People are buying luxury homes with AI money

 People are buying luxury homes with AI money

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Sales of luxury homes, driven primarily by free-flowing AI money, are surging in places like San Francisco and the Hamptons, while nonluxury sales are stalling out. The median US luxury home sale price jumped to $1.39 million from February to April this year, a 3.6% year over year increase, compared to a 1.4% median price increase for nonluxury homes, according to a new Redfin report. There’s no bigger boom than in the San Francisco Bay Area, ground zero for the AI race: Luxury prices in the area have risen 13.4% since November 2022 (when ChatGPT’s first model was released), while less-expensive properties in the same area have fallen 3.8%. In March, the median house price in the city of San Francisco reached a record $2.15 million. Some SF real estate agents have argued that the steep spike in luxury homes can be chalked up to a correction after years of home price hibernation. But rents have also shot up in the last few years, driven by workers flocking back to the city to get a piece of the AI boom: The median monthly price of a one-bedroom apartment jumped over 21% in the last year to above $4,000, the biggest jump in the US, according to apartment-listing firm Zumper. A two-bedroom runs about $5,500 a month on average, tying the city with New York for the most expensive rent in the country. On the other coast: The median property sale price in the Hamptons hit a record $2.34 million in the final quarter of last year. Realtors in the area say deep-pocketed AI workers are paying all cash and are willing to shell out $50,000 to make sure the fiber internet is top-tier. Luxury home sales are also proceeding at a good clip in cities like Tampa, West Palm Beach, and Miami. Speaking of AI…it doesn’t have high hopes for mortgage rates dropping below 5% in the next five years.