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San Francisco’s artificial intelligence boom has created a new class of tech millionaires so quickly that the city is now facing an unlikely problem — a shortage of mansions.
Wealthy AI execs and workers are entering the city’s cutthroat housing market, driving bidding wars, record sales, and sky-high prices as companies expand their local workforces.
The frenzy comes as companies like OpenAI and Anthropic prepare to go public, a process that has unleashed a wave of new wealth with more to come, according to NPR.
At the top of the market, buyers making all-cash offers of $25 million or more have still been outbid for coveted properties.
The mix of newly wealthy buyers and a limited supply of single-family homes has become so extreme that real estate brokerage Compass and others call it a “mansion shortage.”
The median San Francisco home sale price has jumped 25% from a year ago, according to Compass data cited by NPR.
In June, 44 homes sold for at least $1 million above their asking prices, Compass chief economist Mike Simonsen told the outlet.
Competition is intense even for less expensive homes.
Part of the buying spree comes from a generation of AI executives who are now looking for larger homes.
Many are in their mid-30s or early 40s with young children, creating urgency to secure homes in desirable neighborhoods near schools, according to Simonsen.
So far, some of the most dramatic price increases have been concentrated in San Francisco’s wealthier enclaves.
The rise in AI wealth is also making it harder for people who aren’t looking for mansions.
San Francisco renters are facing bidding wars as well-paid tech workers in their 20s move in, some able to spend up to $10,000 a month.
Listings get a lot of attention within hours, and renters say that bids often go hundreds of dollars above the listed price.
For people who don’t work in tech, the sudden jump in housing costs is making an already expensive city even harder to afford.
Alex Brenner, 29, who works in healthcare, said he and his fiancée encountered lines of prospective tenants at open houses and saw the rent on one apartment rise twice by $500 before they even viewed it.
“It’s actually ridiculous,” Brenner told NPR.
Market analyst Jonathan Miller explained that San Francisco is increasingly undergoing a “New York-ification” of its real estate market.
The prices no longer reflect just the property itself but also the premium buyers are willing to pay to be at the center of a powerful economic hub, he told NPR.
“It’s like buying a one-bedroom apartment without great views in Manhattan and it costs you $3 million, and you tell that to somebody in Des Moines, Iowa, and they’re like, ‘There’s something wrong with you,'” Miller said.
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