A view of San Francisco's North Beach neighborhood on June 29. San Francisco home prices and apartment rents are soaring as the AI boom brings a new wave of wealth to the city.
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SAN FRANCISCO — On a recent Sunday, 30-year-old Collin Russell was desperately visiting open houses, looking to buy a place in the city that his wife is from. They left two years ago so he could go to graduate school, and they moved back to San Francisco in June, just as the housing market here has exploded.
"I couldn't have timed it worse, honestly," he lamented after touring a condo in the affluent neighborhood of Presidio Heights.
His new job is in tech investment banking — a solid income. But finding a two-bedroom home within their budget these days has felt impossible.
"Maybe every two weeks, a new one comes on and then it's just a feeding frenzy. The last place I saw today had 10 people, and I got there two minutes after it opened," he said.
San Francisco is the epicenter of the boom in artificial intelligence, and it's intensifying competition in an already pricey housing market. AI companies are expanding fast as the tech industry brings many workers back to the office. Startups Anthropic and OpenAI are also preparing to go public, a process that has sparked a flood of wealth already, with a bigger one to come.
The jump in demand is a sharp turnaround after a pandemic slump, and it has sent home and rental prices skyrocketing. It's also raising fears of more displacement in a city where previous tech booms and a longtime housing shortage have already driven out many who could no longer afford to stay.
Inside the condo that Russell toured, a steady stream of people checked out the modern three-bedroom with big windows facing a shared garden. At 1,600 square feet and an asking price of $2 million, it qualifies as entry level for families here and is a steal in the current market, said Paul Kitchen, a real estate agent with Compass brokerage.
"We've done more business this year than we've done ever, setting records throughout," he said.
Compass finds that the median home sales price in San Francisco has skyrocketed 25% from a year ago. Kitchen has seen some properties pushed even higher than that as sales frequently turn into bidding wars.
"We've had clients who've bid, and it turned out there were 50 offers," he said, which takes an emotional toll on the many who lose out. "That's 49 agents who've talked through the night with their clients, people that have envisioned themselves there — they've talked to their banker, their loan officer."
Paul Kitchen, a real estate agent with Compass brokerage, says competition is so fierce that some listings have had 50 bidders.
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At the highest end, even all-cash offers of $25 million and more have gotten outbid. "You have to laugh just because it is so ridiculous and so beyond the pale," he said.
This new demand with a lack of supply, especially of single-family homes, has been dubbed a "mansion shortage" by Compass and others.
"In June, there were 44 home sales that went at least a million dollars over the asking price," said Mike Simonsen, who tracks citywide sales as chief economist for Compass.
