Just a few years ago, San Francisco epitomised the national narrative of post-pandemic urban decline. Now, propelled by the surge in artificial intelligence, the Golden City and its surrounding areas are rapidly emerging as the most sought-after housing market in the nation. Flush with cash — and highly valued stock options — tech workers are entering the housing market in droves, driving up home prices and, increasingly, rental properties as well. San Francisco home prices are experiencing their most rapid growth in almost ten years, with the median home selling for $1.7 million, as reported by Redfin. In contrast, the national median home price stood at $440,600 in June, as reported. Approximately one-third of home sales in the Bay Area were conducted as all-cash transactions from April to June, according to findings from Redfin. That represents a notable increase compared to a few years prior. San Francisco is experiencing an influx of “newly minted millionaires” in the AI sector actively participating in the housing market, according to John DiDomenico, as reported. These new entrants to the housing market are now vying with employes and investors from major tech firms for homes, resulting in a “frothy, very hyper-competitive market” in the city, DiDomenico stated. In recent months, it has become increasingly typical for a highly sought-after property to attract bids exceeding the initial asking price by over $1 million, according to DiDomenico. He recently collaborated with a client who placed a property on the market for $6.5 million. It garnered numerous bids, with several exceeding the asking price by hundreds of thousands of dollars. The seller ultimately accepted an offer exceeding $8 million. “We’ve never really seen this before,” he said of the city’s real estate industry.
The true spike in demand began showing up in the data this spring, according to Daryl Fairweather. “The San Francisco housing market has always been tied to booms in the tech sector,” Fairweather said. “But AI is different because of the way it concentrates wealth to a more limited set of people: the ones working for these AI companies or who are invested in the AI companies, because most of them aren’t public yet.” And “In a way, it’s more extreme, because it’s a smaller group of people who are shaking up the real estate market,” she added. Paul Belmonte divested his property in Seattle last year and relocated to San Francisco to pursue a new opportunity in the biotech sector, following federal budget reductions that impacted his position at a nonprofit organization in Seattle. He intended to rent as he assessed his long-term commitment to the city, with the eventual goal of purchasing a property. Belmonte secured a rent-controlled flat at a monthly cost of $3,250. It lacked a dishwasher and air conditioning, conveniences he had become used to in Seattle; however, he believed the compromises were only temporary. However, two months prior, Belmonte, aged 34, began the process of searching for a purchase – and the reality of the situation became apparent. Collaborating with a real estate agent, Belmonte swiftly observed that properties within his budget were transacting at significantly higher prices than their listed values. “The prices being advertised are not the prices these places are selling for,” he said. For houses, they’ll list them for $990,000 in the Outer Sunset [neighborhood of San Francisco] and it’ll sell for $2.5 million.
It is bonkers,” he said. In the aftermath of the Covid-19 pandemic, San Francisco experienced a notable decrease in its population, with a loss exceeding 60,000 residents from 2020 to 2022, as indicated by US Census data. As technology firms adopted remote work policies, a significant number of residents departed from the urban environment. Office buildings and retail corridors have been vacated, with San Francisco serving as a symbol of the difficulties confronting cities in the aftermath of the pandemic, including a rise in street homelessness and an uptick in petty crime. However, the trend of departure seems to be shifting. The city’s population commenced its recovery in 2024 and 2025, as indicated by the most recent US Census data. Major AI companies such as OpenAI and Anthropic mandate that the majority of their workforce engage in in-person work for a portion of their schedules. Their hiring boom has attracted a fresh influx of tech workers to San Francisco and its surrounding commuter suburbs, further straining an already tight housing market. The city’s real estate frenzy has extended into the rental market as well. Rentals in proximity to train station stops or within walking distance of prominent AI company offices are experiencing increased demand from rank-and-file tech workers. One-bedroom rents have increased by nearly 23%, while two-bedroom rents have risen by nearly 26% compared to the previous year, as reported in July by rental marketplace Zumper.
The average rent for a two-bedroom flat in the city has now exceeded that of New York City, which has historically held the title of the nation’s most expensive city for rents. Even AI workers at smaller companies and startups are experiencing the ripple effects of the substantial wealth being generated by employes at major AI firms. Active listings in the city have decreased by approximately 30% compared to the previous year, a trend partially influenced by an increasing number of renters opting to remain in their current residences rather than explore the market. This has resulted in a diminishing supply of available units at a moment when competition is becoming more intense, Zumper discovered. Lately, Belmonte remarked that even the prospect of upgrading from his current rental appears unattainable. Comparable apartments frequently command rents exceeding $1,000 per month above his current payment. Belmonte has developed a fondness for San Francisco; however, he noted that the high cost of living occasionally prompts him to consider a return to Seattle. “When I think long term about family, I’d love to have a house. If I have kids, I want them to have their own room,” he said. “If I think about it, I get stressed out. How in the world am I going to be able to do that here?” And “At this point, I need to hang on to this one bedroom forever,” he said. Some in San Francisco believe this could merely mark the onset of a more extended real estate boom in the city.
OpenAI and Anthropic are both anticipated to enter the public market in the near future, which could result in the emergence of thousands of newly affluent individuals benefiting from stock gains, thereby influencing the housing market. In June, SpaceX executed the largest IPO in history, resulting in substantial financial gains for several long-serving employes. The blockbuster debut provided a glimpse into potential future developments as investors anticipate IPOs from AI leaders Anthropic and OpenAI. The potential buying power is substantial. According to Redfin, employes of OpenAI and Anthropic could, in theory, combine their IPO gains to acquire nearly 29% of all homes in the San Francisco metropolitan area. Home sellers are eager to capitalise on the burgeoning AI boom as well. At least two home listings in San Francisco observed this spring indicated that the sellers would entertain the possibility of accepting shares of OpenAI or Anthropic as a form of payment. “There is a feeling that once these companies IPO, there will be more very well-financed people out there on the market with lots of cash,” DiDomenico said. “That expectation is already prompting some buyers to rush into the market and some sellers to hold off on listing their homes.” And “They’re betting the prices could climb even higher,” he added.
