patrick.net

No, no it won't.

Having some friends that have since long retired from Facebook (and working), I can assure you most of the major money is leaving the state. The one's that aren't leaving already own here.

Thinking a few thousand employees can prop up the entire BA RE market is ludicrous at best.

Even from the article:

A Palo Alto resident tells us that frantic Facebook employees have helped drive the Palo Alto real-estate market up 30%-60% in the past 6 months.

(That's not an official estimate. Others say there has been a pop but that that the appreciation is much lower.)

All speculation (AKA: garbage with no data).

It's spelled through, and the correct word is throughout.

chip_designer says

Facebook Millionaires Are Already Driving Palo Alto House Prices Into The Stratosphere
Henry Blodget |

Read more: http://www.businessinsider.com/facebook-palo-alto-real-estate-2012-3#ixzz1oSWshPmv

http://www.businessinsider.com/facebook-palo-alto-real-estate-2012-3

Facebook is the NASDAQ bubble by-product (the so-called shadow bubble). As equity disappeared from the NASDAQ bubble, less and less of that hype money was recovered to be pumped into the next subsequent shadow-bubble IPO. Yahoo, Google and Apple were the first ones. They were 3 of them. Now, we are down to just one, which is Facebook. Facebook is the last vestige remaining from the NASDAQ bubble crash. After, Facebook, there will be no other, because, people will finally learn that silly.con valley is history. All those Facebook Millionaire will lose all the money they made on the next palo alto housing crash.

WELL what if:
1. half the FB millionaires exercize stock but HOLD ON (not sell)
2. FB stock dives very low due to random reasons (big prob with fb is fb overload....there is a numeric limit to how many friends,companies, organizations you can friend without making it a useless site for you)
3. Now you have FB millionaires who owe federal tax on a gain they did not take! Nazdaq crash #2.

I knew people who went in 1 year from paper multimillionaires to bankruptcy court due to having to pay federal tax on gains the 'didnt take'. This law is unchanged from year 2000 crash. So some people will do this again if their stock tanks enought and doesnt come back. (not likely? well FB wont get a bailout, they are not a bank or borrower....maybe they need to borrow 100b so they can be too big to fail?)

"FB" also stands for "F*cked Borrower"

chip_designer says

Facebook Millionaires Are Already Driving Palo Alto House Prices Into The Stratosphere

According to Redfin, Palo Alto is selling for $820/sq ft, for an old shack relative to $300/sq ft for a new house in Silver Creek or a $400/sq ft in Almaden Valley, which are both upscale neighborhoods. Walnut Creek in the East Bay, which is an upscale neighborhood on the East Bay with very good schools and a BART system to San Francisco is selling for $220/sq ft for a fairly new house. Is Palo Alto really 3x more attractive than Silver Creek or Almaden, or 5x more attractive than Walnut Creek? I don't think so. This huge ratio in prices is unprecedented, and anybody who buys in Palo Alto, right now, is a big fool who buys into the hype.

A few thousand employees at a company isn't going to cause a sea change in housing prices in an entire region. Palo Alto maybe. But nowhere in the article did I see anything about "spreading to the rest of the area".

As someone who lives in the East Bay and works in Silicon Valley my experience of hearing people's opinions- even from many of the commentators here- is that anywhere besides the extreme narrow confines of the Peninsula or "The city" is a pit, and that those who sadly live there will spend their entire lives commuting, and that its full of crime. That alone is why more than likely this latest whatever you call it- mini-bubble- will be confined to the Peninsula and the "city". That's fine by me.

No, there is actually no price surge in Palo Alto at all, and here is hard data from Craigslist asking prices over the last year:

http://patrick.net/housing/graphs.php?uaddr=palo+alto%2C+ca&v=prices

edvard2 says

A few thousand employees at a company isn't going to cause a sea change in housing prices in an entire region. Palo Alto maybe. But nowhere in the article did I see anything about "spreading to the rest of the area".

it was not written "spreading...", it was implied HAHA
those who cannot bid up with those who can buy in PA, have to buy at other nearby places, therefore tickled down the rest of bay area.

Whoa... what was going on in Feb-Mar 2011?

That can't be right.

No, there is actually no price surge in Palo Alto at all, and here is hard data from Craigslist asking prices over the

The vast majority of Palo Alto homes for sale will not be advertised on Craisglist. Those that do are relisted every other day, essentially double, triple counting the same ad within a 7 day span. Again, the graph is useless.

No, there is actually no price surge in Palo Alto at all, and here is hard data from Craigslist asking prices over the last year:

Palo Alto prices are surging about as much as Rick Santorum's presidential campaign...

gregpfielding says

Whoa... what was going on in Feb-Mar 2011?

