The Tech Generation impact on SF Housing...

By
Real Estate Agent with Zephyr Real Estate, San Francisco BRE# 01265683

"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... 

_________________________________________________________________________________

Noe Valley


San Francisco

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.

  

 

Posted by

  David Ames   

 

  DavidAmes@zephyrsf.com

  (415) 271-2071

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Show All Comments
Rainmaker
391,565
Kristine Ginsberg
Morris County, NJ: Elite Staging and Redesign, LLC - Morris Plains, NJ
Morris County, NJ Stager

Really interesting article David and with those larger than life companies all being in the Bay Area it's not surprising that San Francisco's market is rebounding quicker than most. Not to mention it is one of the most beautiful places to live. When I visited, I didn't want to go back home. San Francisco has it all in my opinion - you don't even have to join a gym with all the hill walking, filled with beautiful scenery. Maybe someday I will move out your way, but for now we own commercial property and won't be going any where too soon. It's the only other place I've seriously considered living!

Mar 18, 2012 11:49 AM #1
Rainmaker
358,470
Lori Mode
Keller Williams Realty - Elk Grove, CA Homes for Sale - Elk Grove, CA
Mode and Durham, Your Elk Grove Real Estate team

David - very interesting article.  It's amazing how the shuttle bus stops make such a difference especially when it seems San Franciscans are so accustomed to walking. 

Mar 18, 2012 11:54 AM #2
Rainmaker
241,107
David Ames
Zephyr Real Estate, San Francisco - San Francisco, CA
San Francisco

Kristine...we could be neighbors someday!  Funny with the tech company saturation here...Every year I wonder if I should buy stock in Apple.  And yet, I haven't taken that plunge yet.  Actually, I'm looking at investing in a duplex along the mid-peninsula.  I can't help it...real estate is my game, you know?  :)

Mar 18, 2012 11:55 AM #3
Rainmaker
241,107
David Ames
Zephyr Real Estate, San Francisco - San Francisco, CA
San Francisco

Lori, Bruce...it's the "ease of commute" lure that's hard to resist for many of the tech buyers who insist on living in the City.  Most of the buses are "incognito", but I see them pull into my neighborhood every day.  It's actually a brilliant idea.

Mar 18, 2012 12:00 PM #4
Ambassador
839,012
Barbara Martino-Sliva
Dale Sorensen Real Estate Inc. - Vero Beach, FL
Vero Beach Real Estate Vero Beach Homes for Sale

Thanks for sharing this article David...very interesting!  Good to hear that your marketplace is rebounding...happy selling!

Mar 18, 2012 02:42 PM #5
Rainmaker
250,035
John M. Scott
BRE # 01442690, Scott Keys Properties - San Francisco, CA
Broker / Owner San Francisco Bay Area

Great article David. I'm glad you found it - otherwise I would have missed it. I have heard about the shuttle bus routes - location does mean everything, right?

Mar 18, 2012 02:54 PM #6
Ambassador
636,007
Doug Rogers
Bayou Properties Realty - Pineville, LA
Your Pineville Louisiana Agent

1.5 Million would by 10-12 1800 sq ft homes in my market. Location, location, location. One day I would love to visit San Fran!

Mar 18, 2012 02:56 PM #7
Rainmaker
436,552
Sally Weatherley
EXIT STAGE RIGHT - Vancouver, BC
Vancouver Home Staging, Home Stager Vancouver, B.C

David - Interesting that the younger generation prefers a grittier neighbourhood with more character than the older generation who prefer the more over-the-top houses and neighbourhoods.  I sure would love to see one of those glass topped double decker shuttle buses! 

The same phenomenon is happening here, although not related to high tech industry.  East Vancouver, which used to house poor immigrants is now a very sought after, up and coming area due to its close proximity with downtown.  House prices there have shot up dramatically over the past 5 years.

Mar 18, 2012 06:30 PM #8
Rainmaker
241,107
David Ames
Zephyr Real Estate, San Francisco - San Francisco, CA
San Francisco

Thanks Barbara...so far, so good.

John ~ I haven't had anyone ask me "where" the bus drops are, but I suspect that those who are interested already know. ;)

Doug ~ When you do make it out here, you'll have to join me on Tour...although I'm guessing your wife wouldn't consider that part of the visit very "holiday-ish" (lol). 

Sally ~ Pacific Heights, of course, has some amazing real estate, but it's on the North side of town, and for many commuters that can translate to an additional 15-20 minutes of commute time (if heading south).  Gorgeous neighborhood, but less "vibrant" when it comes to the street scene.  East Vancouver sounds like a few southern neighborhoods around here.  ;)

Mar 19, 2012 09:44 AM #9
Rainmaker
580,354
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

David,

That's great to hear.  And with San Francisco so close to us, I'm hoping the dust settles in our direction!

Mar 20, 2012 12:28 AM #10
Rainmaker
241,107
David Ames
Zephyr Real Estate, San Francisco - San Francisco, CA
San Francisco

It just may, DeeDee :)

Mar 20, 2012 04:17 PM #11
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Rainmaker
241,107

David Ames

San Francisco
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