Well what do you know! After writing on TechCrunch for the past year about how Silicon Valley’s Gatsbyesque wealth couldn’t find much real estate to buy, Bay Area inventory is up. Bidding wars are down. And rising rates are squeezing buyers who have to borrow money. Below is Redfin’s quarterly rundown of what’s happening in Silicon Valley real estate.

Bidding wars are less intense. Bidding wars are still common, with Redfin agents facing competition on 95 percent of all homes in May 2013, the highest of any of the 21 markets Redfin serves. For example, Redfin Silicon Valley agent Brad Le reports that this nice-enough $2 million Cupertino listing got 12 offers, and likely went under contract in June for well above $2.4 million. But fewer bidders are competing. Since Redfin publishes competitive dynamics for every offer our agents write, we measure the average number of competitors in a bidding war, which has declined from a peak of 16.3 in January to 7.8 in May. As agents, we know that demand is waning not because buyers no longer want a home but because they’ve despaired of ever being able to get one. About one in four of our Bay Area homebuyers have told us at some point in the last three months that they’re taking a break from their search out of sheer frustration.

Also-rans are left behind. The decrease in competition hasn’t changed the pricing of the most sought-after properties. But occasionally, close also-rans languish. Redfin Silicon Valley agent Mia Simon noticed that two nearly identical Mountain View homes, one slightly better looking, sold at the same time last week: The beauty queen sold for $200,000 over asking, drawing all the attention away from its neighbor, which got only one offer and sold for $150,000 less than comparable properties in the area.

Flash sales. The fact that homes are still selling very quickly may reflect a fundamental change in consumer behavior rather than simply a hot market; the median days on market for Bay Area homes that sold in May was 12 days; last year at this time it was 18. Mobile instant alerts triggered by the debut of new listings have been behind this trend, with 302 listings in May going under contract in less than 24 hours. Some of our buyers don’t even like to go into a Costco for too long if it will block the cell signal they need to get instant alerts. This has also put pressure on real estate websites to get inventory quickly. On average, brokerage sites like APR.com, ZephyrSF.com, and Redfin.com get new listings days earlier than national portals; the reason is that the brokerage sites employ real estate agents with complete, direct access to the Bay Area’s four local Multiple Listing Services.

More homes for sale. Higher prices, and perhaps the fear that higher interest rates could dampen demand later, have at last drawn would-be sellers into the market. Bay Area inventory began the year down 59 percent from 2012, but has now improved to the point that it’s only 28 percent down from this time last year; by year-end we expect 2013 inventory to be up year-over-year for the first time since 2011. Redfin’s own Bay Area listing business has increased more than 100 percent over last year. In 2013, real estate’s spring may come in summer, and summer may come in fall. Sales volume will increase, and price increases may lose steam.

More new construction coming in the East Bay and in San Francisco: Builders are often slow to respond to inventory crunches, in part because it takes time to finish projects, in part to drive profits from a run-up in demand. This is why we’ve seen line-ups, lotteries and camp-outs among buyers competing to get units as they’re released by builders. But four new projects are releasing units this summer in San Francisco, where the total number of homes has barely budged since World War II: 300 Ivy in Hayes Valley, One Rincon Hill Phase Two near the Bay Bridge, The Icon in the Mission, and Linea-built projects in the Mission like Nove.

More inside jobs: We hear more reports of pocket listings, where the listing agent sells the home to one of his own clients or to one of his partner’s clients, without offering the property to the broader market. The actual data suggests that this is common only for homes priced above $5 million. Few sellers at lower prices would ever bypass the larger market, which can draw in enough buyers to spark a bidding war. But there are other types of inside jobs. “Some Redfin clients are trying to get creative,” reports Landon Nash, Redfin San Francisco agent. “I just closed one deal with a client who asked his landlord to sell, and I have another two — which may or may not close — in the works.”

