I have never written an article about the real estate business in Northern California, in spite of residing here since 2002 after my retirement from the Food and Drug Administration. However, the following article attracted my attention and confirmed my belief that real estate prices are influence by the supply and demand principle. This is all related to the recent FaceBook IPO fiasco.THIS IS THE current situation now in Palo Alto, California where Mark Zuckerberg(FB guru)call his home.
Twenty years ago, my sister-in-law purchased a small house in Palo Alto, California near Stanford University. At that time, I told her she overbought since she paid almost a million dollars for the house which was old and not properly maintained. At that time, a similar house in my neighborhood was worth only about half the price for what she paid.
My sister-in-law is indeed very wise. She kept the house even after her two children graduated from college. Now she owns a property worth over 3 million dollars. I could hardly believe it, since her house is not even closed to Mark's Zuckerberg neighborhood.
Here's today's news on how FaceBook IPO affects real estate prices in Palo Alto, California.
It is titled " As Facebook goes, so goes Palo Alto Real Estate". By David A. Kaplan
FORTUNE -- You can take the pulse of the prospects of Silicon Valley by checking stock prices, revenues, profits, hiring, even press clippings of various companies or instead maybe you should just look at the real estate market in Palo Alto, California.
After all, this is where Mark Zuckerberg lives, where Steve Jobs used to, and where countless entrepreneurs and their financiers want to move. When the price of that megalo-mansion just keeps going up -- hey, do you think it has a gift shop? -- we all say it's boomtown in the Valley. But when the value of that modest two-bedroom bungalow actually comes down near a meager $1 million, we say the end of the bubble may be nigh.
Not quite so, as many companies in the Valley, new and old, continue to soar. But the shortcomings of one iconic company, Facebook (FB), now seem to be taking their toll in Palo Alto. Before Facebook's May 18 IPO, when we last paid a visit to the town's oak-lined streets -- where even the trees have fabulous price values associated with them -- the housing market was going especially bonkers.
That's because so many sellers, expecting a bountiful IPO along the lines of the Google (GOOG) bonanza in 2004, kept their homes off the market. For the first quarter of this year, for example, the median price of a single-family Palo Alto home went up 11%, while inventory declined 57%.
All that changed when the Facebook IPO flopped. Since the stock peaked at $45 on the day it opened, it has gone as low as $25.52, a decline of 43% and 33% below its IPO price of $38. (It closed Tuesday at $27.40.) The result in Palo Alto has been a flood of houses going on the market. It's a small set of data, but it tells a story of vastly changed seller psychology. Right now, there are 104 houses on the market -- more than double the number over the winter, according to numbers culled from the Multiple Listing Service. Even compared to last June, inventory is up 44%.
In nearby Menlo Park, where Facebook's new headquarters are located, the trend is less pronounced. There are 103 houses currently on the market, up about 80% over the winter and nearly 20% more than a year ago.
"Facebook gave me a gift in showing my sellers there's no sure thing and don't-look-a-gift-horse-in-the-mouth," says Michael Dreyfus, a prominent residential real estate broker based in Palo Alto. "The "make-me-move" prices -- where a seller says, 'I know my house is worth $5 million but if somebody pays me $10 million I'll take it,' are over due to the Facebook bomb."
Today, my sister-in-law is a 3X millionaire on paper. She came to the US with only $100 in her pocket with an unlicensed degree in Nursing. She stayed with us for 6 months doing nothing but study for her nursing license. She passed the test after trying only for one time. Now, the rest is history. This episode in her life could happened only in the US, but specifically only in Palo Alto, California.
Welcome to My Site
If this is your first visit, welcome! This site is devoted to my life experiences as a Filipino-American who immigrated from the Philippines to the United States in 1960. I came to the US as a graduate student when I was 26 years old. I am now in my early-80's and thanks God for his blessings, I have four successful and professional children and six grandchildren here in the US. My wife and I had been enjoying the snow bird lifestyle between US and Philippines after my retirement from USFDA in 2002. Please do not forget to read the latest national and International News in this site . I have also posted some of my favorite Filipino and American dishes and recipes in this site. Some of the photos and videos in this site, I do not own. However, I have no intention on infringing on your copyrights. Cheers!