(CNN) — Just a few years ago, San Francisco was the national symbol for post-pandemic urban decline.
Now, fueled by the artificial intelligence boom, the Golden City and its suburbs are quickly becoming the hottest housing market in the country.
Flush with cash — and highly valued stock options — tech workers are flooding in to the housing market, bidding up the price of homes and, increasingly, even rental properties.
San Francisco home prices are growing at their fastest pace in nearly a decade, with the median home selling for $1.7 million, according to Redfin. Compare that to the national median home price, which was $440,600 in June, according to the National Association of Realtors. About one in three home sales in the Bay Area were all cash from April through June, Redfin found. That’s up significantly from a few years ago.
San Francisco is seeing many “newly minted millionaires” in the AI space bidding for homes on the market, John DiDomenico, a local real estate agent, told CNN.
These new entrants to the housing market are now competing with employees from and investors in tech giants like Google, Apple and Meta for homes, creating a “frothy, very hyper-competitive market” in the city, DiDomenico said.
In the past few months, it has not been uncommon for a high-demand home to receive offers that are more than $1 million above the original listing price, DiDomenico said. He recently worked with a client who listed a home for $6.5 million. It received multiple offers, including several for hundreds of thousands of dollars above the asking price. The seller ultimately accepted an offer of more than $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, said Daryl Fairweather, Redfin’s chief economist.
“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.”
“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.
Renters are feeling the pressure, too
Paul Belmonte sold his home in Seattle last year and moved to San Francisco for a new biotech job after federal budget cuts affected his role at a Seattle nonprofit.
He planned to rent while he figured out whether he wanted to stay in the city long term, then eventually buy. Belmonte found a rent-controlled apartment for $3,250 a month. It didn’t have a dishwasher or air conditioning, amenities he’d grown accustomed to in Seattle, but he figured the trade-offs were temporary.
But two months ago, Belmonte, who is 34, started looking to buy – and reality set in.
Working with a real estate agent, Belmonte quickly saw homes in his price range selling for far more than their asking prices.
“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 years after the Covid-19 pandemic, San Francisco saw a significant population decline, losing more than 60,000 residents between 2020 and 2022, according to US Census data.
As tech companies embraced remote work, residents left the city in droves. Office buildings and retail corridors emptied out, while San Francisco became emblematic of the challenges facing post-pandemic cities, such as an increase in street homelessness and a surge in petty crime.
The housing market also took a hit. The median home sales price in San Francisco bottomed out at $1.28 million in January 2023, down sharply from its April 2022 peak of $1.68 million, according to Redfin.
But the exodus appears to be reversing. The city’s population began to rebound in 2024 and 2025, according to the latest US Census data. Major AI companies like OpenAI and Anthropic require most employees to work at least some of the time in person. Their hiring boom has drawn a new wave of tech workers to San Francisco and its commuter suburbs and sent them into an already tight housing market.
The city’s real estate frenzy has spilled over into the rental market, as well. Rentals near train station stops or walking distance to major AI company offices are being bid up by rank-and-file tech workers.
One-bedroom rents are up nearly 23% and two-bedroom rents are up nearly 26% since last year, according to a July report from rental marketplace Zumper. The average two-bedroom rent in the city has now surpassed New York City, traditionally the nation’s most expensive city for rents.
Even AI workers at smaller companies and startups are feeling the ripple effects of the enormous wealth being generated by employees at major AI companies.
Active listings in the city are down about 30% since last year, partially driven by more renters choosing to stay put rather than test the market. This has led to a shrinking pool of available units at a time when competition is increasingly steep, Zumper found.
Lately, Belmonte said, even upgrading from his current rental feels out of reach. Similar apartments are often renting for more than $1,000 a month above what he pays.
Belmonte has fallen in love with San Francisco, but he said the cost of living sometimes makes him wonder whether he should figure out a way back 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?”
“At this point, I need to hang on to this one bedroom forever,” he said.
A wave of AI IPOs could supercharge the market
Some in San Francisco think this may only be the beginning of a more prolonged real estate boom in the city.
OpenAI and Anthropic are both expected to go public in the coming months, potentially creating thousands of newly minted millionaires with stock windfalls to spend on housing.
In June, SpaceX had the largest IPO in history, creating multimillion-dollar windfalls for some longtime employees. The blockbuster debut offered a preview of what could be in store as investors await IPOs from AI giants Anthropic and OpenAI.
The potential buying power is enormous. OpenAI and Anthropic employees could theoretically pool their IPO windfalls and buy nearly 29% of all homes in the San Francisco metro area, according to Redfin.
Home sellers want a piece of the AI boom, too. At least two San Francisco home listings seen by CNN this spring said the sellers would consider accepting shares of OpenAI or Anthropic as 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.”
“They’re betting the prices could climb even higher,” he added.
The-CNN-Wire
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