Interest-rate anxiety: With interest rates increasing since May 1, and sharply since May 22, Bay Area homebuyers have felt more pressure to buy a home soon. On June 4, interest rates exceeded 4 percent for the first time in a year. “You know how analytical we can be in the Bay Area,” said Redfin agent Brad Le. “Some of my clients know down to the dollar how much more their mortgage is per month with the current rates, and others already stretching to afford a home have been priced out by the rate increase. The buyers who remain are even more motivated to find something.”

Buyers are withdrawing money from retirement accounts to compete with more cash in bidding wars. In the past week, three different Bay Area buyers did this, despite the penalties associated with withdrawals from 401(k) accounts. Bay Area sellers continue to have a strong preference for cash buyers, to avoid a second price negotiation if an appraisal comes in low from the buyer’s lender. Buyers are also getting help from their parents. Just last month, Redfin clients living in a one-bedroom San Francisco apartment with two small children needed extra dough to avoid being priced out of the Oakland Hills market, so the parents — who were already tired of staying in hotels during visits from the East Coast — just became a party to the purchase. Virtually every Redfin agent in the Bay Area has a story about this.

Surprisingly, fewer for-sale-by-owner listings: Of the Bay Area sales closed in May, 89 percent had been listed by an agent. By comparison, 85 percent of May 2012 sales were agent-listed. Usually, when the market makes it easier to sell a home, more sellers try to do it themselves. But the Bay Area is in such a frenzy that people here are hiring an agent in even greater numbers to play the game to perfection, and to get top dollar. Of course, as real estate agents ourselves, Redfin benefits from a decline in for-sale-by-owner sales. Nonetheless, Redfin’s website is the only one I know of that shows both all the agent-listed homes for sale as well as for-sale-by-owner listings.

A decline in commissions offered to buyers’ agents, from 2.65 percent for Bay Area listings that debuted in May 2012, to 2.56 percent in May 2013. Sellers have been emboldened by the market to offer the buyer’s agent less, with no fear of steering.

A still-exclusive club: Booms usually bring an increase in the number of agents. Not in the Bay Area. In May 2012, 6,008 Bay Area agents represented homebuyers on 9,456 transactions. By May 2013, 5,540 Bay Area agents represented buyers on 8,295 transactions. Because the market here has been inventory-gated, 2013 sales actually declined 12.3 percent, whereas the number of active agents declined 7.8 percent.

What does it all mean? The Bay Area real estate market is getting back to its own version of normal, which still isn’t that normal at all.

• REDFIN

Redfin is an online real estate company that provides real estate search and brokerage services. Redfin uses an interesting combination of online real estate search and access to live agents. They employ their agents so they can better control customer satisfaction; traditional brokerage firms license their name to independent agents. Redfin claims to save homebuyers on average $7,500 by reimbursing roughly 1/2 of the buy-side real estate fee directly on closing. Redfin also pays bonuses to agents when they…

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Article source: http://techcrunch.com/2013/06/15/silicon-valley-real-estate-update-the-craziest-market-in-the-u-s-just-got-a-little-less-crazy/

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Menlo Park is among the areas in Silicon Valley where the real estate market is “hot” and competitive. (Photo: Vignesh Ramachandran / Peninsula Press)

In a region known in the Bay Area for its high-profile IPOs and high-tech wealth, the competition for real estate is so intense that some homebuyers and sellers are opting for off-market sales.

This is all happening in a recovering market, which some Silicon Valley real estate agents say is causing a flurry of activity these days.

“When people ask me, in a word: it’s crazy,” said Keri Nicholas, a Menlo Park real estate agent at Coldwell Banker. She sold property worth over $100 million in 2011, giving her the top share for home sales in Menlo Park, a city on the Peninsula known to draw buyers because of its reputation as one of Silicon Valley’s prominent hubs.

When a house is ready to be put up for sale, a real estate agent will typically list it on the Multiple Listing Service database, or MLS. But with inventory low and demand high, some buyers and sellers are acting quickly before a house is officially on the market. Agents use their networks to conduct these “off-market” transactions, listings that are often left off the MLS database.

