artificial intelligence industry<\/a>,\u00a0leaving even well-paid newcomers scrambling for a place to live.<\/p>\nFor Jenni Lee, a Chicago tech worker seeking to join her boyfriend in the Bay Area, finding an apartment has at times felt more difficult than getting a job. She has spent six months searching for a San Francisco rental, flying in for tours and repeatedly losing out on offers, even after the couple almost doubled their budget to $6,500 a month for a two-bedroom. In Illinois, her friends were living in desirable places for less than half that.<\/p>\n
At one point she showed up to what she thought was a private appointment just to wait in line and later find out someone had already signed a lease. One $7,000-a-month home didn\u2019t have a washer-dryer \u2014 though the touring agent assured her there was a laundromat down the street. Lee recently applied for a place she liked, only to get a text an hour later saying someone else was willing to pay a full year\u2019s worth of rent upfront in\u00a0cash.<\/p>\n
\u201cMy Chicago brain couldn\u2019t compute that,\u201d she said.<\/p>\n
San Francisco\u2019s new tech frenzy is reigniting home bidding wars and sending prices soaring in a city that just a few years ago was mired in post-pandemic malaise. With the AI industry paying hefty compensation to attract talent \u2014 and hometown startups OpenAI and\u00a0Anthropic PBC\u00a0commanding valuations approaching $1 trillion \u2014 the wealth effects are warping the entire residential market. And upcoming initial public offerings from the likes of SpaceX are set to unleash even more money into the market from early investors.<\/p>\n
The city leads the US in annual rent growth, according to apartment-listing firm Zumper. Prices for two-bedrooms are now tied with New York for the most expensive in the country, with a median monthly rent of $5,500, the company\u00a0said in a report this week. The median rent for a one-bedroom crossed $4,000 for the first time ever. Homebuyers also are facing soaring costs: The median price for a San Francisco house recently hit a record $2.15 million.<\/p>\n
The surge is sharpening divides in a city defined by its extremes. San Francisco has long been mired in deep inequality, a place where a homeless encampment can be on the next block from houses owned by tech millionaires. Now, the real estate frenzy is colliding with broader wealth tensions across the state: Californians are facing a potential ballot measure to levy a tax on billionaires, while housing is a central issue in this year\u2019s governor\u2019s race.<\/p>\n
And while the real estate market has been accelerating, the labor market tells a different story \u2014 suggesting the boom is concentrated among those benefiting from the AI fervor. While overall employment in the Bay Area is recovering after the pandemic, job creation has been modest. The San Francisco-Oakland-Fremont metropolitan area has added roughly 10,000 to 15,000 jobs over the past year,\u00a0according to Bureau of Labor Statistics data.<\/p>\n
\u201cOne of the big mysteries in San Francisco is how can you have such a hot housing market when you have such a cold labor market,\u201d said Ted Egan, chief economist for the city and county of San Francisco. \u201cIf you have some people moving in and nobody moving out and you don\u2019t have any new supply, that can create a spike.\u201d<\/p>\n
\u2018What Inventory?\u2019<\/p>\n
For sellers, the frenzy has translated into windfalls. When real estate agent Butch Haze listed a four-bedroom\u00a0home in the Marina neighborhood in March, he figured it would fetch around $4 million, netting the owner a profit from the $3.4 million they paid two years ago. Within days, the house drew five all-cash offers.<\/p>\n
Instead of choosing one, Haze turned the process into an impromptu auction, asking buyers to bid against each other in $100,000 increments. The home ultimately sold for $4.9 million.<\/p>\n
The competition has only intensified. Haze said a recent listing in the Central Richmond neighborhood drew seven showing requests almost immediately and an offer within an hour. The buyers of the four-bedroom, five-bath house paid $4.95 million, plus covered the broker commission for the sellers, pushing the total\u00a0value of the sale to more than $1 million over asking.<\/p>\n
The market has gotten so tight that many buyers are simply dropping out. Haze said he started the year working with about 20 clients; now less than five\u00a0are still actively searching. His response when asked about the available inventory: \u201cWhat inventory?\u201d<\/p>\n
With supply scarce and competition fierce, some sellers are getting creative \u2014 betting that the same AI boom driving up real estate prices can also unlock new ways to pay for homes. Storm Duncan, the founder and managing partner at a tech investment bank called Ignatious, is offering his roughly\u00a013-acre estate\u00a0in Marin County\u2019s Mill Valley north of San Francisco in exchange for hard-to-get shares of Anthropic.<\/p>\n
