Some of the tech world’s best-known companies are going public around the same time, conceivably unleashing billions on the San Francisco-area market.
While prior waves of IPO money have been dispensed mostly to companies based in Silicon Valley, a sprawling peninsula encompassing several cities and counties, these tech companies are largely based in San Francisco, a physically tiny city encompassing just 47 square miles. San Francisco County clocked just 6,420 home sales in the 12 months ending Nov. 15, 2018, according to data from real estate agency Compass, compared with 20,786 in San Mateo and Santa Clara counties combined.
THE LYFT EFFECT
Last month, real estate agency Redfin posted an analysis on the impact that the public offering of ride-sharing company Lyft could have on the market.
-- Based on an IPO price of $72 a share, Redfin estimated that Lyft's
current and former employees would hold about $1.458bn worth of stock.
-- With that kind of money, they could hypothetically buy all 623 homes
listed for sale in San Francisco at that time--and still have $12m left
over.
WHY THIS MATTERS
For buyers and sellers, the pre-IPO buzz has unleashed a lot of consternation. Real-estate agents say buyers are plunging into the market with a renewed sense of urgency, fearful that an influx of newly minted millionaires will set prices on an upward trajectory and make an already tight market even worse. Sellers, worried about missing the height of the wave, wonder if they should hold off listing altogether.
“The question is whether these IPOs are going to be an accelerant to a heating market, or a countervailing factor in a market that’s cooling…I assume it will add some positive pressure on the market, but is it going to reignite the sort of appreciation rates we saw last year? I find that hard to believe,” said Patrick Carlisle, chief market analyst at real-estate agency Compass.
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