyle, if you like your community, you like your neighbors.

Dan: You like the location your kids have been raised in that house and, you know, and day to day you're getting value out of it, it doesn't have to make financial sense.

Jenni: Yeah,

Dan: shouldn't, it shouldn't make, be financially crazy,

Jenni: right.

Dan: Yeah,

Jenni: But that's good advice, right? I think what I'm hearing you say is like, if you're going to do a major remodel it would be worth talking to a trusted real estate agent just to kind of get their advice on what would be the ROI. And would it be correct to assume that like your best ROI is increasing livable space, you know, like if you had an unfinished building?

Jenni: First floor kind of thing, basement, garage situation, like a lot of us in the Outer Sunset. Beyond, like, if that's true, beyond that, like, are there other one or two big things that you feel like in general that would be the best ROI that you would point to?

Dan: Number one is increasing the floor, the square footage, especially if you can do that without changing the envelope of the house or major, major construction. Second would be if you can go from a one bathroom to a bathroom, that can be a big thing, especially for these two bedroom, one bath, single family homes or two bedroom, one bath condo. You can, can increase the number of bedrooms, you know, my, my who moved out here years ago, they actually just finished a remodel. They turned their oversized, very inefficient kitchen. Into a kitchen dining area there. And then they gained their dining room now has become a third bedroom.

Dan: So they actually went from a 1200 square foot, two bedroom to a 1200 square foot, three bedroom. After doing a remodel and you know, 50, 000 into it, they've increased their value of their property by more than that,

Jenni: Okay. So let's go back to kind of the buyer challenge. So let's say this person says, I just can't live in this house anymore. I got to go buy, I got to switch it, sell this one and buy another one. In terms of like trying to manage that, well, I suppose multiple questions is like in terms of like a competitive situation is it still like oh you need a ton of cash like you said it's kind of becoming more of a Stable markets, potentially seller's market where you can get good prices.

Jenni: Like do buyers have to come up with a more than 20 percent down payment or how do you advise when it comes to the percentage of down payment?

Dan: 20 percent is generally the, the go to, and most of my clients are. are buying with 20 percent down. Even in the most competitive time period, most homebuyers were getting loans with 20 percent down. That point in time, there were startup companies that were trying to do cash deals that were incredibly not appealing or compelling for home buyer to utilize financially. of people felt they needed to, in order to be competitive. And sometimes if you're really in the thick of the most strong, you know, strongest neighborhoods in San Francisco you have to do you need to do to buy the home. But the vast majority of my clients are getting loans with 20 percent down. Condominiums are still sitting on the market for. 20 plus days. And most are not going into contract with, you know, multiple, you know, multiple offers, or if they are, you know, two offers, maybe three single family homes are always a little bit more competitive, but even those, you know, even though it was a good numbers are sitting on the market, majority are still going in the market. Going into contract within a week or two, there's a, definitely a good chunk of them that take a bit of time, may have price reductions or may only get one or two offers and you don't have to be all cash or 50 percent down in order to when a competitive, competitive offer, you may need to make an offer clean and we, you know, talking about. Contingencies, you know, waiving finance and appraisal to be competitive. Cause that still happens even with two or three offers, most of those offers are probably getting loans.

Jenni: So let's talk about just Bay Area neighborhoods.

Jenni: Are, like, can you tell me what have been, what are some of the shifts you've seen in the popularity or price points of neighborhoods in the Bay Area, kind of across all these different areas, whether it's North Bay, South Bay, East Bay, San Francisco you've already mentioned that, you know, SF condos and SF single homes have a pretty different trajectory.

Jenni: Like, what are some of the other trends you see?

Dan: Got it. Yeah, we have I would say the s san francisco market and then as you go down the peninsula the You know northern peninsula and then the southern peninsula they tend to have similar trends, you know Just because if people Anyone living generally along that corridor, a good chunk of them are working in tech and a good chunk of them get impacted by the same, you know, the same issues. So the, the market, the Bay definitely has seen prices, especially a lot of this has come. Gone back to the call back from work from home trend that has happened over the past year, where a lot of the major companies are requiring two days, three days, four days of being in the office every week. So that has impacted the S S F and the peninsula market significantly on the. Other hand, it's also impacted the Marin market. And the Northern, the Northern North Bay, the Napa Sonoma market, where those have gotten softer because people that may have moved up there when they could work from home may no longer be able to do that going forward. you know, there's fewer people that are winding up up there if they have to now work back in the office. So we've seen the North Bay market become, you know, it's still, it's still The seller's market for most, you know, for the most point but it is softer than what we saw several years ago. East Bay the market has, I would say has slowed down and has become softer mostly because the prices just went so crazy during, you know, during COVID that so many people wanted large spaces.

Dan: That's just more, probably more of a market correction. And I think that's probably more short lived. but they did kind of drop and drop in price, I would say in 2024. And I think that they're probably more stable and kind of rebounding a bit because you can get good deals over there now. So people are moving back, into looking at that

Jenni: East Bay. Yep. What about the fires? And I speak about the fires from the perspective of like, let's just say up in the hills in Oakland, right? Like those areas from a house, from a buying selling perspective, and also the concern that people have about being able to get property insurance. If they buy this home, I've heard of people even selling homes because they can no longer get property insurance.

Jenni: And then concern about buying homes to get property insurance.

