Toby Howell

OpenAI alone had about 600 employees who collectively cashed in

On $6.6 billion of shares last year, that's who you're bidding against, and it's why the upper half of the market is just going bonkers.

Pending luxury home sales and SF up 48% year over year.

Average luxury sales price up to $6.7 million.

Condo prices are up 24%.

So Neil, you have this very weird juxtaposition where a recovery in the housing market isn't being driven by normal things like falling mortgage rates or middle class purchasing power, but by an insane infusion of cash, thanks to AI startups, warping the top echelon of the market.

And this warping of the market blooms outwards.

It's not just in San Francisco because when luxury booms happen, the ultra, ultra-rich, we're talking very tip of the iceberg bid up homes in San Francisco, but that may push affluent buyers into slightly cheaper neighborhoods, but also it pushes them into neighborhoods

different metro areas altogether, which is why you might see spikes in places like Austin, Denver, Nashville, Tampa, these other places that are less expensive.

But again, when you're not in the 1.1110% of AI money users, these price effects ripple outwards nationally.

And then the other thing that's happening, I mentioned that mortgage rates are still elevated.

And usually when mortgage rates falls, that revives a housing market.

Most of these buyers are all cash buyers.

They don't need mortgages.

When you are competing for these homes and you run into situations where people are paying an entire year's worth of rent, cash is king, which is why, again, you are seeing kind of it go against the grain.

Mortgage rates are still extremely elevated right now, but San Francisco luxury market doesn't care.

If you wanted a physical representation of the K-shaped economy where the top half of the economy is doing very well, the bottom half is struggling, this is the emblematic of it.

This embodies it in San Francisco.

That's where a lot of people have been using the term, kind of in jest, but the permanent underclass.

If you missed out on these AI startups, then you're never going to be able to afford a house.