“What we’ll tend to do is say what we have coming soon, and we’ll send something out to most of the agents who we know are in the know and working hard,” Nicholas said. “And we will say ‘it’s coming soon,’ but we’re not ready to go to market yet.” But then, “your phone rings off the hook. You end up saying ‘we’re coming, we’re coming,’ and, boom, all of a sudden you have four offers in your hand.”

Nicholas said she does not represent a buyer and seller on the same transaction, a practice that is generally frowned upon.

Some sellers might also choose not to list their property publicly for privacy reasons – and in some cases to avoid paying the 6 percent real estate agent’s commission.

Loren Dakin, another agent at Coldwell Banker in Menlo Park, estimates that 10 percent of his sales “will never even hit the market this year,” “They’ll just be between talk between agents. And even though it doesn’t go to market, we’re still seeing multiple offers,” he said.

Comparing the months of March in 2011 and 2012, completed sales are up about 12 percent, while inventory is down 40 percent, according to MLSListings, Inc. This calculation includes MLS data in Menlo Park, Palo Alto, Redwood City and San Carlos. The average days a home is on the market in these cities is also down from 46 to 35 days. However, this data does not even include the handfuls of off-market sales, if an agent left these properties off the MLS.

Jed Smith, managing director of quantitative research at the National Association of Realtors, said “the market seems to be turning” throughout the country, but compared to Silicon Valley “the rest of the country is not experiencing that degree of enthusiasm.”

“It’s expected when an agent takes the property, that it will go on to the MLS to give it maximum exposure,” Smith said. “But obviously if it’s a really hot market it may very well be that, before it gets listed, it gets sold.”

Gautam Nadella, who works in management at Cisco Systems, Inc., said he and his wife bought their five-bedroom Menlo Park home before it went back on the market, after their agent told them it would be available.

“There is something to be said of taking uncertainty out of the selling process and the buying process,” Nadella said. “We were able to move quickly, calmly, with 100 percent confidence that the deal would get done, and as a result we did not have to go through the bidding process.”

Nadella admits they got lucky in a tough market, since he has seen plenty of friends who have placed offers on houses without success.

“There’s Facebook or LinkedIn or some money like that, that comes in where they’re just putting all cash down,” Nadella said.

Though this practice of off-market transactions is common in the area, there could be an issue of fairness, according to Tim Iglesias, an expert in housing and property law.

“The buyers who don’t get invited to be part of this are left out,” said Iglesias, also a professor of law at the University of San Francisco.

Since houses left off-market don’t provide an equal opportunity in the free market, Iglesias wonders if “there’s a risk that fair housing laws could be easily evaded in this context.” However, “nobody knows” if this is really the case, he added. Since off-market transactions are conducted more privately than a regular sale, he noted that it is nearly impossible to test whether the process is fair.

Iglesias explained the broker could consciously or unconsciously be inviting select people to participate, while screening out others who are members of protected classes. “Whereas in the open market, if this happens, there’s a possibility that this person, or the seller or the broker is going to be kind of called to account on this.”

Iglesias also questioned whether sellers and buyers are really getting the best price, when not every potential buyer can consider the property on the free market.

“In terms of sort of economic theory, this is not necessarily going to lead to the most efficient outcome, either for the participants, or for the market overall,” Iglesias said.

However, Iglesias added that those who participate in off-market transactions may be willing to make compromises for the privacy, certainty and speed.

A ‘Facebook effect’?

In early March, a fixer-upper house in Palo Alto generated buzz when it got 38 offers and sold for $450,000 more than the asking price.

“Now people actually have to come with money to the plate, in order to buy,” Dakin said. “So the buying is different because more people have to have more skin in the game.”

