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EXCERPT:
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 of some households and neighborhoods much more than others.”
Many Americans today are grappling with the sobering reality of high mortgage rates, inflated home prices, and a housing stock shortage. Many are delaying homebuying by a near decade from just a few years ago, as the median age of the first-time homebuyer hit 40 in 2025, up from just 33 in 2021.