The Bay Area real estate market continues to reflect one of the most polarized economies in recent history—a true K-shaped market, where wealthier, tech-driven buyers are thriving, while first-time and entry-level buyers face a more challenging environment.
In his latest market update, Bay Area realtor Spencer Sue breaks down how mortgage rates, stock market performance, and local housing data are shaping this split. Here’s what you need to know.
📈 The K-Shaped Bay Area Economy
According to Spencer, the Bay Area’s market is being driven by two distinct forces:
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Thriving Tech Professionals: Many established tech workers are benefiting from record-high stock prices and strong RSU compensation. With companies like Apple, Google, Meta, Nvidia, and Broadcom seeing enormous gains, these employees have more liquidity to buy or upgrade into luxury single-family homes.
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Struggling Entry-Level Buyers: On the other side, layoffs and the high cost of living have sidelined many first-time buyers, especially in the entry-level segment.
The result is clear: luxury and single-family homes remain competitive, while condos and townhomes have softened significantly.
🏦 Mortgage Rates Improve but Stay in a “Stable Band”
Mortgage rates have recently dropped to some of the lowest levels since 2022, now hovering around 6–7%.
However, Spencer notes that rates have been fluctuating within this same range for almost three years. He advises buyers not to wait for drastic improvements:
“If the numbers work for you, it’s better to buy now and refinance later if rates drop. Many homeowners who purchased at 7% are already taking advantage of free refinance programs.”
Refinancing activity has increased notably as rates dipped, creating more opportunities for homeowners to save money in the long run.
💹 The Stock Market’s Bull Run Is Fueling Luxury Home Demand
The NASDAQ and tech-heavy portfolios have seen over 100% gains since 2022, driving immense wealth in the Bay Area.
Companies like Broadcom, Nvidia, and Meta have contributed to this surge, with employees using stock gains or borrowing against stock portfolios to fund home purchases.
As a result, high-end single-family and luxury properties in cities such as Los Altos, Atherton, Burlingame, and Hillsborough are not just stable—they’ve surpassed 2022 highs.
For example, Los Altos’ median home price has risen from $4.7M (2022) to about $5M in late 2025, even in a seasonally slower market.
🏘️ Condos and Townhomes Continue to Soften
The condo and townhome markets tell a different story.
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Median condo price: ~$717,000 (down from $852,000 in 2022)
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Price decline: Roughly 15–18% below 2022 peaks
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Many owners are “holding and renting” instead of selling at a loss, leading to what Spencer calls “zombie properties”—units that would sell in a better market but are now being leased out instead.
He cautions that while the rental market has remained strong, condo owners should assess whether holding these properties long-term makes sense or if reallocating capital could yield better returns.
🏡 Single-Family Homes: Resilient and Competitive
Single-family homes remain the strongest segment of the Bay Area market.
Even though prices have fluctuated, they are generally stable or rising, particularly in desirable cities with limited inventory.
Luxury-tier properties—especially $3M+ homes—continue to outperform expectations, driven by tech wealth and limited supply.
“These are small markets that rarely add new inventory, and buyers have the financial firepower to compete,” Spencer notes.
📊 Seasonal and Countywide Trends
Looking at all counties—Santa Clara, San Mateo, Alameda, Contra Costa, and Marin—the data reveals consistent seasonal trends:
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August tends to be the slowest month of the year.
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September and October see a rebound in prices and transactions.
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November and December bring fewer listings—often 50–60% less than October—but some of the best deals for buyers.
Historically, spring is the most active selling season, but motivated buyers and sellers can find unique opportunities in the late fall and winter months.
🔍 Buyer & Seller Guidance
If You’re a Buyer:
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Single-family buyers: Expect competition at higher price points, especially for move-up or luxury homes.
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Condo and townhome buyers: Now is an opportunity—prices are down, competition is light, and non-tech professionals are finding entry points into the market.
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Consider leveraging stock-based financing or refinance options to improve affordability.
If You’re a Seller:
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Ask yourself: Would I buy my own home today at this price? If not, it may be time to sell or reposition.
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Options include:
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Hold and rent if cash flow is strong.
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Test the market now before spring competition increases.
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Prepare for a spring sale when demand typically peaks.
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Sell now and rebuy in winter if you’re downsizing or relocating.
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💡 Key Takeaway
The Bay Area housing market in late 2025 is a tale of two economies:
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The tech and luxury segments are thriving, fueled by stock wealth and limited supply.
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The entry-level and condo segments remain soft, offering opportunities for first-time and non-tech buyers.
Mortgage rates are stable, inventory is tightening heading into winter, and strategic timing—paired with analytical, data-driven decisions—will make the difference between missing out and moving forward.
“Every home has to be evaluated individually,” Spencer concludes. “It’s a confusing market, but that’s where having a clear, analytical plan makes all the difference.”