Following Facebook Inc.’s February announcement that it will go public, the press has sparked a conversation about how new millionaires could affect the area’s housing market. The social networking giant’s IPO valuation could reach as high as $100 billion. However, agents say high-tech wealth’s effect has been in the area for a while.

“What’s interesting is that it’s really not just Facebook,” Nicholas said. “We’re looking at companies between San Francisco and San Jose: there are 16 companies going public within the next 8 months.”

“It’s not just one company,” Dakin said. “It’s not just one part of the industry. It’s the Peninsula as a whole.”

Moving north

Considering the March 2012 median single-family-home sales price in Palo Alto was estimated to be $1.67 million, according to MLSListings, Inc., areas north of Palo Alto and Menlo Park are gaining

As some buyers get priced out of Palo Alto and Menlo Park, places like Redwood City become places to house hunt for more affordable options. (Photo: Vignesh Ramachandran / Peninsula Press)

traction with some priced-out buyers.

Val Vandervort, an agent with Coldwell Banker in San Mateo, said in the San Mateo market as well as in Belmont, San Carlos and Redwood City, house hunters “have probably explored a larger geographical area that would include Burlingame, Palo Alto, Menlo Park.”

“They’ve decided that for what they can get for their money in the mid-Peninsula cities, that they decide to focus in on these cities and stay away from Palo Alto, Menlo Park, Burlingame, just because they’re going to give up square footage, condition, something like that,” Vandervort said.

In Redwood City, the median single-family home sales price in March was $707,500 and in San Carlos it was $875,000, according to MLSListings, Inc.

Discussing the so-called “Facebook effect,” Vandervort said she thinks any effect would take at least 18 months and then would take a bit more time to ripple toward the area’s northern cities.

Another cycle

Vandervort notes a certain pack mentality in the market.

“It’s interesting how much you see the buyers move all at the same time,” Vandervort explained. “They all pull back at the same time. They all get in at the same time it seems.”

An Atherton-native, Nicholas has lived in the area her whole life and has been practicing real estate in her current office for more than two decades. She said she has seen every cycle and that there are “too many people who need to be here.”

“The fundamentals don’t change here. We just don’t have enough land, and we have too many people. And there is no new construction. There’s nowhere to build.”

Dakin said he gets clients from all over the country and world who want to be here.

“We have great weather. There’s a lot of new business here and people just keep flocking in,” Dakin said. “With limited supply in housing, the real estate market just tends to take off, and that’s what we continue to watch year after year.”

“Only here—nowhere else in America,” Dakin added. “Anywhere else in the world: I don’t know.”

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Article source: http://peninsulapress.com/2012/04/12/off-market-transactions-frequent-in-competitive-silicon-valley-real-estate-frenzy/

Articles all over the web report that real estate professionals are gearing up, potential buyers are trying to buy now before the IPO and sellers are trying to determine their best course of strategy.  From the local Mercury News :

Realtors say the buzz around Facebook is already sparking the long moribund housing market. Potential sellers want to know whether they should sell now or wait, and buyers are fervently pushing their agents to get into the Peninsula housing market before the IPO, anticipating rising prices as the newly wealthy compete for the hottest neighborhoods from San Francisco to Palo Alto.

The New York Times writes that if you thought housing was expensive in the Valley now, just wait for the Facebook update:

..10 homes in Palo Alto sold for more than their asking prices last month, some by large amounts. Now, with the long-expected Facebook public offering a step closer to reality, Mr. DeLeon said he expected to see several things happen: some sellers may keep their homes off the market until they judge the time is right, some speculators may snap up old houses to tear down and rebuild, and some buyers may feel pressure to make offers before the deluge hits.

While the Valley is bubbling with nervous excitement, the Wall Street Journal notes that the benefits of the Facebook IPO may only reach so far.  New potential Facebook millionaires still want a short commute to work.