The four-bed, five-bath home, featuring an infinity pool, a putting green and a fruit orchard, is worth around $8 million, said Duncan, who was part of the wave of tech workers who moved to Miami during the pandemic. And although Duncan said he has never heard of anyone who has done such a transaction, he sees this as an opportunity to grow his investments in AI.<\/p>\n
\u201cI was sitting there thinking, how do I get invested here?,\u201d he said. \u201cAnd then I thought, maybe there\u2019s someone else that has the opposite problem I have, which is they\u2019re already invested, they started working there very early or they coincidentally got some seed shares\u00a0or early shares as a VC and now they\u2019re worth hundreds of millions of dollars, but it\u2019s all illiquid.\u201d<\/p>\n
Duncan said he\u2019s already fielded interest from potential buyers, such as a foreign investor looking to diversify out of concentrated tech holdings. Others have asked about replicating the structure with shares in companies like SpaceX, he said.<\/p>\n
The turnabout in the market has been swift for prospective buyers. When Sedric Bailey and Michael Clery started looking for a home almost a year ago, they thought they had the upper hand. Bailey, a lawyer at a tech firm who has lived in San Francisco for seven years, already owned a condo in the Mission Dolores area, so the couple wasn\u2019t in a rush. They were looking for a bigger home ahead of the birth of their first child \u2014 ideally a three- or four-bedroom that would also accommodate their German shepherd and French bulldog.<\/p>\n
\u201cWe felt like we were basically in control,\u201d Bailey said. \u201cWe would go see a property and say, \u2018Look we\u2019re only going to pay this amount,\u2019\u00a0and if they take it, great, if they don\u2019t it\u2019s not for us. And that strategy has had to change starting this year.\u201d<\/p>\n
Several bids they made faced about 10 competing offers, Bailey said, including some in all cash. Some homes they tracked were selling for as much as double the asking price. After losing out several times, the couple eventually secured a home by viewing it before it officially hit the market and putting in an offer 25% over asking that same day.<\/p>\n
\u201cWe saw a rapid big boom starting September and October and it caught everybody off guard,\u201d said Frank Nolan, the president of Vanguard Properties. \u201cThere\u2019s a house that somebody bought for around $4 million this fall that is probably worth $5 million right now.\u201d<\/p>\n
The demand is creating ripple effects: Many would-be buyers are turning to the rental market to secure a place while they find their home, driving apartment prices further up, said Rachel Swann, an agent at Coldwell Banker Realty.<\/p>\n
Swann recently listed a two-bedroom home at the Four Seasons Private Residences for $15,000 a month and immediately had multiple people who were interested. She\u2019s seen rentals that are 600 square feet with no parking go for $6,500 a month. With the sales market heated, one client who was \u201cbasically a billionaire\u201d preferred to rent.<\/p>\n
\u201cFor these people these payments are nothing,\u201d Swann said.<\/p>\n
\u2013With assistance from John Gittelsohn.<\/p>\n
More stories like this are available on bloomberg.com<\/a><\/p>\n\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"By Francesca Maglione, Bloomberg In San Francisco\u2019s latest real estate boom, renters are paying cash up front, multimillion-dollar…\n","protected":false},"author":2,"featured_media":334571,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[380,184,387,7,8,1336,384,181,1338,100,395,388,1010,21009,101,396,103,102,104,106,105],"class_list":["post-334570","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-francisco","tag-affordable-housing","tag-bay-area","tag-business","tag-california","tag-california-news","tag-housing-crisis","tag-inflation","tag-latest-headlines","tag-morning-wire","tag-news","tag-peninsula","tag-real-estate","tag-rent","tag-rent-control","tag-san-francisco","tag-san-francisco-county","tag-san-francisco-headlines","tag-san-francisco-news","tag-sf","tag-sf-headlines","tag-sf-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/334570","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=334570"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/334570\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/334571"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=334570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=334570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=334570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}