San Francisco's pandemic-era doom loop has been replaced by a land grab, driven in part by anxiety about how artificial-intelligence wealth will impact home buying.
"It's definitely the Wild, Wild West," said David Cohen, founder of City Real Estate. "The market has had a huge influx of new demand."
Buyers are rushing to front-run anticipated IPOs from giants like OpenAI and Anthropic, local real-estate agents said. "For many people not in AI, the feeling is, 'If we don't get in before the big AI IPOs, we're going to miss our window for some period of time, potentially years, before this calms down,'" said Kate Tomassi, an agent at Sotheby's International Realty -- San Francisco Brokerage.
In reality, AI money is already flowing, agents said. Wealth is rippling across the entire AI ecosystem, from hardware manufacturers to AI developers. Some employees at leading, still-private AI companies are already armed with liquid cash from secondary-market transactions and novel arrangements with local lenders.
"I've got junior guys who are selling secondary shares and buying $10 million homes," says Phil Chen, a real-estate agent at Christie's International Real Estate Sereno. Tomassi adds, "The money is real, and it's a lot of cash."
A frothy stock market is compounding the craze. "People say, 'I'm willing to pay extra because stocks are up,'" says Cohen, a San Francisco native. "A high stock market, low inventory and being the center of the AI universe -- it's fueling the housing market."
A decoupling from the regional market
The current boom isn't lifting the entire Bay Area. It's clustered in San Francisco, where a concentration of AI companies is prioritizing in-office work, boosting housing demand in the city itself. While San Francisco has posted a double-digit increase in median single-family home prices, nearby counties saw more modest gains or even declines, according to Compass.
"This is a very San Francisco city-focused phenomenon," says Mike Simonsen, chief economist with Compass International Holdings, noting that the Austin and Seattle tech hubs lack this intense demand.
"I had a 35-year-old AI genius move from Marin into the city because he wanted to be closer to [where] everything is happening," Neal Ward of Compass said .
Surging midtier transaction volume
Agents report that the $2 million to $5 million price bracket is seeing the bulk of market activity, pushing the single-family median price to $2.2 million, according to Compass. In this range, buyers are routinely overbidding by seven figures.
In June alone, 44 homes closed at least $1 million over asking, bringing this year's total of these hyper-bidding transactions to 144, according to Compass. By comparison, only eight such deals closed in the first half of 2025, and just six in the first half of 2024. The 94114 ZIP Code, which includes Noe Valley and the Castro, saw the most concentrated number of sales over asking, according to Compass.
"A rule of thumb in San Francisco used to be to plan for 15% to 20% over asking," says Eric Janson, an agent with Compass. "Now it's more like 25% to 50%."
Above $5 million, the number of deals has intensified. Arrian Binnings, an agent with Christie's, said that between January 1 and June 29, 136 deals in San Francisco closed at or above $5 million -- more than double the 67 deals during the same period of 2025. Bidding wars are happening in this segment, too. Roughly one in eight properties sold for at least $1 million above ask, Binnings said. A Union Street home listed for $7.95 million in April sold 14 days later for $15 million.
"The city has never seen this amount of liquidity ever, and it's huge," said listing agent Ward of Compass, who said he has sold 11 homes for $10 million or more so far this year. In April, Ward also sold a Pacific Heights home for $ 56 million. He showed it 14 times and had two competing offers, he said.
A restricted housing supply
Demand is colliding with "San Francisco's chronic shortage of inventory, " Compass economist Simonsen says. Even so, inventory is down 40% year-over-year, Cohen says. Homeowners locked into 2% to 3% mortgage rates are reluctant to move, while others are hanging onto properties.
"People are saying, 'Why rush to the market? It's getting better,'" says Nina Hatvany of Compass, whose team surpassed its entire 2025 sales volume by June 30.
Not all sellers are sitting on the sidelines. Sotheby's Tomassi has San Francisco clients with long-term plans to settle in Marin County, the East Bay or Silicon Valley who are now considering selling their city properties to take advantage of the market.
Spillover into the rental market
Return-to-office policies are pulling professionals back to the city from other markets, including Austin and Seattle, driving up rents, Simonsen said. "Net migration to San Francisco is positive for the first time in years," he said, noting that inbound residents often rent before buying.
"San Francisco has always been a boom-and-bust city," Cohen says. "The current housing market really shines a light on the fact that we're a city of reinvention. When the spotlight is shined on some sort of new innovation, people flock right back."
"The question everyone is asking is, 'How long is this going to last?" he says. "I think it's going to be shorter than most of these cycles, but I don't see it slowing any time soon."
Write to Jessica Flint at Jessica.Flint@wsj.com
(END) Dow Jones Newswires
July 09, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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