Home prices in the San Francisco Bay Area’s already expensive market are skyrocketing as employees at leading artificial intelligence companies come into gargantuan sums of money thanks to a boom in initial public offerings.
With San Francisco’s OpenAI and Anthropic, as well as SpaceX, which operates a major facility in the Los Angeles area, eyeing debuts on the stock market, the hot housing market may not abate soon. If their initial public offering (IPO) is well-received, the companies’ multibillion-dollar valuations are poised to produce massive wealth for employees and executives holding shares, which experts say could trigger an uptick in demand for the Bay Area’s limited housing stock.
As of March 2026, the median home sale price in San Francisco was more than $2m, according to a report from real estate brokerage Compass, an 18% increase from the previous year. That same month, on average, a house spent 29 days on the market before being sold, the fastest sale rate observed since spring 2022, per the report. And experts say demand is likely to further increase, while supply remains low.
“My joke is that you have to show up to whatever the open house is. Be there a half-hour early. Have a bag of cash with you. Be willing to pay. It’s ridiculous,” said Quintin Mecke, executive director of the Council of Community Housing Organizations, a coalition dedicated to affordable housing.
The recent flush of capital in the metropolitan area can probably be traced to tender offers – employees given the opportunity to sell their equity – at major AI companies. More than 600 employees at OpenAI, the company behind ChatGPT, cashed out last fall on shares that collectively totalled $6.6bn, the Wall Street Journal reported in May. Of that group, roughly 75 people pocketed $30m each.
“If somebody’s thinking about it wisely, they’ll be thinking: ‘Well, I have this large sum of money coming my way. What is a large purchase that I may need to acquire at some point?’ And the home is on that very short list,” said Drew Wilkerson, a real estate adviser with Sotheby’s International Realty.
Record-setting IPOs shake up market
Wilkerson and real estate agent Spencer Hsu, who estimates about 80% of his clients work in AI, have seen competition become particularly fierce in the higher end of the market where homes sell for $5m and above.
“Just this last week, I had five calls from new buyer clients who said: ‘I know that OpenAI and Anthropic and SpaceX and these IPOs are going to happen. I want to try to get in the market before that wave of money comes,’” Wilkerson said.
Even though home prices are high, some of these potential buyers reason the market will only get more expensive post-IPO. “‘I might as well just buy it now,’” Hsu said, describing their mentality.
High-earning tech workers influencing the Bay Area’s housing market is not a new phenomenon. The dotcom era ushered in a millionaire class plucked from the C-suites of buzzy internet sites. In the ensuing so-called “gold rush” era, “shares went up like crazy … house prices soared”, said Ken Rosen, chair of the University of California, Berkeley’s Fisher center for real estate and urban economics.
A similar housing dynamic played out again in the early 2010s, when employees at Twitter (now X) and Facebook (now Meta), among other top tech firms, got substantial paydays from those companies’ IPOs.
Two factors may distinguish those time periods from now. For one, Anthropic, OpenAI and SpaceX are looking at record-setting valuations. While Twitter priced its initial offering at $26 per share and Facebook at $38, SpaceX is looking to sell at $135 per share, at an overall valuation of $1.77tn – making it the largest IPO in history.
Additionally, many of the big tech companies that went public in the 2010s are headquartered in Silicon Valley, about 50 miles south of the city. Some employees opt to live nearby, while others commute from San Francisco. But Anthropic and OpenAI are both headquartered in downtown San Francisco, and their employees may be more likely to put down roots near their offices.
“The interesting tension … in San Francisco is you have this extremely high demand, but inventory doesn’t really ever rise to meet that,” Wilkerson said.
The city has long drawn scrutiny for being slow to build new housing. The time it takes for new housing permits to be processed has significantly decreased in recent years, but San Francisco still lags behind other cities in that department.
Single-family zoning has also historically hindered new residential construction. San Francisco mayor Daniel Lurie recently signed a rezoning law aimed at expanding the supply of housing with taller, multi-unit buildings.
Uncertainty swirls around future of home prices
Others are not so keen on joining the flurry of activity. Some current homeowners, according to Wilkerson, contemplated the possible windfalls from selling to eager buyers but may be deterred by being subject themselves to expensive prices.
Daryl Fairweather, chief economist at Redfin, also noted that for anyone purchasing a home right now, the price it may fetch in the future may be less than what they paid if the upward trend does not persist.
The AI wealth boom has also sent ripples through both the higher end of the market and the lower end, which typically includes renters. Low-income households, which in San Francisco could mean a family of four making six figures – may feel the squeeze, according to Mecke.
The average rent for a one-bedroom apartment is at an all-time high for the city at $4,000, according to a May report from Zumper, a rental listings site. The average two-bedroom costs $5,500.
Among the neighborhoods facing the biggest increases in rent have been downtown San Francisco, SoMa, Mission Bay, Pacific Heights and Hayes Valley, according to the San Francisco Chronicle.
It remains to be seen when the housing market will cool down.
Questions linger about the profitability of the AI boom, as companies invest in data infrastructure without significant earnings yet. “Booms are always followed by busts. Always,” Rosen said.
In the aftermath of the dotcom stock market crash, “house prices corrected downward for the next four years, five years”, Rosen said. “Easy come, easy go.”
