"The Hot Spot for the Rising Tech Generation"
I found this article in a recent edition of the Wall Street Journal which pretty much sums up the current market here in San Francisco...
By NANCY KEATES and GEOFFREY A. FOWLER
A bidding war broke out in November when a small house in San Francisco's tightly packed Noe Valley came on the market.
Twenty-two people, including employees of Facebook, Zynga, Google and Pixar, battled for the home. The winning offer was $1.5 million—40% higher than the asking price. The house had a great view, but it was only 1,800 square feet and came with an old kitchen which, like most of the interior, was covered in 1970s plywood paneling. Seen from the curb, there's hardly any house at all—just a one-car garage and gate leading to small front courtyard.
The inconspicuousness was part of the attraction, said Jasmin Arneja, 42, who bought the two-bedroom house with her husband Gagan, 40, a software engineer at a networking start-up. "It's the antithesis to these outrageous bizarre Gordon Gekko-esque houses. It just incorporates so much of our values," said Ms. Arneja, who runs a philanthropic advisory firm.
Housing prices in the San Francisco Bay area are once again soaring, thanks to an infusion of cash from the rising shares of Apple and Google and the initial public offerings by Zynga, LinkedIn, Yelp and soon Facebook, expected to be the largest in Internet history. But while a previous generation of dot-com executives opted for mansions in wealthy San Francisco neighborhoods like Pacific Heights and tony Silicon Valley suburbs like Atherton, this generation is gravitating to modest homes and condos in grittier parts of the city.
Ground zero of the current tech-fueled real-estate boom is the Mission, formerly a majority Hispanic neighborhood on the southern edge of San Francisco that's close to the main arteries that link San Francisco to Silicon Valley. Median home prices in the Mission grew 44% in December compared with a year earlier. Adjacent Noe Valley had a rise of 31% over that same period, according to the San Francisco Association of Realtors. The average number of days homes sat on the market in both neighborhoods has almost halved over the past year.
That's in sharp contrast to what's happening nationally, where the housing market continues to flounder, with the Case-Shiller 20-City index down for the fourth straight month in a row. It's even an aberration from the San Francisco area (including Oakland), which saw a 5.4% drop in home prices in December from a year earlier
Real-estate agents say it's a cultural shift. The new generation of Internet executives—younger than the last generation of dot-commers—eschews the trappings and responsibilities of expensive properties. They want to bicycle, walk or take public transportation. They like living near food trucks and dive bars.
"You can spend a lot of money on a great restaurant here or just $5 on a burrito," said Christian Niles, 31, who bought a two-bedroom apartment for $585,000 in the Mission with his wife in August because he saw real estate as a good place to store the cash he'd made from selling his app called TrackerBot to Pivotal Labs last summer. He plans to never own a car.
StumbleUpon CEO Garrett Camp bought a 2,900-square-foot loft penthouse with four bathrooms and a patio for $3 million this past summer in the South of Market area. Twitter co-founder Evan Williams bought a $2.4 million house in Noe Valley in 2009.
The hottest properties are near corporate shuttle bus stops—where employees for companies like Google, Facebook, Genentech, LinkedIn and Apple line up daily for the ride to Silicon Valley. Real-estate agent Amanda Jones calls it the "Shuttle Effect" and said proximity can command as much as a 20% premium. Some real-estate agents said they're dying for a map of where the buses pick up. "When a listing gets deluged with people—that tells me it's close to a stop," said Ms. Jones.
Some companies share a few of the same stops, occasionally leading to employees getting on the wrong bus. Discussions can get animated about adding or moving a stop, said Jessica Herrera, Facebook's transportation coordinator who controls the stop locations for Facebook's eight shuttle busses, including a new glass-topped double-decker the company rented to make space for the growing crowds. "Everybody wants a stop that's next to their house that comes every five minutes," she said, adding that discussions have remained civil.
Stephanie Pocino, 28, makes the 45-minute trip to Facebook every day from her rented apartment building in the Mission. She has no garbage disposal and no dishwasher, but the Victorian building has lots of charm and bay windows. She carries a wireless Internet card, which she uses to answer emails and work on presentations while on the commute, and her laundry, which she gets done free at the company's headquarters.
Soaring rental prices—up more than 10% in the Mission and Noe Valley in the past six months alone—are also making buying more competitive, said Vanguard Properties broker Craig Waddle. He's seen bidding competitions for rentals and rental offers coming in higher than the asking prices. At an open house for a one-bedroom offered for $1,400 a month, 40 people were filling out applications on the spot. One person walked up to the owner, offered $1,700 and got the place. (no small wonder considering most 1 bedroom rentals range between $2,400 and $4,000/mo)!
"It's been kind of shocking," said Raj Gajwani, 36, who has been looking for a house in Noe Valley for around $1.5 million for the past few months. A founder of two online companies, he and his wife are expecting twins and want a house close to a shuttle-bus stop for his wife's commute but with "culture, interesting people and activities." They also want something they will be able to sell for more money in five years, when they might have to move to the suburbs for better schools.
Mike Shaw, a real-estate agent who has worked for 15 years in the San Francisco market, said buyers often want something already renovated or vintage because they don't have the time or the interest to hire designers and architects. "That person in jeans and a sweatshirt could be low on the totem pole or a multibillionaire. They haven't realized the value of good design either in architecture or fashion," said Suzanne Tucker, a San Francisco designer who has remodeled many of the most lavish homes in the Bay Area.