The real estate market in San Francisco has run out of ideas

Real estate in San Francisco has never been found. But the sales going on right now in the city’s high-end market are testing the limits of what even this storied city thought was possible.

Consider this six-bedroom, 5,700-square-foot condo in Cow Hollow, one of San Francisco’s most desirable neighborhoods. It was listed two weeks ago for $7.95 million, so, not cheap. It just sold for $15 million. The sellers, who bought the property for $7.8 million in the summer of 2020 as the pandemic drove people out of the cities, nearly doubled their investment in less than five years.

San Francisco real estate agent Rohin Dhar announced the sale on X, where it drew what you’d expect from people who thought they’d seen everything the market had to offer.

Then there’s a 4,100-square-foot home in Presidio Heights, one of the city’s exclusive neighborhoods, which was listed at the end of April for $4.4 million and sold a week later for $8.2 million, nearly double the asking price. Venture capitalist Nichole Wischoff, who toured the property before it was sold, wasn’t happy with the price tag.

“Medium-sized house, good location,” wrote on Xnoting that the view from the balcony was of a neighboring house that appeared to be on fire. “Someone just bought this for $8.2M,” he wrote. “If you want to see money on fire, come see a place in SF.”

It’s not just high-flyers who are seeing action. A 2,300-square-foot home in Bernal Heights sold this week for $4 million — a million dollars over the asking — two years after the same owners tried and failed to sell it for $2.95 million. That sale represents a different but equally telling story: chaos doesn’t just happen in eight-person houses. Across the market, buyers are buying aggressively, with homes selling in the $500,000 to $1 million asking price.

The numbers prove the claim. New data from Redfin shows San Francisco luxury home sales jumped 22% year-over-year in March, with homes moving in just 12 days — down from 28 days last year. About two-thirds of the high-end products were processed within two weeks. In contrast, non-prime sales rose less than 4%, and prices remained low. The high end is operating in a very different environment.

The invisible force behind all this is no secret to anyone interested in the modern economy of the city. San Francisco is home to some of the world’s most valuable private companies, and their workforces have been quietly piling up — and, increasingly, churning out big bucks.

OpenAI and Anthropic, two of the most important AI companies ever created, have allowed employees to sell shares of their shares in the secondary market in recent years, putting large amounts of money in the hands of people who, in most cases, already live here and want to upgrade. That money is flowing straight into the housing market, and the market is responding accordingly.

The truly amazing part may be yet to come. SpaceX, OpenAI, Anthropic, and a host of other tech giants have not been publicly named. When they do – and conventional wisdom says some of them will, soon – an open economy will make the current era seem strange by comparison. Tens of thousands of cash-strapped workers in multi-billion dollar companies are starting to become redundant at the same time.

What that means for a real estate market that is already selling for $15 million less than a week or so after it was listed is, frankly, hard to fathom at this point. San Francisco has been a hotbed of home buying for years. It will be unusual, to say the least, if $15 million soon appears as an opening.