The artificial intelligence boom is making its presence felt in another corner of the US economy: the luxury housing market.High-income earners, including many employees at AI companies, are buying multimillion-dollar homes in the San Francisco Bay Area despite high mortgage rates and rising property prices that have kept many other would-be buyers out of the market, according to news agency AP.The Bay Area surge reflects a broader trend across the United States, where sales of high-end properties are holding up better than those of less expensive homes even as the wider housing market remains sluggish.
Luxury homes outperform middle of the market
Sales of previously occupied homes in the US were essentially flat last year and remained near a 30-year low, before slowing again in July. Sales of newly built homes, which account for a much smaller share of the market, have also declined this year.Affluent buyers, however, are better positioned to deal with higher borrowing costs. Many can pay entirely in cash or make large down payments by selling stocks and other investments. Stock market gains linked to the AI boom have also boosted investors’ portfolios, with the S&P 500 remaining near its most recent all-time high.“These people have lots of money and they’re just not going to be very sensitive to things like mortgage rates or home prices,” said Daryl Fairweather, chief economist at Redfin.“They want the home they want and they have the money to buy it.”Nationally, sales of luxury homes, defined as properties in the top 5% of a metro area by price, rose 2% in the first half of this year from the same period in 2025, according to Redfin data cited by AP.Sales of middle-market homes rose 1.9%.The difference was more pronounced in prices. The median sale price of a luxury home nationwide between January and June was about $1.37 million, up 4.3% from a year earlier. The median price of a middle-market home rose 1.4% to $377,245.
Bay Area sees sharpest gains amid AI hiring boom
In the San Francisco metro area, luxury home sales jumped 39.3% in the first half of the year compared with a year earlier, while middle-market sales rose 15.1%.Across the bay in Oakland, sales of high-end homes increased 13.3%, compared with a 3.9% rise in middle-market home sales.The trend is also visible in metro areas less directly linked to the AI industry. In Tampa, luxury home sales surged 35.5% between January and June, while middle-market sales fell 5.1%. In Nashville, upper-market home sales rose 10.8%, compared with a 1.7% increase in middle-market properties.Detroit recorded an 8.7% increase in sales of higher-end homes, while sales of middle-market properties fell 6%.Overall, luxury home sales have outpaced, or declined less than, middle-market home sales in 44% of the country’s 50 largest metro areas, according to the Redfin data.
Potential AI IPOs add urgency for buyers
In the Bay Area, companies competing to develop artificial intelligence have increased compensation to attract executives and software engineers, expanding the pool of high-income earners.Real estate agents say many of these employees have been bidding well above asking prices for homes.The possibility of major AI companies going public has also added urgency to some buyers’ decisions.OpenAI, the creator of ChatGPT, and Anthropic, which develops Claude, filed preliminary paperwork for initial public offerings in June, though neither company has decided on the timing.A Redfin analysis estimated that the combined potential IPO earnings of employees at the two companies could be enough to buy nearly one-third of all homes in San Francisco.The prospect of a new wave of wealthy buyers entering the market has prompted some existing home shoppers to move faster.Julio Bermudez, a 41-year-old executive at an AI data infrastructure company in the Bay Area, said his search for a first home became more urgent after considering the potential changes ahead.“So, you start taking a look at that and you take a look at your own position — both from just a diversification standpoint, as well as the fact that we’re trying to set roots here, kids are in school, all that good stuff,” Bermudez said. ”And it’s like we don’t want to be priced out, so we need to buy now.”Bermudez recently signed a contract to buy a five-bedroom, four-bathroom house in Orinda, about 17 miles northeast of San Francisco. The property was listed at $3.5 million, but the seller agreed to sell it for $3.3 million.“I felt like this was sort of an interesting time and location to try to strike before it really does get crazy,” he said.