AI IPO boom set to transform San Francisco, starting with soaring real estate prices

SAN FRANCISCO (KGO) -- San Francisco is bracing for a major economic boost as local artificial intelligence companies OpenAI and Anthropic move toward initial public offerings, with city officials and real estate agents already seeing early signs of impact.

San Francisco's chief economist projects the IPOs could generate more than $10 billion for the city in the coming months, signaling what some describe as a turning point for the local economy.

The companies are expected to rank among the largest IPOs in U.S. history, each nearing a $1 trillion valuation.

"Both of them will be more than 10 times bigger than anything we've seen before. So, it is a lot of wealth being generated in San Francisco and the Bay Area over the next few months," said Ted Egan, chief economist for the city and county of San Francisco.

While the city cannot tax stock market wealth or income directly, officials say it stands to benefit from increased real estate activity.

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"The city gets a transfer tax when people sell their house. The seller pays a transfer tax to the city. And for expensive houses that are over $10 million, that's 5.5%, so there's a significant amount of money there. The city also gets a 1% property tax rate that all property owners pay, but as properties go up in value, the value of that 1% goes up," Egan said.

Real estate agents report a surge in buyer interest coupled with limited inventory.

"It's crazier than anyone has seen in many, many years. There's so many people who are trying to jump the gun on all the money that they see coming from SpaceX IPO, OpenAI, Anthropic. And at the same time, all these sellers think it's going to be crazy, so they're holding back. They're not putting their homes on the market. Less people selling and more people looking to buy," said Austin Klar, a real estate agent with Vanguard Properties.

The average single-family home price in San Francisco is about $3 million, but demand is increasingly concentrated at higher price points, according to the San Francisco Association of Realtors.

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"It's really incredible from 2025 to 2026. The sales of homes over $5 million have skyrocketed by 69% when we look at Q1 2025 vs. Q1 of 2026, that's a 69% increase," said Jay Cheng with the association.

Agents say buyers hoping to compete in the current market must move quickly and aggressively.

"It's a hard discussion to have saying you need to offer $800,000 or $1 million or sometimes even more over list to be competitive and get a property," Klar said.

Neighborhoods such as Pacific Heights and the Sunset are seeing heightened interest, with prospective buyers -- many tied to the AI sector -- expected to compete intensely for homes as the anticipated wave of wealth reaches the market.

City officials and industry experts say the coming months will determine how significantly the IPO-driven surge reshapes San Francisco's housing landscape and broader economy.