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SF BAY REAL ESTATE MARKET IS WILD – ARTIFICIAL INTELLIGENCE, MASS LAYOFFS, LACK OF SUPPLY, OHHHH MYYYY….

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AI, cryptocurrency, and space exploration will change the world. AI this, AI that. I have lived in the SF Bay Area for exactly 30 years moving here for a job after my MBA. I have lived and worked through multiple economic highs and lows, including tranformational changes to the world; I’ve did it, done it, and lived it.

  • I was an early pioneer during the Internet boom in the late 90’s, early 2000’s helping create new technologies, marketplaces, business models, and improving how people function in daily life. The Internet changed the world, but took longer than expected. After the dotcom bubble burst, the economy ramped up and the Internet truly shifted how the world operated.
  • In the mid-2000’s when I held Internet VP of Biz Dev roles, I worled with some of the largest subprime mortgage lenders. With 2 degrees in finance and former financial services strategy background, I anticipated the bubble when anyone with a pulse qualified for these subprime (“liar”) loans and no down payment to purchase real estate. The mortgage meltdown was a horrible time period as millions lost their homes to foreclosures tanking the US housing and financial markets that took many years to recover.
  • More recently, the Covid “black swan” impacted real estate in the SF Bay that would have been hard to forsee. We saw a drop in the 1st year of shelter-in-place, but then real estate demand spiked for single family residences outside major metropolitan cities like SF. People worked remotely and wanted more space during the lockdown. They moved to the suburbs and to vacation towns near mountains and oceans/lakes. High density cities with financial districts were deserted for a few years affecting both commercial and residential real estate markets in those cities like San Francisco. 

SF BAY REAL ESTATE IS A CONTRADICTION

The current SF Bay real estate market is in a really confusing dynamic now. On the negative side “Big Tech” companies have laid off thousands of employees as AI has allowed companies to eliminate some skilled engineers, data scientists, product managers, various business functions, and other operations across junior to mid-level roles . Some well known tech firms announced cuts in 2026 such as:

  • Meta 10%
  • Linkedin 500 locally
  • Cisco 4000 globally, 500 locally
  • Intuit 17% / 3k
  • Oracle 30k (yes, that’s thousands) globally, up to 1k locally

Over the past 6-12 months there are a variety of factors pulling at real estate supply and demand:

  1. Engineers and other skilled technical and businesspeople who have worked in Big Tech for a number of years have savings from “in-the-money” stock options and RSU. As of July 10, 2026 YTD Nasdaq is up 13% and up 70% from 5 years ago.
  2. There are very motivated, highly qualified buyers out there who are actively looking particularly in the $1.5-3.5m range.
  3. Given the shaky Silicon Valley job market, high inflation and general economic uncertainty, many potential buyers have postponed purchasing or decided to only casually look.
  4. With fewer active “move-up” buyers, this has affected the supply of available properties at the entry-level causing a supply constrained market.
  5. The SF condo segment was one of the weakest markets since the pandemic in the entire Bay Area due to exodus of workers from the city and remote work. Demand improved in 2025, and then spring 2026 saw a material increase in demand, and thus prices, for condos in SF partially due to the recently announced liquidity event with SF Bay based AI companies. Examples are:
  • Anthropic: The AI developer filed S-1 with anticipated valuation approaching $1 trillion, plus its many major acquisitions of other companies. 
  • OpenAI: The ChatGPT maker filed for IPO with a current valuation of over $850 billion. That’s “B” as in Billions
  • Databricks: Data and AI analytics platform is close to filing.
  • SpaceX: IPO with current valuation of $1.5T, that’s “T” as in Trillions!

