SAN FRANCISCO -- Flowers and wine for listing agents at open houses. A year's rent up front. And $2,250 for a room with no closet.

San Francisco's housing market was already a demolition derby for renters. The artificial-intelligence boom has pushed the bruising race for housing into overdrive -- a lack of supply is colliding with sky-high AI salaries.

In less than two years, the average asking rent across the San Francisco metropolitan area has risen 18% to reach $3,728 a month, according to the real-estate data firm CoStar, surpassing the New York City metro area this year for the first time since 2019. San Francisco has reclaimed the crown for the highest average rent in the U.S.

Rents in the most popular neighborhoods can go for twice the average. Bidding wars are pushing some prices into the five-figure range.

Darren Mallot, 23, moved to San Francisco for a job in finance after graduating in June from the University of California, Los Angeles. After weeks of poring over listings for a place for him and three roommates, Mallot finally found a four-bedroom in the historic and affluent Nob Hill district.

At the open house, around two dozen people were there, and 10 were in line waiting to speak with the landlord about the $7,800-a-month unit. Mallot handed over a letter with biographical information for all four roommates, including credit scores.

The bidding started at $8,000, shot past $8,500 and hit $9,800. Mallot offered $10,000 and got the place. While the renovations and views are nice, one roommate is paying $2,250 for a smaller room that has no closet.

"I was honestly prepared for me to say, 'OK, we'll pay $10,000,' and for her to call back and say, 'Will you do $10,200?' " he said.

Rents in San Francisco declined during the pandemic as people fled cities for more space and worked remotely. Remote workers were slow to return, and several large companies relocated for good. Asking rents across the metro area fell more than 7% during 2020 and then mostly stayed at or below prepandemic levels until last year, according to CoStar data. That changed as the pandemic waned, the era of remote work faded and AI companies based in the city went into hiring mode.

Now, wealthy AI workers are powering much of the bounceback. Bay Area venture-capital fundraising is up, and San Francisco has seen the highest increase in job postings of any major apartment market this year, according to the property-research firm Green Street.

There is no slowdown on the horizon: AI companies continue signing on for more office space, attracting new people with top salaries who need somewhere to live. One startup even offers a rent stipend to workers who choose to live near the office.

The rise in apartment demand is coinciding with a decline in the number of units available to rent. The apartment-vacancy rate in the San Francisco metro area fell to 3.7% in the second quarter, down from 4.9% in the same quarter last year. That is the lowest vacancy rate for any metro area other than that of New York and San Jose, Calif.

A result is a frenzied market in which apartment listings in the city can disappear within hours of being posted. Rents for the most competitive places can shoot up by hundreds of dollars in a day or two, as landlords seek to seize the moment.

Rents are rising fastest in neighborhoods including Mission Bay, a waterfront area with newer buildings where OpenAI has offices, and SoMa, a former warehouse district where Anthropic has offices.

Some residents have paid $1,500 over the asking price to secure a place. Landlords have started offering more buyouts to tenants living in rent-controlled apartments, and rent increases are spreading to Oakland, Calif., and San Jose.

In May, Jaya Gupta, a 28-year-old partner at a venture-capital firm, saw a two-bedroom listed on a high floor of a luxury building for $10,000 a month. She offered three months' rent in cash upfront, hoping it would improve her chances. She lost out to an employee at one of the big AI labs.

"Someone literally paid for the whole year," she said.

There aren't many new apartment buildings for renters to choose from -- new construction lags behind other big coastal cities such as Seattle and New York. The movement to boost construction in California has been slow to take hold in San Francisco. In the Marina District, plans to build an 800-unit apartment tower have divided many residents.

Lily Mastrangelo, 22, recently graduated from the University of San Francisco and was hoping to find a new lease for Aug. 1. She initially planned to have a roommate. The pair saw an outdated two-bedroom unit for $4,800 a month. The landlord sent a mass text saying there was an offer for $6,300.

"The two of us made a decent amount of money, but we didn't make enough to spend over $3K in rent," said Mastrangelo.

A broker advised them to split up: In this market, it is every tenant for herself. Mastrangelo went on to tour a one-bedroom for $2,800 a month. It had one window, which faced a dumpster.

"It was the ugliest space I've ever seen," she said.

Mastrangelo ultimately found a sublet: She will be spending $2,520 for a bedroom and private bath in a woman's house in the tony neighborhood of Russian Hill. Her new roommate is 67 and has two cats. They haven't met in person but have spoken by phone. The lease will be up in November, when Mastrangelo will try to re-enter the market.

The woman told her several other past tenants have ended up extending their stays.

"She must be cool to live with," she said. "Believe me, this is a steal."