SAN FRANCISCO (KPIX 5) — Bay Area residents concerned about home prices in the region being out of control should fasten their seat belts as a number of major San Francisco tech IPO’s could send housing costs into the stratosphere.
Among the major tech firms going public this year are Uber, Airbnb, Lyft, Pinterest and Slack. All are based in San Francisco and all are valued at more than $10 billion dollars each, with some holding much more value than that.
Those initial public offerings stand to make millionaires out of hundreds — possibly thousands — of employees and investors, almost overnight.
“Lot of people will get a lot of money. Looking for housing to buy, things to spend on, so the city gets more crowded and more expensive. You know, that’s usually what happens,” remarked San Francisco resident Jon Yin.
But it hasn’t happened like this before.
Ted Egan is the chief economist for the city of San Francisco. He remarked how he hass seen plenty of big tech giants go public, but not this many at one time.
“This is not a new process, but this could be bigger than anything we’ve seen before.” said Egan.
Once the companies hold their respective IPOs, employees may receive a bigger paycheck, or the shares they may own could increase in value.
Such and influx of wealth to the market could mean life gets more expensive for the rest of San Francisco.
“A lot of the things that have gone up in value and have become more prominent in the city in past years. You’ll see even more of that,” said Egan.
In 2012, when Facebook went public, according to a Zillow study, median home prices rose more than $20,000 in neighborhoods with a high concentration of the social network’s employees.
If history repeats itself, the average cost of a San Francisco home could climb even higher than its current $1.13 million price tag.
“It’s getting more expensive and housing is super hard to build these days. So I just feel sorry for the people who don’t own their houses,” said Lin.
But there is a silver lining beyond the obvious economic boon. The influx of wealth means fatter coffers for San Francisco’s budget.
.4 percent of whatever employees earn will come into the city’s coffers by way of a payroll tax. That’s money many locals hope will be spent on bridging the gap of income inequality for the folks who aren’t so IPO lucky.
“What you have is, the haves and the have nots. You’re looking at the end of one huge spectrum: up here, money, money, money. Down here, a huge population with no funds at all. It is going to be a challenge,” remarked SF resident Manuel Randie.
The operative word here is “if.” Most of these companies announced their plans last year when the market was high. As volatile as the market has been, it is hard to say exactly what will happen in the coming months.