QUESTIONS AND TAKEAWAYS FOR REMAINDER OF 2026

  1. Supply is low in SF, Peninsula and South Bay right now. Will supply increase in September/October 2026?
  2. San Francisco real estate is surging with low supply and heightened demand such that many properties including SFR, condos and even some duplexes are setting offer dates. Tjhis includes SF condos that are vacant, move-in condition, in desirable neighborhoods are going multiple offers after being very slow movers for past 5+ years.
  3. Segment of buyers who are waiting and seeing how the economy evolves and whether their companies will lay off more people as many people are feeling uncertainty with their job security.
  4. Move up buyers are slow to upgrade given shaky economy, and that their current property has a <3% interest rates compounding the opportunity cost of purchasing a larger/better home.
  5. Current uncertainty of the US and International political climate adds to nervousness of the current economy.
  6. Lastly, for my SF Bay Area readers, what will the Golden State Warriors do with the team without Lebron joining the team? Will they now trade Steph Curry and Draymond Green for young players and a haul of 1st round picks to rebuild?

As always, feel free to reach out to Peter.Tao@cbnorcal.com if you ever wanted to talk SF Peninsula real estate.

CONUNDRUM: TAKE INVESTMENT LOSS OR WAIT IT OUT?

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In the past month, I had conversations with a friend in San Francisco regarding his condo and with a different friend who invested some money shortly after the Figma IPO. While the asset class and personal situations are different, it dawned upon me, some of the decision considerations actually have similarities.

While most of the Bay Area real estate market post Shelter-in-Place since 2021 increased its market price, the segment for condos in San Francisco had been soft. He purchased the condo prior to Covid, and the value is about 5-8% below. He and family are considering a move out of the City just outside SF for a larger SFR house. However, he is reluctant to sell at a “loss” and prefers to wait until the market in SF improves a bit more so he can at least “break even” after selling expenses. 

Another “friend” jumped on the Figma IPO bandwagon. Figma is a cloud-based design and prototyping platform and it went big. IPO offering price of $33/share and skyrockets to over $140/share with valuation of over $60 Billion (with a B!) for a current unprofitable company. My friend bought it at $80/share thinking he is getting it at a “good price” with the big upside to the company and industry. It has recently been bouncing between $55-70/share and he’s not sure he has the stomach to weather the volatility. 

Having been in both those situations over the last 20 years personally and professionally, I get the conundrum on what to do. In my past life, I had been a VP of Biz Dev and Alliances for a couple high tech startups plus, I have degrees in finance. Still, there are no easy asnwers even for me, but I’m able to offer up an analytical framework and perspective on how to approach the dilemma..

Here are some considerations I would factor in from an economic and financial perspective:

  • Sunk cost: if currently seeing a loss, from a decision making perspective, you need to try and think of it as a sunk cost and make a decision based that if you were to keep holding on to it at whatever current market value, would that be a price/value today where you would actually invest in it if you didn’t already own it. For example, for Figma, it’s currently $60/share and you bought in at $80. However, what if you didn’t own Figma at all, and it’s trading at $60, would you consider purchasing shares at $60? If not, there should be strong consideration to sell. The same logic would apply to real estate from a pure investment perspective, but we know real estate is more than just a financial decision.
  • Opportunity cost: understand that with money tied up in that real estate or stock investment, you are now constrained with alternative investments. Could you reinvest that capital to a different stock or a different house that you believe may have more upside. For example, with respect to real estate, my friend who is leaning towards keeping his SF condo until the prices increase to not take a loss, what would be the option if he decided to sell at a slight loss? Let’s say if sold, and $500k of cash is freed up from the equity of the condo, could he then take that equity, purchase a different house outside SF; in this scenario, he would believe that if the SF condo market increased 5-10% over the next 2 years, what is the outlook for a different city or segment (house vs. condo) and could you predict higher or lower appreciation relative to the SF condo.

Now specific to real estate, there is a huge psychological and lifestyle factor much different than for pure financial investments:

  • Oftentimes, not selling the current property, limits the ability to purchase a different property especially in a “move-up” situation.
  • In a good situation where a person has the financial strength to purchase a different property without having to sell first, one must factor in being a landlord to lease, collect rent and property management.
  • Of course, selling at a lower price also is tough given emotional attachment if it’s a place you have lived in previously.

No easy answers for these scenarios, even more complicated when it comes to real estate. I am always here to help brainstorm the options and be able to provide pros and cons to different approaches so don’t hesitate contacting me.