In communities in the shadow of tech giants like Facebook Inc. in Menlo Park, housing prices are on a tear. Menlo Park led the Bay Area with a 52.7% increase in its median home sales price in the fourth quarter, with prices rising to $1.29 million from $840,000 a year earlier, according to DataQuick. Palo Alto’s median home-sales price jumped 12.5% to $1.1 million from $977,750, according to DataQuick.

Cities outside of Silicon Valley didn’t fare as well. Sonoma, for example, experienced a 24.1% drop in the fourth quarter in its median home-sales price to $356,000 from $469,000 a year ago, while Walnut Creek prices fell 18.3% to $580,000 from $709,500, according to DataQuick.

 Since we live in the Bay Area, we should know what’s happening out there.  Readers – what have you seen?  Are you looking to buy or sell in the Valley?  Does the Facebook IPO affect how you’re planning to buy or sell?

Article source: http://blog.sfgate.com/ontheblock/2012/02/13/facebook-ipo-is-sizzling-up-silicon-valey-real-estate/

“I’m kind of worried – a thousand millionaires are going to be buying houses!” Connie Cao said as she and her family toured a home in a good school district here.

Her husband, Jared Oberhaus, was more optimistic. “Maybe sellers are sitting on their houses now, waiting for Facebook, and they’ll all come on the market at the same time,” he said.

It will be some time before the first Facebook shares are sold to the public, and even longer before Facebook’s employees are able to turn their paper wealth into cash and officially take their places as the newest members of the 1 percent. But the mere anticipation of the event may pour a little kerosene onto what is already a fairly hot local real estate market.

When Ken DeLeon, a Silicon Valley real estate agent, recently sold an 8,000-square-foot house to a Facebook employee, he said, the movers showed up at the client’s old 1,000-square-foot home and asked, “Did you win the lottery?”

Silicon Valley has been good to Mr. DeLeon, a former lawyer, who said he sold $275 million worth of homes last year, and who is finishing up a memoir about overcoming illness, injury and loss that he calls “Why Do Bad Things Happen to Sexy People?”

Even after some of the air went out of the housing bubble in the Bay Area in recent years, prices in the most desirable parts of San Francisco and Silicon Valley stayed buoyant enough to remain out of reach for most people. A report on 2011 housing prices by Coldwell Banker, the real estate company, found that 8 of the nation’s 20 most expensive markets were in Silicon Valley or the Bay Area. Mr. DeLeon said Palo Alto, with its limited supply, had remained remarkably strong – and could hit new peaks this year.

In recent weeks, he said, there have been signs that the market has been heating up more: 10 homes in Palo Alto sold for more than their asking prices last month, some by large amounts. Now, with the long-expected Facebook public offering a step closer to reality, Mr. DeLeon said he expected to see several things happen: some sellers may keep their homes off the market until they judge the time is right, some speculators may snap up old houses to tear down and rebuild, and some buyers may feel pressure to make offers before the deluge hits.

A steady stream of would-be buyers walked through the open house Mr. DeLeon held here on Sunday – a 2,325-square-foot home with a small backyard and an asking price of nearly $1.8 million. They checked out the sunken Japanese-style dining room and the heated concrete floors with leaf inlays. Many got lattes from the barista stationed in the backyard.

Mr. DeLeon said he already had plans to market to Facebook employees. One strategy: he intends to buy ads on Facebook. “It’s amazing how you can target them,” he said.

Article source: http://economictimes.indiatimes.com/news/international-business/facebook-millionaires-might-drive-up-real-estate-prices-in-the-already-expensive-area-of-silicon-valley/articleshow/11818491.cms

June 15 (Bloomberg) — A surge in wealth from technology stock sales and initial public offerings is spilling into the Silicon Valley real estate market as newly rich workers bid up home values in suburban cities south of San Francisco. Bloomberg’s Cris Valerio reports. (Source: Bloomberg)

A sold sticker is displayed on a for sale sign outside of a home in Palo Alto, California. Photographer: David Paul Morris/Bloomberg

The Hoover Tower stands at Stanford University in Palo Alto, California. Photographer: David Paul Morris/Bloomberg

A surge in wealth from technology
stock sales and initial public offerings is spilling into the
Silicon Valley real estate market as newly rich workers bid up
home values in suburban cities south of San Francisco.

