San Francisco home prices rise to a record $2.15 million AI startup "gold rush" fuels the real estate market

Real estate brokerage Compass stated that the median home price in San Francisco in March rose to a record $2.15 million, up 18% year-over-year. Wealth generated by artificial intelligence startups has flooded into the city, driving home prices sharply higher.

In its report, Compass noted that apartment prices also surged significantly, increasing by 27% to $1.36 million, just slightly below the peak of $1.38M set in April 2022.

By contrast, data tracked by Zillow Group Inc. showed that U.S. home prices in March only rose modestly by 0.8%.

“Economic changes brought about by the Iran conflict, such as rising interest rates and financial market volatility, have not affected San Francisco’s extremely hot market. The wave of wealth and new jobs created by AI startups has added further heat to the market,” said Patrick Carlisle, Chief Market Analyst at Compass.

AI companies like OpenAI and Anthropic PBC have sparked a new “gold rush” in San Francisco. Employees of these companies are spending heavily on homes in this land-constrained city, but local new housing development is limited. Compass reported that in March, at least 22 homes sold for over $5 million, setting a monthly record; additionally, 24 apartments sold for over $3 million, also a new monthly sales high.

Buyers are competing fiercely for available homes, with the average sale price exceeding the asking price by 23%, matching the record premium set in April 2022.

The surge in San Francisco home prices stands in stark contrast to the rest of the U.S. According to data tracked by Zillow Group Inc., U.S. home prices in March only increased by 0.8% year-over-year. The last peak in San Francisco home prices was in April 2022, when buyers rushed to close deals before interest rates rose sharply.