An increase in millionaires by the thousands is expected to come later this year as several big-name tech companies go public.
Employees of the companies, including Uber, Lyft, Airbnb, and Pinterest among others, are to set to be major beneficiaries of the currently “open for business” IPO market. Deniz Kahramaner, a Compass realtor believes that over 5,000 of these employees could become millionaires after the change – a figure that’s greater than the number of millionaires created after either Google’s IPO in 2004 or Facebook’s in 2012, which both saw around 1,000 additions.
The drastic increase in wealth will be felt primarily in the San Francisco Bay area where the future IPOs are located, and their biggest impact will most likely be on real estate and rental markets. Kahramaner’s predictions show 2,400 of the new millionaires could buy properties at $1 million or less, and a little over 200 might buy properties over $10 million.
These purchases, if they take place, would spur the real estate market in San Francisco even higher – so much so that Kahramaner believes that within 5 years it will be impossible to purchase a property in the city for under $1 million. And Anthemos Georgiades (the CEO of the rental site Zumper) says that he would estimate around 10% increase in rental prices.
Georgiades was less convinced that the new millionaires would have the extreme impact that others are foreseeing. He noted that not all of them will be gung-ho about entering the real estate market. Much of the new wealth will come to millennials, who have proven to be less inclined to spend their money on new homes. According to a recent Zumper survey, 33% of those currently renting don’t think owning a home is an integral part of the American dream. Instead, they would rather use that wealth on experiences like traveling.
However, it is my belief and understanding as these “20-40 somethings” with a lot more cash that they have ever had or need for traveling will make their respective way towards getting married and dare say having children. They will then likely sober to the fact that they will need to chuck in their “travel wings” and friend’s couch for a nice single family home or flat with a bit more space to stretch out in and begin working on their next project.
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