The median price of single-family houses sold in Palo Alto,
home of Facebook Inc., climbed 20 percent in May from a year
earlier to $1.63 million, the biggest jump since 2008, according
to preliminary figures from research company DataQuick. In
Mountain View, the base of LinkedIn Corp., prices rose 3.1
percent to $957,500, the ninth year-over-year gain in 12 months.

The advances are defying a 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, said Kenneth Rosen, an
economist at the University of California, Berkeley.

“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,
said in a telephone interview. “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 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.

Pandora Media Inc. climbed 8.9 percent today as shares
began trading on the New York Stock Exchange. The online radio
company, based about 35 miles (56 kilometers) north of Silicon
Valley in Oakland, raised $234.9 million in its IPO. Shares were
priced at $16, above the expected $10 to $12 range.

The real estate gains in Silicon Valley, located primarily
in the San Jose metropolitan area, are mostly occurring in towns
where million-dollar values are already the norm. The median
price in Cupertino gained 12 percent last month from May 2010 to
$1.08 million, and values in Saratoga rose 4.7 percent to $1.62
million, according to San Diego-based DataQuick.

U.S. Price Declines

Housing in much of the rest of the nation is struggling as
foreclosures and unemployment of more than 9 percent weigh on
consumer sentiment. Home prices in 20 U.S. cities dropped 3.6
percent in March from a year earlier to the lowest since 2003,
according to the SP/Case-Shiller index of property values. The
measure has declined 33 percent from its 2006 peak.

In Palo Alto, traffic at home showings has tripled in the
last three weeks, with the average age of potential buyers
dropping from about 50 to the mid-30s, said Daniel Siciliano, an
associate dean at Stanford Law School who attends the tours
because he’s in the market for a bigger house.

“People at startups have a lot of pent-up demand and tend
to spend a portion of their new liquidity pretty quickly,”
Siciliano said of his newfound competition for residential real
estate. “They want to manifest their wealth.”

Past Silicon Valley property booms started in Palo Alto,
adjacent to the Stanford campus, and Cupertino, home of Apple
Inc. (AAPL), because of those institutional links and their coveted
public schools, said Stephen Levy, director of the Center for
Continuing Study of the California Economy in Palo Alto. Buyers
from China have also been drawn by education resources in
prestige valley locations and pushed up demand.

‘Happening Place’

“We’re a happening place because of the university and a
lot of the folks that have been buying are relatively young,”
said Levy, who has viewed downtown condominiums selling for
double what he paid in 2005. “We have the best train service to
San Francisco. I can be downtown in 35 minutes.”

Sean Scott, head of sales for Redwood City-based software
firm Ingenuity Systems Inc., looked at a four-bedroom, two-bath
home in Palo Alto last month priced at $1.8 million. The house
has “soaring ceilings and generous living spaces,” two patios
and a “lush backyard garden,” according to a marketing flyer.

A sale is pending for more than 20 percent above the asking
price, or at least $2.2 million, after five bids were received,
said Denise Simons, the listing agent at Alain Pinel Realtors.

“The market seems to be returning to the crazy days and
the question is whether or not it is a false recovery or a
sustained recovery,” Scott said in an e-mail after viewing two
more homes at $1.25 million or more, and declining to make any
offers. “I suspect that it is a sustained recovery, given the
planned liquidity events with social-networking companies.”

Facebook IPO

Speculation that Facebook will go public in the next year
is mounting even as the world’s largest social-media site
remains silent about its plans. The company may have an IPO in
the first quarter of 2012 with a valuation as high as $100
billion, cable channel CNBC reported June 13, citing people
familiar with the matter.

