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If you haven’t yet realized that the real estate market is completely bonkers in some parts of the world, all you have to do is take a glance at what’s happening in California. Specifically, in San Francisco.
The artificial intelligence industry’s continued rise and spread has completely shifted the property situation in the city. As The Guardian reports, “San Francisco’s AI boom has buyers spending unprecedented amounts of money on homes – much more than sellers are asking for.”
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A recent analysis by brokerage Compass found that more than 140 San Francisco homes sold for at least $1 million above their asking price in the first half of 2026, with 44 of those properties being sold in June.
Or, as Compass’s chief economist Mike Simonsen put it, the demand for homes in this price range is “absolutely bananas.”
Simonsen emphasized that this upwards trend in prices is “of course related to the AI boom. It’s migration and hiring, as well as preparing for mega IPOs.”
San Francisco is home to the headquarters of both OpenAI and Anthropic, which have filed to go public on the US stock market. The Guardian reports that their valuations are approaching $1 trillion.
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With the promise of new SF-based multimillionaires hovering in the air, there is soaring demand for fancy homes.
As per Compass’s new report, single-family home prices in San Francisco have risen by roughly 17% year over year. Meanwhile, inventory has dropped a whopping 45%. In other words, there’s too much demand and not enough supply, therefore, prices are going bonkers.
In San Francisco, the median price for a single-family home has risen from $1.7 million to $2.2 million. Meanwhile, houses stay an average of 18 days on the market, which shows just how much demand there is for properties.
“AI and tech-driven demand has created aggressive bidding wars on the scarce inventory,” Compass’s report notes.
“Skyrocketing rents are back in the norm.”
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Meanwhile, the recent report also points out that the housing market is “increasingly segmented by income tier and proximity to AI-driven employment centers.”
Bizarrely enough, according to Simonsen, other tech hubs across the United States have not seen a similar trend of overbidding for property.
According to real estate firm Redfin, San Francisco had the highest increase in the median sales price of homes in the US from a year earlier.
SF reported a spike of 10% in April, compared to the year before.
“What’s different this time is that the benefits or the prosperity of AI seems much more concentrated. It’s not that everybody is going out and buying homes,” noted Daryl Fairweather, the chief economist at Redfin.
