For the past several months, a severe shortage of homes for sale has turned San Francisco into a pressure chamber for competition.
Buyers have been moving quickly, bidding aggressively, and in many cases giving sellers extremely favorable terms.
But as we head into fall, something is changing.
Inventory is beginning to return.
Some of that is normal seasonality. But I also suspect we’re seeing opportunistic sellers recognize just how strong the market has become and decide to take advantage of it.
For now, buyers are still competing aggressively. The bigger question is what happens if inventory continues to build.
At some point, buyers may suddenly find themselves with more options and sellers could lose some of the extraordinary leverage they’ve enjoyed this year.
We’re not there yet. But it’s a shift I’m watching closely.
One of the clearest signs of just how competitive the market has become is overbidding.
In August, 85% of San Francisco single-family homes sold above their asking price.
The last time we saw overbidding at roughly this level was during the pandemic-era housing boom, when mortgage rates were considerably lower.
That makes today’s level of competition particularly noteworthy.
Despite a very different interest-rate environment, buyers are once again bidding over asking on the vast majority of single-family home sales.
Homes Are Being Absorbed at an Incredible Pace
Another way to understand the current market is through the absorption rate
Absorption measures how quickly available inventory is being bought by comparing the number of listings in contract with the number still active.
And recently, that number has surged.
In June, San Francisco’s absorption rate reached a staggering 90%, significantly higher than anything we saw during the pandemic-era boom.
In August, it remained elevated at 70%.
Put simply, available homes have been getting absorbed at an unusually fast pace.
And a major reason for that is the lack of homes available in the first place.
San Francisco’s Inventory Has Collapsed
This may be the most important chart.
At the September 2020 peak, San Francisco had more than 2,100 active single-family home and condo listings.
At the end of August 2026, there were just 568.
That’s roughly one-quarter as many active listings as that 2020 peak.
For desirable single-family homes, overbidding, contingency-free offers, short closing periods, and seller-friendly terms have become increasingly common.
But now comes the question:
What happens if fall inventory spikes upward?
Could the Market Be About to Shift?
We’re already beginning to see more homes come to market.
That doesn’t mean San Francisco is suddenly becoming a buyer’s market. But real estate markets are ultimately driven by the balance between supply and demand.
If inventory continues to increase while buyer demand stays relatively stable, buyers will gradually have more choices.
And once buyers have more options, they may no longer feel the same pressure to bid as aggressively, waive as many contingencies, or offer terms overwhelmingly favorable to sellers.
That’s the potential shift I’m watching this fall.
What This Means for San Francisco Sellers
If you’ve been thinking about selling, current conditions are worth paying close attention to.
Limited inventory and intense buyer competition have created an unusually favorable environment for many sellers.
If more competing properties come to market this fall, some of that leverage could begin to soften.
But that doesn’t mean everyone should rush to sell.
One of the most important questions is “What happens after your sale?”
If you’re planning to sell and immediately buy another home in San Francisco, you’ll likely be entering the same competitive market you’re benefiting from as a seller.
And if your plan is to rent, today’s elevated rental market should also factor into the decision.
Selling a home isn’t just about maximizing the sale price. It’s about making sure the entire move makes sense for your situation.
What This Means for San Francisco Buyers
For buyers, I won’t sugarcoat it.
Today’s market is difficult. But we’re consistently seeing prepared buyers succeed
The buyers who are winning tend to be confident, decisive, fully pre-approved, and perhaps most importantly educated about what homes are actually selling for.
That’s particularly important in San Francisco. We educate our clients based on sold prices, not simply asking prices.
Unlike many real estate markets, San Francisco list prices are often used as part of a property’s marketing strategy and may not reflect the price a seller ultimately expects to accept.
When 85% of single-family homes are selling above asking, relying on list price alone can give buyers a very misleading picture of value.
Instead, we look closely at recent comparable sales and what buyers have actually been willing to pay.
That gives our clients a much more realistic understanding of a home’s value and what it may take to win.
What We’re Watching Next
The San Francisco real estate market remains highly competitive.
Overbidding is near levels last seen during the pandemic-era boom. Homes are being absorbed at an unusually fast pace. And available inventory remains dramatically below its 2020 peak.
But inventory is beginning to return.
The next several weeks should tell us a lot.
Will buyer demand absorb the new supply just as quickly? Or will buyers finally have enough options to become more selective?
Will buyer demand absorb the new supply just as quickly? Or will buyers finally have enough options to become more selective?
We’re always happy to help you make sense of the market and determine the right strategy for you.
