San Francisco house prices surge 25%, AI wealth drives record real estate demand

San Francisco's real estate market experiences unprecedented reversal

San Francisco's real estate market is undergoing an unprecedented transformation, rapidly transitioning from an urban recession to one of the most competitive real estate markets in the United States. This AI-driven housing boom is reshaping the market landscape.

The surge in demand is mainly due to the surge in wealth brought by the artificial intelligence industry. According to reports, high-paying employees of AI companies have promoted bidding for ready-to-live homes, with bids far exceeding previous market norms, and even all-cash offers as high as US$25 million sometimes cannot ensure access to real estate.

Three years ago, San Francisco faced a severe population loss. As telecommuting became popular with the epidemic, the city lost more than 60,000 residents between 2020 and 2022. During this period, as the market slumped, the median home sales price fell to $1.28 million through January 2023, a sharp drop from the peak of $1.68 million in the spring of the previous year.

However, this trend has reversed recently. According to Realtor.com and local brokers, the median price of homes in San Francisco has soared 25% year-on-year, with some popular listings attracting as many as 50 competing bids. Several high-end buyers offered cash offers of up to US$25 million but still failed, highlighting the extraordinary competitive situation brought about by the influx of AI wealth.

San Francisco real estate agent Paul Kitchen commented on the increased competition, noting that bidding scenarios in the luxury property sector have taken on eye-catching characteristics in recent years.

AI industry wealth reshapes urban dynamics

Although San Francisco has benefited from a technology boom before, analysts point out that the current artificial intelligence boom has unique implications. Unlike earlier tech waves, the latest growth has concentrated a lot of wealth in the hands of a relatively small group of employees and private investors, as many leading AI companies remain private in nature. Take OpenAI, the pioneer of generative AI, and Anthropic, another major innovator, as examples, both companies have not yet launched a public stock offering.

If OpenAI completes its initial public offering at its expected valuation, the after-tax equity value of its employees and investors could reach US$135 billion. Anthropic employees could bring about $63 billion in new wealth. The combined potential wealth of both accounts for almost one-third of the total value of San Francisco's existing housing stock.

OpenAI and Anthropic have both expanded their physical presence in San Francisco, leasing approximately 1 million square feet of space each over the past two years, and encouraging an expanding workforce to return to office work.

Micro Dictionary: Anthropic is a San Francisco-based artificial intelligence research company focused on developing reliable and interpretable artificial intelligence technologies and is known for its work developing large language models for corporate customers.

Tenants and ordinary home buyers face increasing challenges

Soaring house prices are also affecting tenants and ordinary income households. According to reports, young technology professionals now pay $10,000 a month to rent a luxury apartment, and hundreds of inquiries pour in within hours of new listings. In the past year, average rents in San Francisco have risen more than $1,000 to $4,600, surpassing New York as the most expensive rental market in the United States.

For ordinary wage earners, housing affordability has dropped sharply. A May 2026 analysis by Realtor.com and the National Association of Realtors found that only 2.1% of homes listed in March 2026 were suitable for households earning $75,000 a year. This means there are only about 2,475 affordable housing units available citywide.

Comparison with other technology centers and urban responses

Cities that have previously experienced technology-driven growth have not shared the latest rising dividend. For example, in Seattle, another major technology center in the United States, house prices fell 3.6% to $809,479 after companies such as Amazon and Microsoft laid off jobs.

In contrast, San Francisco's median sales price in July rose 6% year-on-year to $1.6 million. Active listings fell by 18.4% over the same period, the most significant decline in inventory among major U.S. cities.

Migration trends have also changed. In the first quarter, only 369 people moved from San Francisco to Seattle, compared with more than 5,100 in the same period in 2021. Chen Zhao, head of economics research at Redfin, said artificial intelligence is fundamentally reshaping the technology labor market, with San Francisco and Seattle showing different results.

In response to the growing housing shortage, San Francisco authorities have embarked on expanding the housing supply. In December 2025, the city implemented the Family Zoning Plan, which aims to allow more communities to build high-density housing and support the transformation of vacant office space into residential units. As of the end of 2025, the vacancy rate for office space was 34.4%.

As competition for housing in the city continues to intensify, it remains doubtful whether these policy measures can keep up with strong demand.