As major artificial intelligence (AI) corporations move to pursue initial public offerings (IPOs), the housing market in San Francisco, California, is heating up. With growing expectations that home prices will rise further as large sums of money flow in from AI corporation employees after their IPOs, investors are buying homes in advance in a so-called "FOMO (fear of missing out)" phenomenon.
On the 11th (local time), global real estate services firm Coldwell Banker said that transactions of high-end dwellings priced at $10 million (about 15 billion won) or more in San Francisco doubled in the past six months from a year earlier. Brokerage Compass said that in June there were 44 dwellings that sold for at least $1 million (about 1.5 billion won) over the asking price.
Eric Jansen, a Compass real estate agent, said, "In the past, it was common for transactions to close at 15%–20% over the asking price, but now deals 25%–50% higher are frequent." Since the start of this year, there have been 136 dwellings that sold for $5 million (about 7.5 billion won) or more in San Francisco, more than double the 67 during the same period last year.
Behind this overheating are expectations for large IPOs by OpenAI and Anthropic. The major AI corporations Anthropic and OpenAI are preparing to list as early as this year, and the two corporations are each valued at up to $1 trillion (about 1,500 trillion won). Market research firm Sacra projected that, if including SpaceX, which recently completed its IPO, listings by the three corporations will newly create more than 16,000 millionaires and more than 20 billionaires.
In San Francisco, where the two corporations are headquartered, investors are flocking to get ahead as projections spread that employees who amassed vast assets in company stock will move to buy dwellings. The Wall Street Journal (WSJ) reported, "Amid expectations that the massive wealth accumulated through AI will push up home prices, buyers are rushing to purchase real estate ahead of OpenAI and Anthropic's IPOs."
The New York Times (NYT) also noted, "Even though OpenAI and Anthropic have not yet gone public, the corporations leading the AI boom are already roiling San Francisco's housing market," adding, "Homeowners are demanding pre-IPO shares as part of payment, and buyers are purchasing on expectations that even if they pay more today, it will be more expensive tomorrow."
Homebuyers expect price gains to steepen after the IPOs. Kate Tomassi, an agent at real estate corporation Sotheby's International Realty San Francisco, said, "Even people who do not work in the AI industry think, 'If we do not invest before the major AI corporations' IPOs, we could miss the opportunity.'"
Some sellers are even setting conditions to accept payment in OpenAI or Anthropic private shares. Nima Gabai, a 51-year-old real estate investor, listed a three-bedroom, two-bath dwelling in San Francisco last month for $2,995,000, adding a clause that part of the payment could be in OpenAI or Anthropic shares. "San Francisco now feels reminiscent of a gold rush," Gabai said.
The NYT said such a phenomenon was rare even during past IPOs of big tech corporations. Real estate agents and asset managers said that even in San Francisco, which experienced the late-1990s dot-com bubble and the IPOs of Google (2004), Facebook (2012), and Uber (2019), it is unusual for the housing market to overheat like this ahead of listings. Pete Rodway, an agent at Compass, said, "Excessive fear is rampant in the market right now."