08 August, 2011


A surge in wealth from technology stock sales and initial public offerings is spilling into the Silicon Valley real estate market as newly affluent tech workers bid up home values Palo Alto.

The median price of a single-family home sold in Palo Alto for the first semester of 2011 climbed 7.7 percent from a year earlier to $1.55 million, according to MLS listing services. The medium sale price has returned to the 2008 level and is just shy of the 2007 all-time record of $1.555 million.

The medium sale price had plummeted 14 percent in 2009. The Palo Alto real estate market started its recovery last year when the medium sale price climbed 3.7 percent by the end of last year to $1.385 million.

The number of sales was also up by 25 percent, with 246 listings closing escrow this semester compared to 197 houses for the same period last year. The number of days on the market decreased from 47 days to 34 days.

Palo Alto real estate market has always been a market leader and it seems
that the real estate market is adjusting to pre-bubble prices.
Single Family Residential 2010 Semi-Annual 
City/Area Closed Sales Average DOM Average Sales Price Median Sales Price % LP Rec'd Total Sales Volume
Palo Alto 197 47 1,631,812 1,438,900 99.33 319,835,266
Single Family Residential 2011 Semi-Annual 
City/Area Closed Sales Average DOM Average Sales Price Median Sales Price % LP Rec'd Total Sales Volume
Palo Alto 246 34 1,810,177 1,550,000 102.40 436,252,736

Kenneth Rosen, an economist at the University of California, Berkeley said that “The advances are defying the U.S. housing slump that has sent national values to an eight-year low. Share sales such as the IPO of LinkedIn -- which doubled on its first day of trading -- and an expected offering from Facebook will fuel a boom in some Silicon Valley cities into 2013.

“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, “You’ve got young people with real money, and it’s not surprising they want to have a house.”

IPO Filings

Almost 300 companies have filed for IPOs [so far] in 2011, the most for any year during the same period since 2000, and more than 10 percent 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 percent of the $23.3 billion in venture-firm investments last year, estimates from the National Venture Capital Association show.

The market seems to be returning to the pre-recession days and the question is whether or not it is a false recovery or a sustained recovery. I suspect that it is a sustained recovery, given the planned IPO for many technology companies from Facebook to Zynga Inc. and others that will generate new Millionaires the next two or three years in the area and the only direction that I can see for our market is up.

Please contact me if you have any questions about our local real estate market.

Samia Cullen
Broker Associate

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