That can't be right.

The 30-day rolling average doesn't have a lot of meaning until you're at least 30 days into it. The first day's prices in the data set were probably high. Then you can see that day averages in with other days over time and the average falls.

SFace says

The vast majority of Palo Alto homes for sale will not be advertised on Craisglist.

Got any proof of that?

SFace says

Those that do are relisted every other day, essentially double, triple counting the same ad.

If a house doesn't sell and gets relisted, that is definitely another valid data point.

Anyway, they don't get relisted every other day. I could do a statistical study of relisting frequency, but it looks to me like they get listed about once a week, which is the duration of an active ad on Craigslist.

Just because you don't like the data doesn't mean it isn't true.

Pointing out the obvious, I said my piece so take it for what it's worth.

dunnross says

chip_designer says

Facebook Millionaires Are Already Driving Palo Alto House Prices Into The Stratosphere

Is Palo Alto really 3x more attractive than Silver Creek or Almaden, or 5x more attractive than Walnut Creek? I don't think so. This huge ratio in prices is unprecedented, and anybody who buys in Palo Alto, right now, is a big fool who buys into the hype.

I've been saying the same thing about Accord vs. BMW for as long as I can remember, and I still refuse to buy BMW/MBs for that reason (it's not twice as good!). But I'm old enough now to realize it's not going to change, and the greater economics clearly supports it.

Palo Alto is not going to change. Just like another poster mentioned the entire BA has been in a bubble since 1987....it's not a bubble if it's sustained for 25 years...

With FaceBook, Google, and Apple all hiring like mad, you will be waiting for a long long time for this "bubble" to pop.

PockyClipsNow says

Now you have FB millionaires who owe federal tax on a gain they did not take!

This is why you buy stock when you get it, and fill out a form 83b. But for those who are not on the executive leadership team, or you didnt get in real early, you cant buy your shares, you just get options, so if you sell them to take the gain your gain is considered income.

The game is rigged, friends, for those on the inside. Us regular people, even when we come into money, get railroaded.

flat says

I've been saying the same thing about Accord vs. BMW for as long as I can remember, and I still refuse to buy BMW/MBs for that reason (it's not twice as good!). But I'm old enough now to realize it's not going to change, and the greater economics clearly supports it.

Palo Alto is not going to change. Just like another poster mentioned the entire BA has been in a bubble since 1987....it's not a bubble if it's sustained for 25 years...

I always sort of laugh when people run an Accord vs BMW comparison. The cars are built for different purposes and it is apples to oranges. Anyone that buys a BMW and then complains about the cost of ownership (maintenance, gas, reliability) is a moron, just like anyone that complains about an Accord not handling well and having a cheap interior is a moron.

Sadly, the dumb car buyer demographic has been buying a lot of BMWs, which in turn has made BMW start catering to the soccer moms. Now their new ones, while still good performers, are fat heavy pigs compared to what they used to build and they lack the sporty character of the old ones.

Also, 25 years isn't that long of a time as far as society & civilization are concerned. Maybe PA will remain expensive for as long as the USA exists, and maybe it won't. Just because it has been that way for a couple of decades doesn't mean it will. The northeast used to be the tech center if the US with the railroad industry, and the whole area is nothing like what it was for almost half of a century thanks to the RR industry maturing & becoming old news. Nobody ever thought that it could happen there, and everyone here is convinced that it can never happen either. Maybe it will, maybe it won't.

PockyClipsNow says

WELL what if:
1. half the FB millionaires exercize stock but HOLD ON (not sell)
2. FB stock dives very low due to random reasons (big prob with fb is fb overload....there is a numeric limit to how many friends,companies, organizations you can friend without making it a useless site for you)
3. Now you have FB millionaires who owe federal tax on a gain they did not take! Nazdaq crash #2.

Yes the risk of excercising but not realizing. But most Facebook employees got RSU's, so they would have value based on the absolute stock price.

There are some 400M RSU's aready granted and counting. @ $40 a pop, that is $16B in payday in the pipeline for a company with just a 3K employee headcount.

The kicker and you see this with Zynga as well, the company will pay the employee income tax as it vests. Employees tax bills are transferred completely to the employer. 15B worth of RSU is 15B net of tax to the employee. 83b election is irrelevant. One hell of a company to work for.

Don't forget that the groundwater in Palo Alto is definitely polluted with a known carcinogen:

http://www.paloaltoonline.com/news/show_story.php?id=22807

Steve Jobs lived right in the middle of it and died young of pancreatic cancer. Just one data point, but hmmm.

