Anthropic's IPO expected to reshape SF's housing market: 'Most of us can't afford houses'

San Francisco's Anthropic, a prominent artificial intelligence firm, has announced its intention to go public with an initial public offering (IPO), a move anticipated to inject billions into the local economy and further strain an already tight housing market. This IPO is expected to be one of the most significant in history, with city economist Ted Egan estimating the company's valuation could soar to an impressive $2 trillion.

City officials are bracing for the economic repercussions that may follow this IPO. Egan noted that San Francisco saw a similar, albeit smaller, surge in wealth when Uber went public in 2019, initially valued at around $82 billion. He indicated that the city could benefit from increased tax revenues, including property and sales taxes, as new wealth floods into the area, particularly as Anthropic employees gain access to their stock options.

“While employees typically cannot liquidate their shares immediately due to a quiet period, they can secure loans against those shares to purchase homes if desired,” Egan explained.

Real estate experts are already observing shifts in the housing market. Laura Pallin, a realtor with The Agency, reported that buyers are increasingly arriving with cash offers in a market characterized by a significant shortage of available homes. “The inventory is very low, so when you have 10 or 20 other buyers competing, it changes your mindset, and you may be willing to go higher than you initially planned,” Pallin stated.

An example of this trend is reflected in the recent sale of an eight-bedroom residence in the Presidio Heights area, which was listed at $18.5 million but sold for $10 million over that asking price. Pallin noted that it is common for single-family homes to sell for more than their listed prices, as realtors often price them strategically to generate competitive bidding.

“For single-family homes, we tend to under-price them with the expectation that they will attract higher offers. What remains unpredictable is the extent of those bids,” she added.

However, the influx of new wealth has raised alarms among housing advocates, who warn that affordability issues will likely worsen for residents already struggling to find homes. Sam Moss, the executive director of Mission Housing Development Corporation, expressed concern, stating, “The IPO of Anthropic and similar companies will exacerbate existing challenges, making it even tougher for many of us who already cannot afford housing.”

Moss emphasized the need for policymakers to address long-standing housing issues rather than blaming the tech workers. “It’s often easier for city, state, and federal leaders to point fingers at software engineers than to examine the laws they’ve upheld for generations in San Francisco,” he remarked.

Anthropic is not the only AI company in San Francisco that is capturing attention; OpenAI is also expected to pursue an IPO soon, with a current valuation of around $1.2 trillion. While the full economic impact of Anthropic's IPO remains uncertain, both housing experts and city officials agree that the event is already shaping expectations in the local real estate market.