The IPO wave of 2019 won’t upend the Bay Area housing market

The impending wave of San Francisco tech IPOs is substantial and will influence San Francisco real estate, but the hype about its impact is likely overblown. 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.

IPO-driven buyers will add an affluent but small contingent to the Bay Area buyer pool and they will help support the Bay Area’s ongoing price appreciation — perhaps even substantially — but they will be extending a long history of price appreciation in which IPOs have played a part, not breaking from it. Between 1970 and 2017 there were 1,987 IPOs by California-based companies, with a large share being in the Bay Area. The scale of the current wave of IPOs, although it is exceedingly large, is not very different from Facebook’s in terms of home-buying power. After its 2012 IPO, Facebook was valued at $104 billion — but because Bay Area housing prices have roughly doubled since, that’s equivalent to the same home-buying power as $200 billion-plus today.