August 10, 2012

Bay Area Tops The Zip List For Million Dollar Home Sales In California

Top Zip Codes for Million Dollar Sales

In the second quarter of 2012, a total of 7,763 homes sold for a million dollars or more in California, up 18.5 percent from the second quarter of 2011. Ranked by total sales per zip code, Hillsborough/Burlingame (94010) sat atop the list with 134 million-dollar-plus sales in the second quarter, up from 118 last year, and with a top sale of $5.28 million.

Eleven other Bay Area zip codes made the top 25 in terms of sales. In fact, combining Los Altos zip codes 94022 and 94024 would top the list of California communities with 167 million dollar sales in the second quarter of 2012, up from 147 the year before and with a top sale of $6.15 million.

A combined 95030 and 95032 would rank Los Gatos third with 129 sales, up from 75 the year before and with a top sale of $4.66 million. The only San Francisco zip code to make the top 25 list was 94114, ranked number 19 with 65 sales last quarter, up from 50 in the second quarter of 2011 and with a top sale of $3.25 million which was 350 Hill Street.

The other Bay Area zip codes to make the top 25 list:

2. Saratoga (95070): 126 sales (up from 93) with a $5.35 million top sale
5. Cupertino (95014): 105 sales (up from 88) with a $2.45 million top sale
7. Menlo Park (94025): 100 sales (down from 124) with a $4.8 million top sale
12. Fremont (94539): 83 sales (up from 52) with a $3.39 million top sale
21. Palo Alto (94306): 62 sales (down from 69) with a $3.15 million top sale
23. Alamo (94507): 61 sales (up from 28) with a $2.33 million top sale

Also of note, leverage has increased as 31.0 percent of the million-dollar-plus buyers in the second quarter paid cash, down from 37.7 percent in the first quarter, down slightly from 31.9 percent in the second quarter of 2011. In the five million dollars or more segment, 59.4 percent of the purchases were cash.

California Million-Dollar Home Sales Highest Since 2007 [dqnews.com]
No Hill Street Blues For This Maniscalco Designed Home [SocketSite]

First Published: August 10, 2012 9:45 AM

Comments from "Plugged In" Readers

La Canada Flintridge? Was not aware of that area.
What I want to know is does this mean the 1% in the Bay Area are doing very well, or the entire Bay Area is as healthy as this shows for high priced sales.

Posted by: Go Hillsborough! at August 10, 2012 9:58 AM

94010 is not only Hillsborough. It is Hillsborough and Burlingame.

Hillsborough alone could not possibly have over 100 sales in one quarter.

[Editor's Note: Since amended above.]

Posted by: Unplugged at August 10, 2012 10:09 AM

Talking of combining ZIP codes for Los Altos? 94114 isn't even all of Noe Valley. D5, just C, M, and K saw 76. SF saw 427' (per mls)

[Editor’s Note: Each of the Los Altos and Los Gatos zip codes individually ranked in the top 25.]

Posted by: Anon1 at August 10, 2012 10:28 AM

They seperate out Corona Del Mar from the city of Newport Beach even though it is a neighborhood within Newport Beach. If they had not seperated the entire city of Newport Beach into two listings it would have ranked number one.

Posted by: Anon2 at August 10, 2012 10:36 AM

Top end doing VERY well right now.
Prestige home index (I remember when that was featured here..)rose 3% in last quarter, up 4.2% YOY - the biggest increase since 2006.

From
http://www.firstrepublic.com/lend/residential/prestigeindex/index.html
"People who work for technology companies have a lot of money and want to live in San Francisco, and this has changed our market dramatically in the past two months," said Lee Ann Monfredini of Pacific Union International in San Francisco. "It is the Facebook and Zynga effect. There is pent-up demand and not much inventory. It's amazing."

In Silicon Valley, a lack of inventory and a growing number of buyers were putting upward pressure on prices. "Our inventory is very low, and we have strong demand. We have many buyers who work at technology companies, in addition to money coming from Asia. The hottest market is Palo Alto, and that is like dropping a pebble in the pond – it's having a ripple effect across the area."

Posted by: REpornaddict at August 10, 2012 10:54 AM

"It is the Facebook and Zynga effect." - May 22, 2012

FB 5/22: $31. Today: $21.6
ZNGA 5/22: $6.80. Today: $2.95

Palo Alto has slowed down in the past few months.

Posted by: Michael at August 10, 2012 11:08 AM

Yeah well SF saw 327 such sales in the same quarter, last year. It's up nearly 31 percent yoy.

Posted by: Anon1 at August 10, 2012 11:11 AM

SF not slowing down tho, from sf re port,

Sales of single-family, re-sale homes were up 6.8% year-over-year.

