San Francisco’s IPO Surge: Housing Boom or Bust?

A new report by Trulia states that expectations of the housing market in San Francisco based on the projected boom of IPOs are overstated and will only reinforce existing trends.

“In particular, despite being centered on San Francisco instead of Silicon Valley, its impact is still likely to diffuse throughout the broader Bay Area. Rather than breaking with the past, the current wave of IPOs is likely to reinforce existing trends: undulating but maintained pressure on the gas pedal, not an abrupt kickdown,” the report states.

Companies such as Lyft, Uber, Pintrest, Slack, and Zoom, among others, are expected to release IPOs, which have fueled large expectations on the housing market.

The New York Times reported on the expected boom, saying, “even conservation estimates predict hundreds of billions of dollars will flood into town in the new year.”

Trulia reports that the estimated value of the anticipated IPOs is around $200 billion, and could add an additional 10,000-15,000 workers to the San Francisco Bay Area.

Despite added money and workers, Trulia anticipated that the San Francisco housing market will remain steady.

Trulia stated that only a fraction of the employees receive wealth from the IPO. The report added that, as of 2017, only 17% of the Uber shares were in the hands of the employees.

“If we conservatively take 25% of $200 billion to be employees’ share, we arrive at a $50 billion figure, but that too is an overestimate of the employees’ likely windfall in the wake of the offerings,” the report stated.

Another reason why estimates are overstated, according to Trulia, is that many of the home buyers benefiting from the IPOs will seek homes outside the city.

Trulia states the “immediate housing impact” will extend in all directions: south along the San Francisco Peninsula, north to Marion County and east past Oakland and Berkeley. The secondary impact of the IPO boom will extend farther, “diffusing the housing component for the IPO windall” throughout the Bay Area.