Dan: Yeah. And I mean, incredible to see what's happening down and so Cal right now in the Palisades and Altadena. The fact that that an entire neighborhood of a major city could be destroyed or a couple neighborhoods. That may give a lot of pause to people living up in the Oakland and Berkeley hills where fire, you know, could be more prevalent and you could see something that, you know, similar to what happened down in Southern California the most part when, you know, with wildfires have happened, prices have actually gone up because it's decreased the amount of inventory in a certain area. We saw that in Santa Rosa, that after that fire, values of homes that survived went up

Jenni: Hmm,

Dan: people need new housing or, you know, there's more there's more demand for the housing that existed. Insurance has made it expensive, but I don't, as long as you can afford it, To pay that insurance, you know, there's still been competition on those properties. But, you know, we may see a very different thing happening over the next six months after the Palisades and Altadena fire.

Jenni: So for some folks they're interested in real estate as an investment and perhaps it's because they Had a starter home in the barrier and now they have upgraded the first home and their question is, should I keep my first one and rent it out or they moved out of the area and they've got a lot of appreciation in that first house and thinking, should I keep it for rental?

Jenni: How do you feel? I think the challenge in the barriers to make this work is that usually if you kind of look at rental yield relative to the value of the house, it's quite low. You know, so versus like. What you could get in other parts of the US. So how do you help clients think about real estate as an investment in the Bay Area?

Dan: Yeah. And I've gone through that same decision process myself. And I like what you call the, the rent, the rental yield. because there are, there is the. The rent to purchase ratio, like how much can you buy a house for versus how much you can rent it for. I don't think anyone's surprised that San Francisco falls on one really far end of that spectrum.

Dan: I think it, when I last checked, this was several years ago. San Francisco was the last city on that spectrum having the worst ratio. And then on the other side of that, you have a lot of Midwest cities Rust Belt cities Southern cities secondary kind of areas where you can get based on the price of the property you can purchase, you can get a lot of rental income. So your return on investment, it, you know, it looks really strong, but when I talk to people who are thinking about investing, I use the metaphor of like a three legs of a stool or three points of a triangle that. When you're looking at investing, you have the, like the monthly return on it. So how much, how much rental income are you making?

Dan: That's one, the appreciation, how likely is that market to go up in value over time and make you money in equity. And then the third item is the security of the asset. Not everyone is, is investing for money. Sometimes people just need a place to plot money to diversify their assets. So you have three different, three different points and you can generally get one or maybe two of them. Almost never three. San Francisco, not great on the rental income, but we are generally a very secure, strong market if someone needs to diversify their, their portfolio. This is a great place to invest because we hold our value quite strongly. And then the second is appreciation. Generally the Bay Area tends to appreciate quite a bit over time. So if you're looking at it from that standpoint, San Francisco in the Bay Area can be a really great investment option if you want to invest in the Bay Area, but you want stronger rental income, you can look at towards the East Bay. You can look towards the Central Valley Central Coast. Those areas you may get a lot better monthly rental based on the purchase of purchase price.

Jenni: That's great. Thank you. Yeah, that's very helpful. I like that framework of the three legged school stool to think about this. And I do think real estate in general, whether it's for obviously if it's for your primary residence, but also as a second home or as an investment, a lot. Part of it is a financial calculation, but also a lot of it is personal and your preferences, right?

Jenni: That's just as important.

Dan: A lot of it's personal and anecdotally, it's been interesting. Usually one of the slowest months in real estate, if you can imagine with the holidays and everything about this year, got six, six clients in a contract, four of them were buying, In a house hacking manner where it was multi unit building. They were the, my clients were planning on living in one unit and then the other unit was, was already rented out or going to be rented out to lower their monthly payments. And for a lot of these, like buying a multi unit building was less expensive than buying, you know, a single family home or a condominium on, on their own. And then they could. Gain the additional benefit of having the income from the tenant.

Jenni: Yeah,

Dan: really interesting. units are multi units have gone down in value a lot recently. I'm over the past several years. there's some great deals out there. And if you're, I mean, if you're in the bay area and you're under rent rent control rent control city, you know, there can be. The headaches that come along that with being a landlord you know, everywhere there's headaches with being a landlord, but in a rent controlled city, you have to be more careful of how you interact with your tenant. But if you're willing to do that, you can get some really great value properties. In great neighborhoods for a 70 percent of the price of what a condominium or a single family home make.

Jenni: that's great. Yeah, I like, I like house hacking. So are there particular areas of the barrier that you feel like are or are better both in terms of the availability of these properties and also the rent control problem?

Dan: I mean, the ones that we closed this month, one was in Berkeley, one was in Oakland, and two are in San Francisco.

Jenni: so it's still all areas that people want to live in. Yeah.

Dan: all areas, I mean, you don't necessarily have multi unit buildings. In all parts of the, you know, there's not a huge number of them in Marin. Compare, you know, comparatively you kind of have to, you're kind of looking at some of this the major cities, you know, San Jose definitely has a lot of, a lot of multi unit buildings, San Francisco, Berkeley, Oakland are areas that you're going to find a lot of those.

Jenni: Okay,

Dan: And in rent controlled areas, the in cost is going to be greater because of the rent control being on the books.

Jenni: gotcha. Okay. Well, thank you so much, Dan. Uh, so if folks are interested in learning more, where can they best find you? Awesome. Cool. And we will link to all of that, too. Thank you.

Yeah. Yeah. Yeah.