While national home price appreciation is stuttering to a halt and many states and regions are seeing price declines, San Francisco's median home sales prices continue to surge higher, a dynamic we expect to see continue in 2026. The underlying factors are an extremely inadequate supply of homes for sale vs. rapidly increasing demand due to the AI startup boom. Very fast sales and competitive bidding wars between buyers have become the norm. Though the city’s house market has been seeing the lowest supply and highest demand, its condo market is also experiencing a dramatic rebound. Rents have also been in rapid ascent with the influx of young high-tech workers eager to work in AI. Interest rates are near multi-year lows and stock markets, though recently volatile, remain at or not too far off all-time highs. Local AI startup valuations have been skyrocketing with substantial effect on employee wealth. Though national consumer confidence remains low and employment concerns continue, they don’t appear to be impacting San Francisco. As has been the case in the past 2 years, more affluent buyers seem poised to play an outsized role in demand. We anticipate a very heated spring market, and in the Bay Area “spring” often starts in February.