Where tomorrow's tech titans are buying
Sale prices in the San Francisco Bay Area are skyrocketing, thanks to a new generation of dot-commers — and the new neighborhoods they're choosing to call home.
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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 that, 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 Arneja, who runs a philanthropic advisory firm.
Home 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, which is 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 such as Pacific Heights and tony Silicon Valley suburbs such as Atherton, this generation is gravitating to modest homes and condos in grittier parts of the city.
Part of a cultural shift
The center of the current tech-fueled real-estate boom is the Mission, formerly a mostly Hispanic neighborhood on the southern edge of San Francisco that's close to the main arteries linking the city to Silicon Valley. Median home prices in the Mission increased 44% in December compared with a year earlier. Adjacent Noe Valley increased 31% in that same period, the San Francisco Association of Realtors said. The average number of days homes sat on the market in both neighborhoods has been sliced nearly in half in the past year.
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That's a sharp contrast to what's happening nationally, where the housing market continues to flounder. It's even an aberration from the San Francisco area, where home prices fell 5.4% in December from a year earlier.
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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 in August because he saw real estate as a good way to store the cash he'd made from selling an application called TrackerBot to Pivotal Labs last summer. He said 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.
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The hottest properties are near corporate-shuttle bus stops, where employees for companies such as 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.
Stephanie Pocino, 28, makes the 45-minute trip to Facebook every day from her rented apartment in the Mission. She has no garbage disposal and no dishwasher, but her 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.