Here you go buyers and sellers out there that are wondering what’s happening in the real estate world within Santa Clara County and the San Jose Real Estate Market, but unsure because you read from your local newspaper in San Jose that things are still doom and gloom. Then you turn the tv on and more doom and gloom.
Well, USA Today just printed this great article a few days ago that I had to pass along being it’s not from any news around the bay area just trying to get bad news out for ratings, but to get news out there for what it is…the truth. I always say be careful with your resource and stick with the numbers as numbers don’t lie. This is especially for those who are waiting and waiting for other news sources to print good things about the market here in San Jose. Keep reading and watch the market pass you buy or email and or call me so we can discuss your plans before you miss out and pay more. Read below…
By Dan Levy, Bloomberg News
A surge in wealth from technology stock sales and initial public offerings is spilling into California’s Silicon Valley real estate market as newly rich workers bid up home values in suburban cities south of San Francisco.
The median price of single-family houses sold in Palo Alto, home of Facebook, rose 20% in May from a year earlier to $1.63 million, the biggest jump since 2008, according to preliminary figures from research company DataQuick. In Mountain View, the base of LinkedIn, prices rose 3.1% to $957,500, the ninth year-over-year
gain in 12 months.
The advances are defying a U.S.housing slump that has sent national values to an eight-year low. Share sales such as the IPO of LinkedIn and an expected offering from Facebook will fuel a boom in some Silicon Valley cities into 2013, said Kenneth Rosen, an economist at the University of California-Berkeley.
“It’s just the beginning of the story, and I suspect we’ll see an explosion in the next couple years,” Rosen, chairman of the school’s Fisher Center for Real Estate and Urban Economics, said in a telephone interview. “You’ve got young people with
real money, and it’s not surprising they want to have a house.”
Almost 300 companies have filed for IPOs in 2011, the most for any year during the same period since 2000, and more than 10% of those are in California, according to data compiled by Bloomberg. Silicon Valley is the U.S. hub for early-stage companies, receiving almost 40% of the $23.3 billion in venture-capital firm investments last year, estimates from the National Venture Capital Association show.
The real estate gains in Silicon Valley, located primarily in the San Jose metropolitan area, are mostly occurring in towns where million-dollar values are already the norm. The median price in Cupertino gained 12% last month from May 2010 to $1.08 million, and values in Saratoga rose 4.7% to $1.62 million, according to San Diego-based DataQuick.
Housing in much of the rest of the nation is struggling as foreclosures and unemployment of more than 9% weigh on consumer sentiment. Home prices in 20 U.S. cities dropped 3.6% in March from a year earlier to the lowest since 2003, according to the S&P/Case-Shiller index of property values. The measure has declined 33% from its 2006 peak.
In Palo Alto, traffic at home showings has tripled in recent weeks, with the average age of potential buyers dropping from about 50 to the mid-30s, said Daniel Siciliano, an associate dean at Stanford Law School who attends the tours because he’s in the market for a bigger house.
“People at start-ups have a lot of pent-up demand and tend to spend a portion of their new liquidity pretty quickly,” Siciliano said of his newfound competition for residential real estate. “They want to manifest their wealth.”
Past Silicon Valley property booms started in Palo Alto, adjacent to the Stanford campus, and Cupertino, home of Apple, because of those institutional links and their coveted public schools, said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. Buyers from China have also been drawn by education resources in prestige Valley locations, and pushed up demand.
“We’re a happening place because of the university, and a lot of the folks that have been buying are relatively young,” said Levy, who has viewed downtown condominiums selling for double what he paid in 2005.
Sean Scott, head of sales for Redwood City-based software firm Ingenuity Systems, looked at a four-bedroom, two-bath home in Palo Alto last month priced at $1.8 million. The house has “soaring ceilings and generous living spaces,” two patios and a “lush backyard garden,” according to a marketing flyer.
A sale is pending for more than 20% above the asking price, or at least $2.2 million, after five bids were received, said Denise Simons, the listing agent at Alain Pinel Realtors.
“The market seems to be returning to the crazy days, and the question is whether or not it is a false recovery or a sustained recovery,” Scott said in an e-mail after viewing two more homes at $1.25 million or more, and declining to make any offers. “I suspect that it is a sustained recovery, given the planned liquidity events with social-networking companies.”
Speculation that Facebook will go public in the next year is mounting even as the world’s largest social-media site remains silent about its plans. Some investors have already cashed in equity in their companies through private share sales, boosting Silicon Valley housing demand and contributing to price gains, Rosen said. Stakes in closely held firms can be sold on secondary exchanges such as SharesPost, which connects buyers and sellers. The exchange values Facebook at almost $53 billion.
Shares granted to employees of public companies can’t be sold until 180 days after the IPO, under U.S. securities rules.
“You will probably see hundreds, if not thousands, of newly minted millionaires in the next two or three years,” said Steve Eskenazi, a tech investor in Hillsborough, north of
Palo Alto, where the minimum lot size is a half acre. He sold his portion of an online advertising network to Sunnyvale, Calif.-based Yahoo in 2007.
“Most people in their 20s who find themselves millionaires feel it’s their inalienable right to buy real estate, and they’re typically not price sensitive,” Eskenazi said.
Facebook founder Mark Zuckerberg, 27, bought a house this year in Palo Alto, said Larry Yu, a company spokesman. He declined to disclose details. Zuckerberg paid $7 million for a 5,000-square-foot, seven-bedroom home in a “leafy and affluent” neighborhood, the San Jose Mercury News reported May 5, without saying where it got the information.
The purchase was made before Facebook’s scheduled move to Menlo Park, just north of Palo Alto. As more firms go public and workers cash in shares, real estate within 15 miles of the office will climb, said Rosen, who gave a presentation at Google’s Mountain View headquarters before the company’s 2004 IPO to educate employees on housing.
In Cupertino, about 12 miles from Palo Alto, a three-bedroom home listed for $908,000 got more than a dozen offers and sold for $950,000 on June 8, said Albert Kao, an agent at Giant Realty in the city. The previous owner, who bought the property in 2002, decided to sell after her children graduated from the public schools. She made a $290,000 profit before commissions, Kao said.
Lower-price areas are still struggling with weak demand. In all of Santa Clara County, which encompasses some Silicon Valley cities, prices fell 5.1% in May from a year earlier to $498,000, as distressed sales pulled values down in the broader market, DataQuick said in a report. The drop was smaller than in the rest of the San Francisco Bay Area, with the nine-county median in the region tumbling 9.3%.