The impact of the San Francisco based tech IPO’s that are occurring in the next few weeks, has many speculating about the impact on Bay Area housing. The Bay Area median price rose 4.5% in January 2019 compared to January 2018 and is well over $1,000,000 in San Francisco, Marin, Santa Clara and San Mateo counties.

Overnight Millionaires

The influx of monies is speculated to creating “overnight millionaires” that will definitely have an impact on the Bay Area real estate market.  How far reaching the impact will be, is yet to be seen.  The North Bay may be too far out of reach for a home purchase for these “new” wealthy individuals.  But perhaps, their purchasing power will encourage sellers in the Bay Area to make a move to the North Bay where they can get more for their money.  Who knows….

The Timing of Cash

According to The Guardian, there is usually a contractual restriction of 90 – 180 days after the initial IPO release, preventing insiders from selling their shares.  With that information, the affects will not be felt immediately.  According to the article in Forbes, San Francisco in recent years has had its higher end housing fueled by the injection of all cash buyers coming in from China. But in 2018, that came to an end with the restrictions on getting money on China, thereby slowing down the high-end market.  The hopes are that the release of these IPO’s will generate a new wave of home buyers for that market.

Lyft Starts The Ball Rolling

Last week Lyft went public with shares opening at $87 a share out and closing out at about $72 per share generating the company $2.3 billion, making them now worth about $22.2 billion.  Uber’s IPO has a release date sometime in April, with an estimated value after of $120 billion.  AirBnb currently valued at $31 billion follows in June.  There are other San Francisco based tech companies on the move as well.  Slack, Pinterest and Palantir are just naming of a few of the unicorn IPO’s going public.

Actuality and Speculation

This wave of unicorn IPO’s and their impending release dates have homeowners speculating and calculating their own futures.  The generation of this amount of constant influx of millions will definitely have a tremendous impact on the Bay Area.  But one thing to keep in mind is the actual cash in hand these employees will end up with.  The average employee is 35 plus years old and will be looking to set roots down and it may not necessarily be a $3 million dollar home.

Information was gathered from:  Articles in The Guardian by Vivian Ho and Forbes by Mary Ann Azevedo

Holly Young

Vanguard Properties

(707) 477-9885