If you thought techies were to blame for pushing up the housing market during the booms of the past, you ain\u2019t seen nothing yet. A flood of wealth from AI-related companies has begun to wash over San Francisco, showering billions on employees who suddenly need somewhere to stash their windfalls \u2014 and often look to real estate as the first stop on their buying sprees.\u00a0<\/p>\n
Unlike in past booms, AI companies may not even need to go public to unlock vast sums of wealth for their workers.\u00a0<\/p>\n
Facebook\u2019s valuation was over $100 billion when it went public in 2012, and Uber was worth about $82 billion when it hit the New York Stock Exchange in 2019. During that seven-year span \u2014 which also saw the initial public offerings of Twitter, Box, Zendesk, and Twilio \u2014\u00a0median home prices in San Francisco more than doubled.\u00a0<\/p>\n
But these IPOs are \u201csmall potatoes\u201d compared to what could happen to the real estate market after it\u2019s jacked up with AI money, according to Patrick Carlisle, chief market analyst at Compass, who has tracked Bay Area real estate data going back to the early 1990s.<\/p>\n
OpenAI\u2019s valuation just jumped from $300 billion to $500 billion \u2014 equivalent to five Facebooks at IPO stage \u2014 while archrival Anthropic recently reached $183 billion. Employees of both companies are cashing out thanks to offers that allow them to sell their stock on the secondary market.\u00a0\u00a0<\/p>\n
An \u2018economic tsunami\u2019<\/b><\/p>\n
Bay Area home prices tend to go up when a local tech company goes public because employee stock-option programs create overnight millionaires who can pay in cash for their homes. Even more employees can plunk down hundreds of thousands for large down payments, increasing demand for homes and making it difficult for those outside of tech to compete.\u00a0<\/p>\n
Stock grants from tech giants, many of which are based in the South Bay, continue to have an impact on the wider Bay Area real estate market, which is one reason home sales slowed this spring <\/a>as financial markets seesawed on tariff news. But the AI startup scene<\/a> is based firmly in San Francisco, which means the riches it creates could disproportionately be spent within city limits, Carlisle said.\u00a0<\/p>\n \u201cIf the worldwide AI economic tsunami continues, then I would expect an accelerating explosion of wealth in San Francisco,\u201d he said.\u00a0<\/p>\n Both SoMa-centered Anthropic and Mission Bay-based OpenAI have allowed employees to cash out pre-IPO by selling shares back to the company, in the case of the former, or to outside investors, for the latter. OpenAI employees sold shares worth $6.6 billion in a recent deal with Thrive Capital, SoftBank, and T. Rowe Price, among others.<\/p>\n Carlisle can see no other reason why his stats show a 35% increase in sales in San Francisco in September versus one year before \u2014\u00a0an increase agents had been anticipating given the surprisingly hot late-summer market<\/a>. Year-to-date median prices are also up by almost 4% to $1.7 million, still off from peak values but continuing an upward trend.<\/p>\n Compass agent Nina Hatvany said the voraciousness of buyers\u2019 appetites starting right after Labor Day weekend caught her by surprise. Usually, \u201cwait and see\u201d is the reaction to September\u2019s increased inventory. This year, buyers called her while she was still on vacation, in part because they sat out the unusually tepid spring market and in part because they feared AI workers would increase competition for the few listings out there. September\u2019s listings were up from the August lull but still 28% below the same month in 2024, according to Compass.<\/p>\n Hatvany said it\u2019s possible that the impacts of the AI economy on the city\u2019s housing market could eventually exceed those of previous cycles, but at this early stage it looks an awful lot like previous tech booms she has experienced during her 35 years in the business.\u00a0<\/p>\n \u201cHere we are again,\u201d she said. \u201cThe same type of people, same type of excitement and energy.\u201d\u00a0<\/p>\n One thing that is different this time around, though, is how many people are calling her to rent for-sale listings, a testament to how the AI world has already pushed up the rental market<\/a>.\u00a0<\/p>\n \u201cPeople are calling as though they were just, like, regularly available,\u201d she said. \u201c\u2018Hi, can I lease this? I can pay a really good rate. I can pay $30,000 a month.\u2019\u201d\u00a0<\/p>\n These would-be renters are happy with a large monthly payment to save themselves from making a long-term commitment, especially when another financial windfall could be around the corner.\u00a0<\/p>\n Sometimes her sellers take them up on the offer, figuring that the housing market will be even better in a year or two and they can make a substantial sum renting their property in the meantime. That reduces the\u00a0 inventory of homes for sale and makes buyers for the few listings that do come on the market all the more aggressive \u2014 and a lot less picky.\u00a0<\/p>\n