Yesterday we discussed some of Financial Samurai’s Reasons that year 2020 is a good time to buy real estate. One of the more complicated arguments surrounds tech IPOs.
Here’s the idea. When a successful company grows to the point of raising money through an initial public offering, it is the first time thousands of employees and investors can unlock their years of stored wealth and paper gains. Tech workers tend to be younger millennials looking to buy their first home and minimize commuting. Therefore, housing closest to the office headquarters will see a large boost shortly after the IPO.
What IPOs Will Impact Rent and Real Estate?
We are in the middle or even mid-late stages of the tech IPO wave across multiple metro areas. The SF Bay Area has already seen a tech wealth effect for years – bay area rentals are sky high, much higher than NYC rentals. That’s not even from the IPO wealth – it’s just a general trickle down effect of venture capital money driving up a talent war for all jobs.
But which IPOs could mint some new tech millionaires that will scoop up condos and houses, possibly without even visiting a mortgage broker?
Airbnb: Probably the most recognized consumer company from Y Combinator, SF-based Airbnb changes the way millions of people travel and unlocked a new avenue for almost anyone to earn spare money (or in some cases full time hosting jobs). They could have IPOed years ago, but perhaps they choose not to because they are already plenty profitable.
Stripe: Listed as #1 on the current YC Top 100 list, payment processor Stripe employees 2000+ with a heavy emphasis on engineers in the bay area. Competitor Square already IPOed half a decade ago – it’s only a matter of time.
CloudFlare (already IPOed): Based in Boston, already had their IPO late 2019, and it was very successful – full period. Add that to the timing, when so many other IPO deals had gone badly, and we should see some liquidity effect as lockups end and we near the spring buying season.
