Massive AI salaries and RTO are fueling a real estate boom in San Francisco: 'It's going to rain money'

TKnktwentythree/Getty Images/iStockphotoPrices and rents across the San Francisco Bay Area are climbing thanks to an injection of AI cash."It's going to rain money in SF," one real estate agent said of OpenAI's employee stock sale.AI workers are more cautious homebuyers than in past tech booms, real estate agents said.The AI boom has lit a fuse under San Francisco's housing market, with prices and rents inflamed by a tech workforce increasingly returning to the office, and as the AI talent wars push salaries to dizzying highs.Tech workers are flocking to the Bay Area to work at OpenAI, Anthropic, and Nvidia after the region was dealt a massive blow during the COVID-19 pandemic. Real estate agents say RTO is fueling the resurgence, with AI being particularly synonymous with in-person work and hardcore culture. What's more, tech workers, especially those working in AI, are commanding massive salaries, including multimillion-dollar compensation packages.The salary needed to afford a home in the San Jose metro area — which encompasses Silicon Valley and the headquarters for Meta, Google, and Nvidia — crossed the $400,000 threshold for the first time in April 2024, said Daryl Fairweather, Redfin's chief economist — "an inconceivable amount of money unless you work in AI, and those salaries are probably more common." This makes it the most expensive metro area in the US. Home prices in the San Jose metro area are up 3% year-over-year, according to Redfin.While big AI companies like OpenAI and Anthropic aren't public, employees can tap equity during stock sales on the private market.One former OpenAI employee, who requested anonymity to speak about personal matters, told Business Insider they purchased a home in San Francisco during the company's last tender and knew of at least four others who did the same."It's definitely the popular move, and people are talking about it again," they said.The luxury housing market in San Francisco is also setting records. More homes sold above $20 million in the city last year than ever before, according to Sotheby's 2025 Mid-Year Luxury Outlook report, which its international realty chief marketing officer, A. Bradley Nelson, attributed largely to AI's rise.Another Bay Area county, San Mateo County, nestled between San Francisco and Silicon Valley, is seeing record prices for single-family homes — $2.6 million on average this year, according to MLS data. This boom is fueled by both the rise of AI and the strength of the stock market, said Raziel Ungar, a San Mateo County real estate agent who has worked with Big Tech buyers working at Oracle, Google, and Apple."There's been so much wealth that's been created in the last few years, in particular in the Valley, that it's pushed our prices higher," Ungar said.AI workers adapt to newfound wealthSan Francisco real estate agent Ruth Krishnan has worked with several OpenAI employees who have cashed out during tender offers to make down payments on homes, she said.Krishnan likened the current "level of frenzy" to the period before Facebook's IPO in 2012, with homebuying anticipation fueling rapid transactions and swaths of competitive offers on each property.With news of OpenAI's latest $10.3 billion secondary share sale, "it's going to rain money in SF," she said.AI workers are quickly adapting to newfound wealth. A second former OpenAI employee said that when they first moved to San Francisco, they lived in a group house and paid roughly $1,200 a month in rent. Now, former colleagues frequent Michelin-starred restaurants and wear luxury goods."They have massive bag collections, they have upgraded their houses, and everything," the second former employee said. "It feels more like a normal tech company or even kind of like finance in some ways."The rental market is rocketingThe rental market is also rocketing. Rents across the San Francisco metro area are up about 5% since last year — double the pace of national growth, a Zillow representative told Business Insider.Apartment hunters are handing out "tenant résumés" at packed showings, making offers site unseen, offering several months of rent in advance, or coming in at thousands of dollars over the asking price, The San Francisco Standard previously reported.In terms of specific San Francisco neighborhoods, Mission Bay is central to AI activity, Krishnan said, while the Hayes Valley neighborhood has been dubbed "Cerebral Valley."Other desirable neighborhoods for those in the field include South Beach, Dogpatch, Potrero Hill, the Mission, Noe Valley, and Bernal Heights, Krishnan said.More cautious buyers than in past tech boomsDespite their eye-popping salaries, the average AI homebuyer tends to be more pragmatic, real estate agents said.They're "data-driven and decisive," said San Francisco real estate agent Danielle Lazier, adding that many clients "model payments, taxes, and micro-market evaluations with large language models before touring."While the single-family home market is "on fire" and condos are "perking up," Lazier said a full pre-COVID recovery hasn't yet been attained.Krishnan agreed that buyers in AI aren't "going crazy," adding that a typical purchase ranges from $2 million to $4 million — still a relatively staggering sum. The AI wave is nascent, and while many of her clients are young, they're aware of past tech busts, she said."They're being very cautious about what if this doesn't last forever," she said."They've heard of people who thought that they had all this money that then disappeared, and it seems to be top of mind for them, actually. So they're not overspending. They're cautiously spending."Read the original article on Business Insider

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