Some investors have already cashed in equity in their
companies through private share sales, boosting Silicon Valley
housing demand and contributing to price gains, Rosen said.
Stakes in closely held firms can be sold on secondary exchanges
such as SharesPost Inc., which connects buyers and sellers. The
exchange values Facebook at almost $53 billion.

Shares granted to employees of public companies can’t be
sold until 180 days after the IPO, under U.S. securities rules.

New Millionaires

“You will probably see hundreds, if not thousands, of
newly minted millionaires in the next two or three years,” said
Steve Eskenazi, a tech investor in Hillsborough, north of Palo
Alto, where the minimum lot size is a half acre (0.2 hectare).
He sold his portion of an online advertising network to
Sunnyvale-based Yahoo! Inc. in 2007.

“Most people in their 20s who find themselves millionaires
feel it’s their inalienable right to buy real estate, and
they’re typically not price sensitive,” Eskenazi said.

Facebook founder Mark Zuckerberg, 27, bought a house this
year in Palo Alto, said Larry Yu, a company spokesman. He
declined to disclose details. Zuckerberg paid $7 million for a
5,000-square-foot (465-square-meter), seven-bedroom home in a
“leafy and affluent” neighborhood, the San Jose Mercury News
reported May 5, without saying where it got the information.

The purchase was made before Facebook’s scheduled move to
Menlo Park, just north of Palo Alto.

15 Miles

As more firms go public and workers cash in shares, real
estate within 15 miles of the office will climb, said Rosen, who
gave a presentation at Google Inc. (GOOG)’s Mountain View headquarters
before the company’s 2004 IPO to educate employees on housing.
Sales are usually concentrated in the “middle to upper end,”
he said.

In Cupertino, about 12 miles from Palo Alto, a three-
bedroom home listed for $908,000 got more than a dozen offers
and sold for $950,000 on June 8, said Albert Kao, an agent at
Giant Realty Inc. in the city. The prior owner, who bought the
property in 2002, decided to sell after her children graduated
from the public schools. She made a $290,000 profit before
commissions, Kao said.

Lower-priced areas are still struggling with weak demand.
In all of Santa Clara County, which encompasses some Silicon
Valley cities, prices decreased 5.1 percent in May from a year
earlier to $498,000 as distressed sales pulled values down in
the broader market, DataQuick said in a report today. The drop
was smaller than in the rest of the San Francisco Bay area, with
the nine-county median in the region tumbling 9.3 percent.

Groupon, Zynga

Groupon Inc., an online coupon provider based in Chicago,
filed for an initial share sale June 2 and is hiring engineers
in California, according to its website. As early as March,
Groupon was in talks with bankers about an IPO that would value
the company at as much as $25 billion, two people familiar with
the matter said at the time.

Zynga Inc. of San Francisco, the largest maker of games for
Facebook and valued at $8.8 billion on SharesPost, may file for
an IPO by the end of the month, a person with knowledge of the
matter said June 3.

Those firms are among the companies that will help Silicon
Valley grow by about 20,000 workers in 2011, said Levy, the
California economist. Software publishers and Web portals
accounted for 5,600 of the 13,400 jobs added in the year through
April in the San Jose metropolitan area, according to the
California Employment Development Department.

“We’re at the beginnings of an expansion of the job
base,” said Levy. “There will be a lot of hiring.”

Simons, the agent for the four-bedroom Palo Alto home, said
there were five “excellent” offers for the 2,257-square-foot
residence. It was constructed in 1973 by California developer
Joseph Eichler, who built thousands of “progressive” tract
houses in middle-class neighborhoods, according to a website
devoted to the properties.

“There are people who want to get in and they’re willing
to pay,” Simons said outside the home, which was repainted,
landscaped and staged with furniture before the public showings.
“We’re just starting to see the market come back.”

To contact the reporter on this story:
Dan Levy in San Francisco at
dlevy13@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net

Article source: http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-demand-for-silicon-valley-million-dollar-homes.html