The Facebook Effect On Real Estate

by Joe Sesso on May 24, 2012

Now that Facebook is a publicly traded company, lots of exciting things will be happening in Silicon Valley. More and more young tech entrepreneurs will be moving to the Valley to try to become the next Mark Zuckerberg and angel investors will be looking to get rich quick by putting up seed money for the next big thing. But the biggest buzz will be all the new millionaires created by the Facebook IPO, which was the largest technology public offering ever.

The Facebook effect on real estate values has been going on for more than a year now. Last year CEO Mark Zuckerberg plopped down $7 million for a house in Palo Alto, and COO Sheryl Sandberg paid more than $1 million for a home she knocked down in Menlo Park so she could build her new mansion near Facebook’s new headquarters. Silicon Valley began to feel the real estate buzz again, bringing back memories of the early to mid 2000s. 2011 was a strong year for sales in this region but 2012 has been nothing short of amazing. Property values are up more than 10% this year and it’s looking to get even bigger by year’s end. The reason…Facebook.

Silicon Valley Homeowners "Like" Facebook's IPO

Facebook’s IPO has created a tremendous supply and demand situation. Many owners held off on listing their homes until the IPO last week. This created a housing shortage in the region, causing prices to skyrocket. Small teardown homes that would sell for $200,000 in Seattle or Los Angeles were fetching more than $1 million in Silicon Valley and getting more than 50 offers within a couple of days being on the market. Even with more properties expected to hit the market this summer, it won’t slow down this area. Why? Because there are many more buyers flush with cash, and that’s exactly why homeowners waited to list their homes until AFTER the IPO.

Even with Facebook now a public company, the market won’t slow down. There are many more hot start-ups in this region like Twitter, Square and Foursquare that are still private. Every day, hot new apps and tech companies are sprouting up in this region, creating hopes and dreams of fame and fortune for young techies. While most of the U.S. is still feeling the strain of the Great Recession, Silicon Valley is seeing a resurgence in real estate that many thought would never happen again. Things are looking up for the real estate market here.

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