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

SAN FRANCISCO (KGO) -- Anthropic, an artificial intelligence company based in San Francisco, has filed paperwork to sell its shares to the public for the first time. This is called an initial public offering (IPO). The move is expected to bring billions of dollars into the city's economy and could make it even harder for people to find affordable homes.

The IPO is expected to be one of the biggest in history. Ted Egan, the chief economist for the City and County of San Francisco, said the company could reach an extremely high value.

"Potentially worth $2 trillion dollars," Egan said.

City officials are getting ready for the economic effects of the IPO. Egan said San Francisco saw a similar but much smaller increase in wealth when Uber went public in 2019, with an initial value of about $82 billion. He said the city expects to collect more money through property and sales taxes as Anthropic employees gain access to their wealth.

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"Employees generally can't sell their stock right away. And so, there's what's called a quiet period before they're allowed to sell. But nothing stops them from getting a loan on the basis of those shares and going out and buying a house if that's what they want to do," Egan said.

Real estate experts say the effects are already showing up in the housing market.

Laura Pallin, a real estate agent with The Agency, said more buyers are bringing cash to buy homes, even though there are very few homes available.

"There is not a lot of options; inventory is significantly low. So, if you are competing against 10 other buyers or 20 your mindset changes and you are willing to do a lot more than you initially thought you might," Pallin said.

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One recent example was an eight-bedroom house in San Francisco's Presidio Heights neighborhood. It was listed for $18.5 million and sold for $10 million more than the asking price.

Pallin said it is common for single-family homes to sell for more than their asking price because sellers often set the starting price carefully to encourage competition.

"For single family homes we do strategically under-price so there is an expectation. It's sort of like a formula that the homes will go over asking. What we can't predict is how much," she said.

The possibility of new wealth entering the local economy has also worried housing advocates. They say it could make housing even less affordable for people who are already struggling to buy a home.

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"The Anthropic IPO and other IPOs are going to make it even harder, are going to make the pressure even more but the sad part is that most of us can't afford houses already," said Sam Moss, executive director of Mission Housing Development Corporation.

Moss said leaders should focus on housing policies that have been in place for a long time.

"I think it's easier for our city and state and federal leaders to demonize the software engineers than to take a look at themselves and the laws that they perpetuated for multiple generations in San Francisco," he said.

Anthropic is not the only major artificial intelligence company attracting attention in San Francisco. OpenAI, which is also based in the city, is expected to be the next local company to seek an IPO. It is valued at $1.2 trillion.

It is still unclear how much Anthropic's IPO will affect the economy. But housing experts and city officials say it is already changing what people expect to happen in San Francisco's housing market.