The generative artificial intelligence boom is reigniting San Francisco's real estate market, as concentrated wealth among AI workers and investors drives a wave of multimillion-dollar cash purchases and pushes home prices and rents sharply higher.
According to real estate platform Redfin, the median home sale price in the San Francisco metropolitan area reached $1.7 million (about 2.3 billion won) in April, up more than 10% from a year earlier. That marks the highest level among major U.S. metropolitan areas.
Home prices are also rising in the San Jose area, which includes Silicon Valley. "The annual income required to buy a home surpassed $400,000 for the first time last year," Redfin Chief Economist Daryl Fairweather said. "It's a level that would be hard to imagine without the AI industry." The region is home to the headquarters of Meta, Google and Nvidia.
Behind the price surge are the substantial compensation packages received by AI company employees. According to Business Insider, more than 600 current and former OpenAI employees secured a combined $6.6 billion (about 9 trillion won) in cash last year through stock sales.
A former OpenAI employee who requested anonymity told the outlet, "I bought a home in San Francisco during a tender offer, and several colleagues bought homes around the same time." The person added, "Buying a home has now become something of a trend. When people get together, they talk about houses."
According to local real estate industry sources, a significant portion of buyers of high-end homes priced above $5 million (about 6.8 billion won) are AI company workers or investors. Some pay entirely in cash without loans, and there are cases of buyers offering millions of dollars over asking price to secure desired properties.
"The current atmosphere is very similar to just before Facebook's 2012 IPO," San Francisco real estate broker Ruth Krishnan said. "Every listing draws competitive bids, and transactions move very quickly." She also described OpenAI's planned $10.3 billion secondary stock sale by saying it would bring "a money rain" to San Francisco.
AI Millionaires vs. Ordinary Workers
The issue is that the benefits of the AI boom are concentrated among a narrow segment. According to local outlet the San Francisco Chronicle on Tuesday, the area's median household income is about $162,000 (around 245 million won) per year, but homes affordable on that income account for just 6% of all listings.
The New York Times analyzed that polarization in the San Francisco real estate market has become pronounced since ChatGPT emerged in 2022. Prices have surged in neighborhoods densely packed with luxury homes, while relatively affordable areas have even seen prices decline.
The AI boom is also affecting the rental market. According to real estate platform Zillow, rents in the greater San Francisco area have risen about 5% over the past year, roughly twice the U.S. average rate of increase.
Locally, there are cases of prospective tenants prepaying several months of rent or offering amounts higher than landlords' asking prices.
"Wealthy but Cautious": A Surprising Side of AI Workers
Some observers note, however, that today's AI industry workers appear relatively prudent compared with those during the dot-com bubble era.
"AI industry workers make decisions based on data," San Francisco real estate broker Daniel Lazier said. "Many of them use AI to analyze taxes, mortgage payments and neighborhood-level market conditions before they even go to view a home."
Another broker, Ruth Krishnan, said, "They are well aware of past tech industry bubble collapses. Even when they make big money, they don't overspend as much as you might expect and tend to spend cautiously."
Still, the market expects home price gains to continue for some time. If major AI companies such as OpenAI and Anthropic move forward with initial public offerings, another large group of "AI millionaires" could emerge.
Private market analytics firm Sacra projects that more than 16,000 new millionaires would be created if the two companies go public. That is why analysts say AI is reshaping not only jobs but also urban home prices and the distribution of wealth.
