The AI frenzy is making itself felt in an unexpected place: the luxury housing market. High-income earners, many of them AI company employees, are snapping up multi-million dollar homes in the San Francisco Bay Area, undaunted by higher mortgage rates and rising home prices.
Luxury home sales in the Bay Area soared 39.3% in the first half of this year compared to a year earlier, while middle-market sales rose 15.1%. Nationally, luxury home sales rose 2% with a median price of $1.37 million, up 4.3%. Middle-market homes rose just 1.4% to $377,245. This "K-shaped" recovery is the housing market's version of a widening wealth gap.
The trend is fueled by AI industry wealth. Tech companies are paying top dollar for AI talent, and the looming IPOs of OpenAI and Anthropic are expected to create a new wave of millionaires. Redfin estimates that combined IPO proceeds from the two companies could buy nearly one-third of all homes in San Francisco.
For ordinary homebuyers, the reality is harsh: AI is creating a new wealth class that is driving up housing costs in every city it touches.