If the contamination is shown to really be causing a lot of cancer, that would definitely take prices in Palo Alto down.

SFace says

The vast majority of Palo Alto homes for sale will not be advertised on Craisglist.

Got any proof of that?

of course not. sf ace never has any data to back up his claims.

bmwman91 says

I always sort of laugh

you are very laughable guy.

If the contamination is shown to really be causing a lot of cancer, that would definitely take prices in Palo Alto down.

It would be ironic, to say the least, since PA & the peninsula are full of some of the most vociferous NIMBY, Whole Foods loving, only-eat-locally-grown-organic-sustainable-stuff enviro-champions in the US. My sister is finishing her PHD in marine chemistry at UCSC and she was telling me to stop drinking the tap water in MV, and well, most of the Peninsula because of the huge number of poorly cleaned up superfund sites. The number if superfund sites is staggering, and published online, and it looks like there is a proposal to build a ton of housing units DIRECTLY ON TOP of a huge one on Minaret & Ada in 94043 (I used to rent an apartment adjacent to it lol).

There was some report released recently linking Parkinsons in MV/PA to the type of foundation a house had and its proximity to these superfund sites. Anyone have a link? I think that it was mentioned in here.

whoa i didnt know what an RSU is.
No wonder everybuddy wants to work at these places.

bmwman91 says

I always sort of laugh when people run an Accord vs BMW comparison.

The question is not why Palo Alto is so much more expensive than Walnut Creek. The question is what made Palo Alto only 50% more expensive in 1998 and 2005, and 500% more expensive now. The ratio of valuation between Palo Alto and Walnut Creek went up 10 times in only 6 years. There are absolutely no fundamental reasons which could have caused this huge of a valuation difference.

dunnross says

Is Palo Alto really 3x more attractive than Silver Creek or Almaden, or 5x more attractive than Walnut Creek? I don't think so

Absolutely.

According to Google Maps it takes two hours round trip to commute from Walnut Creek to Palo Alto by car and going by bicycle isn't practical. It takes no time to get to PA proper and pretty much everything in the valley from San Jose to San Mateo is reasonable either way.

I'd rather live in a one bedroom apartment somewhere like PA or Menlo Park than own a mansion in East Bay unless I was retired and I didn't need to work and want to pick and choose among the broadest selection of tech startups to maximize my chances for a pleasant work environment and startup win.

The only issue with high prices in PA is that it costs too much more to rent the money for a place than it does to rent a similar property.

bmwman91 says

My sister is finishing her PHD in marine chemistry at UCSC and she was telling me to stop drinking the tap water in MV, and well, most of the Peninsula because of the huge number of poorly cleaned up superfund sites. The number if superfund sites is staggering, and published online, and it looks like there is a proposal to build a ton of housing units DIRECTLY ON TOP of a huge one on Minaret & Ada in 94043 (I used to rent an apartment adjacent to it lol).

I always use one of those carbon filters on the tap water in Menlo Park, mostly because the water just reeks of some kind of hydrocarbons otherwise. Smells like paint thinner, or maybe nail polish remover. Not everyone can taste or smell it though, so my wife made me do a blind taste test where one out of three glasses was supposed to have unfiltered water. But she secretly also filled one of the other two with half filtered and half unfiltered water.

I passed the test perfectly, picking out the filtered and the unfiltered, and putting the other one between the two because it wasn't as clear.

I sure hope those filters trap most of that crap.

dunnross says

There are absolutely no fundamental reasons which could have caused this huge of a valuation difference.

Of course not.

I don't care though, because PA not where I want to live. It is full of self righteous NIMBY douchebags, cramped houses on cramped lots and traffic. On top of that, it is super expensive. Yes, yes University Ave has nice food & stuff. So do tons of other places that don't look as posh but taste just as good. The people with more money than brains can keep it. I don't understand why PA keeps coming up. Anyone with any critical thinking ability can see that it is not the center of the universe. It seems to me that tons of people on here must keep bringing it up because they want to live there or something.

The only parts of PA that I want to live in are the ones up on Moody & Page Mill. Having multiple acres of oak forest to frolic on, with a 20-30 minute drive to solid jobs & stuff to eat/do would be killer. So, THOSE particular properties' prices actually make some sense. The frenzy over the Eichler shitboxes down next to 101 is just idiocy.

Idiocy is nothing new. Stupid people have been around since forever. You can get mad & rant about them, but it doesn't accomplish anything. Around here, there are hordes of people with more money than brains, and certainly more money than you & me. I know that I can't compete with that, nor do I intend to since that would put me in the "stupid" category too.

drew_eckhardt says

According to Google Maps it takes two hours round trip to commute from Walnut Creek to Palo Alto by car and going by bicycle isn't practical.

