SAN FRANCISCO (KPIX 5) — With the volume of Bay Area tech IPOs happening this year, San Francisco city officials are trying to crunch the numbers to analyze the impact the influx of cash will have on the local real estate market.
“This tech IPO earthquake beginning to shake our city is unprecedented in scope,” said Supervisor Gordon Mar, who represents San Francisco’s 4th District.
Likening this year’s wave of tech IPOs to seismic event, Mar asked city staff to estimate how the flood of potential down-payment money might affect the city’s real estate values.
Their answer was a 1.8 percent increase for the first IPO.
For the second? “Another 1.8 percent impact, so it’s per IPO,” said Fred Brousseau with the Budget Legislative Analyst’s Office.
Assuming all six of the expected IPOs happen, that would send the median value San Francisco home up more than 11 percent in the next year or two. However, there is another way to think of the IPO impact.
“There are almost as many new people who can buy housing as the number of houses that sold in San Francisco last year,” said San Francisco real estate agent and data analyst Deniz Kahramaner.
He has been crunching the numbers at Data Bay Area. He looked at how Twitter and Salesforce drove the market in recent years, an he thinks the city might be underestimating what will come with the latest IPOs.
“If Uber, Airbnb, Lyft, and the others prove to be a long, sustainable businesses, we could see a similar 5 to 10 year trend, which is prices doubling again,” said Kahramaner.
Also during Wednesday’s hearing, Supervisor Mar introduced a proposal to increase taxes on IPO income. That actually comes from the payroll tax.
That is the same tax supervisors lowered in 2012, partly with the intention of making San Francisco more appealing to tech companies.