Anthropic IPO Could Reshape San Francisco’s Housing Market

How will San Francisco-based artificial intelligence company Anthropic’s IPO filing affect real estate? Potentially, a lot.

Experts expect the move to inject billions of dollars into the city’s economy and potentially intensify pressure on an already competitive housing market, according to an ABC7/KGO-TV report.

The artificial intelligence company’s IPO is projected to be one of the largest in history.

Ted Egan, Chief Economist for the City and County of San Francisco, said the company’s value could attain extraordinary levels.

“Potentially worth $2 trillion dollars,” Egan said.

City Prepares for Anthropic Impact

The station said city officials are preparing for the economic impact that could follow the IPO.

Egan noted that San Francisco experienced a similar, though much smaller, wave of wealth creation when Uber went public in 2019 with an initial valuation of about $82 billion. The economist said the city expects increased revenue through property and sales taxes as Anthropic employees gain access to their wealth.

“Employees generally can’t sell their stock right away. And so, there’s what’s called a quiet period before they’re allowed to sell. But nothing stops them from getting a loan on the basis of those shares and going out and buying a house if that’s what they want to do,” Egan said.

The IPO’s effects are already being felt in the housing market.

Laura Pallin, a Realtor with The Agency, said buyers are increasingly arriving with cash in a market where available homes remain scarce.

“There are not a lot of options; inventory is significantly low. So, if you are competing against 10 other buyers or 20, your mindset changes and you are willing to do a lot more than you initially thought you might,” Pallin said.

Here’s a recent example: An eight-bedroom home in San Francisco’s Presidio Heights neighborhood was listed for $18.5 million and sold for $10 million above the asking price.

Above Asking Price

Pallin said it is common for single-family homes to sell above asking price because listings are often priced strategically.

“For single-family homes, we do strategically underprice so there is an expectation. It’s sort of like a formula that the homes will go over asking. What we can’t predict is how much,” Pallin noted.

ABC7 noted the prospect of new wealth entering San Francisco’s economy has also raised concerns among housing advocates, who say affordability challenges could worsen for residents already struggling to buy homes.

“The Anthropic IPO and other IPOs are going to make it even harder, are going to make the pressure even more, but the sad part is that most of us can’t afford houses already,” said Sam Moss, Executive Director of Mission Housing Development Corp.

Housing Policies

Moss said city policymakers should focus on long-standing housing policies.

“I think it’s easier for our city and state and federal leaders to demonize the software engineers than to take a look at themselves and the laws that they perpetuated for multiple generations in San Francisco,” he said.

Anthropic is not alone in drawing attention in San Francisco. OpenAI is also based in the city and is projected to be the next local company to pursue an IPO and is valued at $1.2 trillion.

Houses aren’t the only issue facing San Francisco residents.

Rent Emergency

Rents in San Francisco are continuing to climb, and Mayor Daniel Lurie sounded the alarm in September, declaring a rent emergency that he said needs to be addressed now.

San Francisco City Attorney David Chiu added his voice on the city’s rent prices, saying they are “too damn high,” NBC Bay Area reported.

Just look at the numbers.

New data from rental marketplace Zumper revealed the cost of a two-bedroom apartment in San Francisco has risen 24.6% compared with last year, with monthly rent now topping $6,100.

San Francisco isn’t alone among Bay Area cities encountering higher rents, with San Jose and Oakland also experiencing jumps from last year, NBC Bay Area reported.

At a news conference Thursday morning, Lurie and local leaders unveiled a package of a half dozen reforms, including protections from unfair evictions for renters and new rules to protect against sudden jumps in rent.