Apartment rents in San Francisco are climbing at an unprecedented pace amid the artificial intelligence (AI) boom. The surge is attributed to a sharp rise in hiring and office space demand from related companies, along with a series of initial public offerings (IPOs) that have heated up the local economy.
Rents Top New York for No. 1 in the Nation
According to a rental report from U.S. real estate data firm Zumper released Monday, the monthly rent for a two-bedroom apartment in San Francisco rose to $5,700 (about 8.8 million won), a record high. This pushed San Francisco past New York, which stood at $5,620 (8.2 million won), making it the most expensive city in the United States for two-bedroom rentals.
For one-bedroom apartments, New York remained the priciest at $4,660 (about 7.2 million won), while San Francisco emerged as the second most expensive city nationwide at $4,060 (about 6.3 million won). In both metrics, San Francisco closely trailed or overtook New York.
What stands out most is the speed of the increase. San Francisco's annual rent growth reached 22.6% for two-bedrooms and 21.9% for one-bedrooms, ranking first by a wide margin across the country. Over the same period, the median rent nationwide rose just 0.4% for one-bedrooms and actually fell 0.3% for two-bedrooms. New York's growth rate also remained in the 4% to 4.3% range.
Zumper pointed to the AI boom as the driver of the surge. Major companies are hiring large numbers of AI workers and securing office space spanning hundreds of thousands of square meters, while plans for new housing supply have virtually vanished.
As the gap between supply and demand widened, the occupancy rate for rental housing in downtown San Francisco has soared to above 96%.
Living Costs Too High Even for High Earners
The rising rent trend is spreading across Silicon Valley throughout the San Francisco Bay Area. San Jose, already among the top five nationwide, saw rents rise a further 2.6% to 3.8%, while Oakland, previously around 15th, jumped 6.2% for one-bedrooms.
The New York Times (NYT) recently reported a case in which even an engineer earning an annual salary of $180,000 (about 280 million won) could not withstand San Francisco's housing costs and is preparing to move.
The rent surge is spilling over into broader price increases. According to cost-of-living index data released last month by the Council for Community and Economic Research (C2ER), the cost of living in San Francisco was 65.6% higher than the national average. Utilities were 41% more expensive, transportation 43%, and groceries 19%.
Nigel Hughes, senior research analyst at real estate data firm CoStar, said of the pace of San Francisco's rent increases, "It's rising in temperature really quickly, like a pressure cooker."
With SpaceX recently completing the largest IPO in history, and IPOs from OpenAI and Anthropic also planned, this trend driven by large-scale capital inflows is expected to continue for some time.