But that goes both ways. It also takes 2 hours round trip to commute from Palo Alto to Walnut Creek by car and going by bicycle isn't practical. Now, given that the sili.con valley is on it's way out, they do have this little unknown city, with lots of jobs in the medical and banking professions, called San Francisco, which is only a 20 minute commute by BART from Walnut Creek and a 1hr+ commute in heavy traffic from Palo Alto.

drew_eckhardt says

According to Google Maps it takes two hours round trip to commute from Walnut Creek to Palo Alto by car and going by bicycle isn't practical.

Also, does that Google map also show you that the distance between Palo Alto and Walnut Creek, had suddenly gone up 5 times in the last 6 years? Does that have anything to do with Einstein's warped space theory?

drew_eckhardt says

Absolutely.

According to Google Maps it takes two hours round trip to commute from Walnut Creek to Palo Alto by car and going by bicycle isn't practical. It takes no time to get to PA proper and pretty much everything in the valley from San Jose to San Mateo is reasonable either way.

location location location

its so nice to be right in silicon valley :)

my friend who live in san ramon, spend $600/month just on gas to commute to work.

after bought that big 5 bedroom house, no more money to buy even a prius.

it is very funny.

chip_designer says

location location location

chip_designer:
You must not be a very good chip designer if you have to pimp used houses for a living.

flat says

With FaceBook, Google, and Apple all hiring like mad, you will be waiting for a long long time for this "bubble" to pop.

They'll make up for the thousands of Yahoo layoffs in the works.

dunnross says

The question is not why Palo Alto is so much more expensive than Walnut Creek. The question is what made Palo Alto only 50% more expensive in 1998 and 2005, and 500% more expensive now. The ratio of valuation between Palo Alto and Walnut Creek went up 10 times in only 6 years. There are absolutely no fundamental reasons which could have caused this huge of a valuation difference.

Absolutely. Everywhere is relative. Pleasanton is worth more than Livermore, but if Livermore falls 50%, we can expect Pleasanton probably will too.

Palo Alto is fundamentally different today than in 1998 - more than WC, but 10x the gains is ridiculous.

Never Trust Realtors says

Realtors Are Liars.

therefore i am not a liar

gregpfielding says

Palo Alto is fundamentally different today than in 1998 - more than WC, but 10x the gains is ridiculous.

Yes, it was quite a bit different, fundamentally? In 1998, the sili.con valley was at the height of it's historic fame. With hundreds of new startups announcing their IPO's every year, and 10-20 jobs for every college graduate, it was definitely different than now. Now, you can probably find more homeless people than high-tech yuppies in down-town palo alto.

dunnross says

Now, you can probably find more homeless people than high-tech yuppies in down-town palo alto.

good point.

Don't forget that the groundwater in Palo Alto is definitely polluted with a known carcinogen:

http://www.paloaltoonline.com/news/show_story.php?id=22807

Steve Jobs lived right in the middle of it and died young of pancreatic cancer. Just one data point, but hmmm.

If the contamination is shown to really be causing a lot of cancer, that would definitely take prices in Palo Alto down.

One thing Palo Alto buyers share with Steve Jobs is the Reality distortion field and stern adherence to the self fulfilling prophecy. They would all move to Prypiat if it was hyped up enough as a property dreamland.

People are like sheep

bmwman91 says

Also, 25 years isn't that long of a time as far as society & civilization are concerned. Maybe PA will remain expensive for as long as the USA exists, and maybe it won't. Just because it has been that way for a couple of decades doesn't mean it will.

No analogy is perfect. My point is simply price follows an exponential curve on everything, and that it's not a bubble when it last multiple decades (what is the official definition of a bubble anyways?).

I shouldn't have said Palo Alto will never change. What I meant is measured in our lifetimes it isn't likely going to change much. We don't have too many 25 years in our lives. Those with $ in the BA all want to migrate to Palo Alto, so it's just the natural reflection of the Silicon Valley economy.

If SV really goes down over the next 10-15 years, sure, you'll see a decline. Even then, Palo Alto will go down last. I was just pointing out that based on the current tech climate, I wouldn't hold your breath for it.

flat says

I was just pointing out that based on the current tech climate, I wouldn't hold your breath for it.

All the bulls just keep repeating the same mantra about how attractive PA is, and how desirable it is, but nobody would dare to answer my question: How did PA become 5 times more desirable relative to another desirable city like Walnut Creek, in just 6 short years?