AI is quietly splitting the housing market in two: Bay Area luxury homes are up 13%, affordable ones are collapsing

As AI mints new millionaires, billionaires, and even trillionaires, it’s also threatening to replace entry-level workers and sparking fearful chatter of the “permanent underclass.” There’s no place that’s more evident than in the Bay Area, at the heart of Silicon Valley, where technology is wedging a deeper divide in the K-shaped economy, especially in the housing market. 

A new Redfin report found that since the launch of ChatGPT’s first model in Nov. 2022, luxury home prices in the region—classified as those selling between $3.1 and $7.6 million—have jumped 13.4%. At the same time, home values for lower-end properties in the Bay Area—those $535,000 to $615,000—have fallen by 3.8%.

“Some owners of lower-end properties have missed out on the AI boom, with home prices in the most affordable Bay Area zip codes declining over the past two years,” Yingqi Xu, Redfin senior economist, said in a statement. “It’s another sign of the K-shaped economy taking shape in the Bay Area, with AI lifting the fortunes........

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