With over 10% of the world’s population counted as loyal members and hundreds of millions in disposable cash, high-growth tech companies like LinkedIn, Facebook, and even Groupon have sparked the Northern California real estate market. Top level employees looking for a place to stay have revved up excitement to late 90’s levels; particularly in Palo Alto, also known as Silicon Valley.
And it’s not just the techy kids.
Wildly successful venture capitalists like Yuri Milner (early investor of Facebook and Groupon) have rewarded themselves with head-scratching $100 million mansions. Just like the old days — Silicon Valley — we’re back in real estate business.
Or is it?
Let’s take a look.
In Palo Alto, average listing price is up .6%, plus $12,949 in asking price from the prior week,and an increase of 4.2%, or $82,915, compared to the week ending Sep 21. Not bad.
Homes being sold July to September of this year saw an increase of 16.1% compared to the prior quarter but a decrease of 2.9% compared to the prior year. Not good.
It seems to me that sellers feel more confident in getting a good price on their home, and not without merit, as the general view of the market is upbeat due to the resurgence of Tech IPO’s (Facebook expected to be in 2012). On the other hand, buyers are still unsure about making over-the-asking price offers. It’s still a buyer’s market (majority of sales price not over asking price, unemployment is relatively high for the greater CA ), but there is data suggesting that the increase in home values may come sooner rather than later.
For the most part, Silicon Valley won’t turn heads as an investment for the smart readers of this blog. But look out for great deals around the area, as employment around the Silicon area is gaining steam. Google just released monster quarterly earnings netting them 33% increase year over year. Google’s main building is at Mountain View, which has houses less than $200,000. (As Always, start with the simple but dependable 50% rule when considering investments.)
Other areas worth looking at are: Crescent Park, Old Palo Alto, Barron Park, Evergreen Park, Midtown, and College Terrace.
What does this mean for the Greater San Francisco / Northern California Real Estate?
To get a better picture of their local market I talked to a Realtor in Berkeley, and she reported to me that she has been seeing multiple offers on five to six hundred thousand priced properties. Lowball offers are being routinely rejected.
Does this constitute an “apple does not fall far from the tree” phenomena?
I don’t know.
I think it’s too early to call a bottom but something seems to be happening. Of course, double dip is still a market possibility in almost all real estate areas.
As big name cities in Northern California are starting to show signs of stability, dare I suggest a closer examination of surrounding areas? Start looking under the rocks. Keep tab of what you see and look for sustained trends. You should even check going rental rates versus listing prices. With the power of the internet, the more information you can get, the better.
Photo: Christian Rondeau