With the Facebook IPO due tomorrow, May 18th, there is widespread speculation that a number of industries in and around the Palo Alto and Menlo Park areas are standing to benefit.
Home prices shoot up
Real estate near Facebook’s headquarters is booming.
“When you get a significant wealth-creating event like a
Google or a Facebook (IPO), it does affect real estate prices,” says Geoff Yang,
a founding partner at Redpoint
Ventures, in Menlo Park.
In the past year, Zuckerberg bought a $7 million house in
Alto. Zuckerberg’s former No. 2, Owen Van
Natta, a few months ago snagged a house listed at $8.6 million in the same
neighborhood. Sandberg is building a multimillion-dollar modern mansion in Menlo
Topping them all: Russian investor Yuri Milner, whose DST
Global venture firm stands to make billions from Facebook stakes, last year
bought a $100 million mansion in nearby Los Altos
Overall, Palo Alto “real estate is already up 10% this year
in anticipation” of the Facebook IPO, says Vista Wealth Management CEO Michael
Home prices in the center of Palo Alto are up 29% from a
year ago, according to data from real estate site Zillow.com. Realtors say the
area has long commanded a premium but is experiencing a wave not unlike when
Google went public.
Google’s 2004 public debut, which raised $1.7 billion at a
$23 billion valuation, is estimated to have created 1,000 millionaires. Realtors
say that after the IPO, a standing joke was that they often hosted Google open
A development now is a trend to more all-cash offers. “The
other day, we had eight offers, and seven of them were in cash,” says Alain
Pinel real estate agent Bob Gerlach, based in Palo Alto. “A lot of them have
stock in tech companies.”
Penelope Huang, a ReMax Realtor based in neighboring Menlo
Park, says cash is so common, it’s no longer king. Hopeful “buyers will say,
‘But I have cash,’ and I will say, ‘So do the other four buyers.’ You can
literally close the transaction in 10 days because the money is in the bank. I
think this is a phenomenon unique to this area.