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Photo: Jeff Steinberg/celebrityhomephotos.com
The last housing boom standing
Tech creates a Go-Go in the market in a No-Go economy.
Larry Rosen | October 21, 2011
When Mark Zuckerberg founded Facebook, he was at the forefront of a trend, but when the 27-year-old wunderkind purchased a $7 million home (right) in Palo Alto last May, he was smack in the middle of one: techies once again investing their newly gained riches in real estate. Though it’s too early to track the surge via hard market data, realtors in Silicon Valley and San Francisco and on the Peninsula all say the same thing: Startup newbies and veterans are buying.
In Cupertino, it’s the latest chapter in a long-term story about the gravitational force of Apple. This once solidly middle-class city has been so transformed, it just snagged the number 10 spot on Coldwell Banker’s latest list of the “most expensive U.S. housing markets.”
In San Mateo County, older tech workers—the engineers and the execs—are snapping up single-family properties in established communities like Burlingame and Hillsborough, sparking a 49 percent spike in sales between the first and second quarters of this year, according to the San Mateo County Association of Realtors. Some clients are simply out doing recon, meaning that an IPO has just been completed or is around the corner, and they want to buy as soon as they can sell their options.
In San Francisco, tech clients are flocking to Noe Valley and Bernal Heights, says Payton Stiewe, an agent at Christie’s International Real Estate and former head of business development at Evite, neighborhoods where a growing number of Victorian facades hide sleek modern designs and open floor plans. The heavy hitters look for “iconic homes,” Stiewe adds, like 526 Duncan Street in Noe Valley, known as the T House. Purchased in 2005 for $5.3 million by a former Google engineer, it sold in June for $6.1 million to a former Facebook employee.
Of course, everyone remembers the last tech bonanza, when lofts purchased by youthful dot-commers during the 1990s were worth pennies on the dollar by 2001. But realtors insist that people are now waiting longer to buy and are buying smarter. Plus, if it turns out that we’re in the middle of another bubble and the purchaser loses her job, her Noe Valley home isn’t likely to depreciate as much as those SoMa lofts did.
Some tech workers, though, are hedging their bets by selling their pre-IPO stock on the secondary market—to hedge funds, often, and to private investors—to get money for a down payment, in case their IPO never happens. They may be sacrificing potential millions if their companies eventually hit the jackpot, but at least they’re buying homes and keeping the latest housing surge alive.