San Francisco is selling homes based on future IPOs

NQ100

Key zone: 29,000 -29,500

Buy: 30,000 (on a positive fundamental basis); target 31,500-32,500; StopLoss 29,400

Sell: 28,500 (on a pullback following a retest of 29,000); target 26,500; StopLoss 29,200

San Francisco is entering a new phase of investment euphoria. Owners of luxury real estate are now willing to accept private shares of OpenAI and Anthropic as payment—even though neither company has gone public yet. The market is effectively treating future IPOs as if they were already a source of liquidity, while home prices are becoming increasingly driven by expectations surrounding AI rather than by fundamental factors.

Private shares of AI companies are beginning to function as a means of payment for real estate even before an IPO takes place.

This approach turns real estate into a derivative of the technology sector. Investors are paying not with publicly traded equity, but with expectations of the future market capitalization of AI companies. That is precisely why analysts are increasingly drawing parallels with previous periods of market euphoria.

Reminder:

The excitement is clearly reflected in prices. The first half of 2026 was remarkable for San Francisco's housing market. A total of 144 homes sold for more than $1 million above their original asking price, compared with only eight such transactions a year earlier. June alone recorded 44 sales of this kind, confirming a sharp increase in speculative demand.

It is important to understand that this does not refer to the number of homes worth more than $1 million. Rather, it refers to homes that sold for more than $1 million above their initial listing price.

• Local sellers traditionally list properties below their estimated market value in order to trigger bidding wars. Even accounting for this practice, however, the size of the premiums demonstrates extraordinary market activity.
• Another major factor is the shortage of supply. The number of available listings has fallen by approximately 40–45%, meaning that even a relatively modest inflow of capital from the AI sector produces a disproportionate increase in prices.
• Demand remains strongest in the $2–5 million segment, while the number of transactions above $5 million has more than doubled.

The primary source of new capital has become employees of leading AI companies. They use their private shares as collateral for loans, sell stakes through specialized secondary-market structures, or rush to purchase homes before IPOs, expecting that thousands of newly wealthy colleagues will enter the housing market simultaneously after the companies go public.

According to rough estimates, the combined wealth of current and former employees of OpenAI and Anthropic following potential IPOs could theoretically be sufficient to purchase approximately 29% of San Francisco's entire housing stock. This is not a forecast of future purchases but rather an illustration of the enormous concentration of potential wealth around the AI sector.

However, this is also where the greatest risk lies.

Private shares of privately held companies cannot be valued as objectively as publicly traded securities. The secondary market remains opaque, transactions take place with varying discounts and restrictions, and the ultimate IPO valuation may differ significantly from the prices implied by specialized investment vehicles.

If OpenAI or Anthropic postpone their IPOs, receive lower valuations, or impose post-IPO lock-up restrictions on employees, the anticipated flow of capital into the housing market could prove far smaller than investors currently expect. In that scenario, buyers risk being left with homes purchased at prices reflecting future technological success while paying today's mortgages, taxes, and maintenance costs.

That is why market participants are closely monitoring secondary-market valuations, potential IPO timelines, tender offer activity, lending backed by private shares, sales of homes above $5 million, and the premium paid relative to original listing prices. Any decline in secondary-market valuations or postponement of IPOs could become the first signal that the market is cooling.

What does this mean?

Today's San Francisco is not repeating the pattern of the 2007 mortgage crisis. Back then, the market was fueled by excessive leverage, widespread mortgage lending, and the securitization of low-quality loans.

Today's environment is different. Demand is driven primarily by highly paid technology professionals and wealthy capital owners, while the housing shortage remains a structural issue. As a result, the current situation more closely resembles the late 1990s, when asset prices surged on expectations of future technological wealth.

The key message for investors remains unchanged: the market is already valuing real homes based on companies whose shares still cannot be freely bought or sold.

For traders, this means paying close attention not only to developments in the AI sector but also to conditions in the private capital market. Any changes in the valuations of OpenAI or Anthropic could quickly reshape sentiment not only in the housing market but across the broader U.S. technology sector.

So we act wisely and avoid unnecessary risks.

Profits to y’all!