San Francisco's housing market is experiencing an "absolutely bananas" surge, with home sales routinely exceeding asking prices by over $1 million. In the first half of 2026, 140 homes sold for at least $1 million above asking, a stark increase from just eight such sales in the same period last year. This frenzy is directly linked to the burgeoning AI sector, with companies like OpenAI and Anthropic poised for massive IPOs.

Industry experts attribute the demand to migration, hiring, and anticipation of these tech IPOs, which are expected to create new millionaires. San Francisco's single-family home prices have climbed approximately 17% year-over-year, while inventory has dropped by 45%. The median home price has jumped from $1.7 million to $2.2 million, with homes selling in an average of 18 days.

The market is becoming increasingly segmented, with demand concentrated in luxury segments and near AI employment hubs. This contrasts with other tech hubs, which are not seeing similar overbidding. The AI boom's prosperity appears to be funneling into a narrower segment of the market, driving intense bidding wars for scarce properties.