Buying homes in Bay Area with pre-IPO OpenAI stock? New real estate trend going viral in San Francisco

SAN FRANCISCO (KGO) — The Bay Area’s real estate market is notoriously competitive, and the artificial intelligence boom is taking it to a whole new level.

Would-be buyers are getting turned down because others are making offers in AI stock.

A text shared on social media is now going viral and exposing a new reality in the San Francisco real estate market.

In it, a tech company founder shows a conversation with his realtor in which he was told his bid for a Noe Valley home, which was $400 thousand over asking price, was denied.

The realtor responds saying the seller instead went with a buyer who paid in pre-IPO stock of OpenAI.

“I think the motivation is to get the jump on things,” said Kevin O’Connor.

O’Connor is an associate broker with Sotheby’s, who says he’s seeing this more and more in real estate deals around the Bay Area.

It’s a way for sellers to get equity in booming artificial intelligence companies, which they think will only appreciate with time.

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“They trust that this company is a good company and that this company is a company that can deliver based on everything they’ve heard about it,” said Ahmed Banafa, a tech expert at San Jose State University.

He says that while the trend has potential benefits for home sellers, it also helps the companies too.

“That’s going to increase the value for the companies, because now the shares of the company are used as a currency,” Banafa said.

But he warns that this also comes with risks. Among other things, there’s a chance stock values could fall once companies go public, possibly leaving whoever owns them with an outsized tax bill.

“But a lot of the sellers — they look at it as it’s worth it for them, because they have seen the examples with other companies,” Banafa said.

Home prices in San Francisco have risen dramatically over the past year as AI money continues to flow into the city.

And, while nothing can last forever, O’Connor believes, at least for now, this trend is here to stay.

“It’s good to understand that right now, it is in the infancy stage. It’s just beginning. And our hope and what we see and what we anticipate is this trend,” O’Connor said.

As for OpenAI, industry experts predict it could go public as soon as this fall.