Here’s why San Francisco housing prices could soon get even crazier

Here’s why San Francisco housing prices could soon get even crazier

Fresh wave of tech IPOs could create a lot more millionaires

San Francisco is already facing a housing and affordability crisis, but it may be about to become a lot worse.

By the end of 2019, the city could have hundreds, even thousands, more millionaires — on paper at least — thanks to a slate of tech IPOs lined up. On Thursday, a report by the New York Times’ Nellie Bowles laid out what may be coming, boiled down to two words: “Housing madness.”

San Francisco-based tech unicorns planning to go public in the near future include Uber Technologies, Lyft, Slack, Postmates, Pinterest and Airbnb. While the San Francisco Bay Area has been no stranger to tech IPO riches in recent years, as Bowles pointed out, previous big tech IPOs — think Google and Facebook — have been largely based outside San Francisco and had workers spread out around the area. This new crop are based in the city itself, and many of their employees live there as well — or want to.

Real estate agents are already drooling. According to the Times, at a recent gathering, one agent said there likely won’t be any one-bedroom condos in San Francisco under $1 million within five years. And single-family homes, which already average well over $1 million, will reach an average of around $5 million, he forecast.

“People are like, ‘I’m not going to sell till next year, because there are going to be bajillionaries everywhere left and right.’”

Herman Chan, a real estate agent, according to the New York Times

Millennial tech workers want the convenience of the city, another real-estate agent told the Times: “They seem to not want to own cars, and food deliveries are really easy now, and they want to be close to entertainment, so they’ll stay in the city.”

That could be bad news for non-millionaires who are trying to find an affordable apartment or — gasp! — even a house. Displacement is likely to increase as housing prices become even more out of reach for lower- and middle-class people. The median price of a one-bedroom apartment in San Francisco recently hit a new high of $3,690 a month, according to real-estate website Zumper, up 9% from the same time last year. That’s more than $800 higher than the median New York City apartment.

But while San Francisco’s inequality gap may grow, some small businesses are poised to cash in. Event planners told the Times that the upcoming IPO boom will likely surpass the ‘90s tech bubble in terms of sheer excess — which is good news for them. One told the Times that party budgets for tech companies can top $10 million, with A-list entertainment. One recent tech exec’s ‘80s-themed party featured the B-52s, Devo, The Bangles, Tears for Fears and A Flock of Seagulls, the planner said.

At least one electric bike shop is stocking up its inventory, predicting a sales boom later in the year, and a nearby ice sculptor is gearing up for a big year, likely carving everything from massive ice sculptures to ice cubes with company logos engraved in them.

The size of the coming boom is no sure thing — IPO bubbles have a nasty tendency to pop, as employees of companies such as Snap SNAP, -0.74% and Blue Apron APRN, +0.85% can attest to. Employees’ stock options will be locked up for months after the companies go public, and it’s unlikely most will entirely cash out at once. Still, there will likely be a noticeable effect.

The growing financial excess has some talking about the certain backlash.

“There’s some who’ve talked about pitchforks,” a private wealth adviser told the Times. “And I don’t think we’ll go there, but there’s a point when that makes sense.”

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