Sales are being impacted by the lack of inventory. As of today, there are only 234 homes for sale in the city. That's down from 379 in June! That’s just over one month of supply. There are 337 condos/lofts for sale, about one and half months supply.

The beneficiary of low inventory has been prices.

The median price for condos gained 10.4% year-over-year. Sales were up 22% from last July.

This is an extraordinarily tough market for buyers. It’s important to be calm and realistic.

Posted by: REpornaddict at August 10, 2012 11:20 AM

The top 25 zip codes accounted for ~27% of all sales (2129 of 7763). The report is ranked by number of transactions so it is surprising that even 94114 made it on to the list. Pretty interesting. I wouldn't have guessed there were that many transactions there. I would bet that the percentage of transaction over $1M in that zip is pretty high. And as a whole, I would bet that SF has a much higher % of homes sold over $1M. Those zips just don't have the volume required to make it on to this somewhat arbitrary list.

Excerpt:
Statewide, 188 homes sold for $5 million or more last quarter, while 122 were in the $4-$5 million range, 316 were in the $3-$4 million range, 909 were in the $2-$3 million range, 5,100 were in the $1-$2 million range.

I'd like to see the same analysis on the data set for homes above $2M.

Posted by: eddy at August 10, 2012 11:27 AM

I absolutely love the current trend for 94114.

Zillow's Zestimate has crawled back over 1M for 94114, reflecting the higher volume of 1M+ sales.

http://www.zillow.com/local-info/CA-94114-home-value/r_97568/

Posted by: lol at August 10, 2012 2:57 PM

@Michael: "FB 5/22: $31. Today: $21.6"

I think the more relevant number is this:

Today's Mkt Cap: 46.72B

I don't think FB employees are crying too much.

Posted by: Toady at August 11, 2012 5:13 PM

"I think the more relevant number is this: Today's Mkt Cap: 46.72B I don't think FB employees are crying too much."

FB doubled employees from 2010 when GS investment valued the company at $50B. 2,000+ employees are crying/underwater at $46B cap.

Posted by: KK at August 11, 2012 6:31 PM

Who cares about a few FB employees when the whole Bay Area take a giant step backwards to the days of radical UNaffoardability for the millions of other residents.

The working homeless of Palo Alto was a cautionary tale just a few months ago now, it looks like its rapidly becoming the reality for every one else.

Unless salaries for ALL workers rise rapidly, which is unlikely, or Bay Area communities lift their anti-density zoning policies, even more unlikely, this tale of a boom is going to turn into a bust as workers and employers leave the area in search of lower costs.

Posted by: Badlydrawnbear at August 12, 2012 6:21 AM

Badlydrawbear's implicit claim, that the Bay Area in general and San Francisco in particular should be hosting a much larger population in less expensive, more densely built homes and that the reason they aren't is due to "their anti-density zoning policies" really gets deployed a lot around here.

I'd ask commenters or the ss editor: give us a few examples of said "anti-density zoning policies". Really. The post on It’s All About Density in 2007 was pegged to an academic talk and it appears that the slides aren't on-line.

It seems to me that some people have decided, in an ex post facto manner, that because construction of housing units in the Bay Area isn't keeping up with other MSAs where wages are lower, that it must be bad, bad government regulations (and of course the ever-present NIMBYs) that are keeping construction down and prices up.

But they never seem to be able to point to a concrete set of policies, or even policy, that is at fault. They never compare zoning laws here to some higher-growth, lower-cost MSA of similar starting point population around 1990, say, and then conclude that the lack of Bay Area housing growth and admittedly skyrocketing prices since that time is due, even in large part, to the difference in regulations.

Instead, it seems like they are assuming the conclusion and saying that because housing growth isn't up to what they think it should be, that public policy must be at fault.

Here's my respectful request: next time you assert that "Bay Area communities must lift their anti-density zoning policies", please point out at least one policy which should be "lifted", and then try to explain when it was put into place, thus artificially limiting housing density.

Or if the Bay Area policy has been in place for a long time (I suspect this is most often the case), explain how your favored higher-growth, higher density yet-comparable population municipality elsewhere changed their policy to enable the building of higher density housing, thus encouraging housing affordability.

Posted by: Brahma (incensed renter) at August 12, 2012 9:34 AM

Sad for Goldman, but not sad to the 2100+ employees that worked there at the end of 2010.

As for Palo Alto, pricing has jumped so quickly ($1.5M for lots? Crazy), it's the market that's equalizing. If you want to call that slowing down, that's up to you.

Posted by: Toady at August 12, 2012 10:20 AM

There is no doubt that building regulations have kept down the number of units built. The Eastern Neighborhood building moratorium, for example, blocked the conversion of warehouses to residences (for example, the graffiti-covered plywood warehouse on Harrison). However, there are a number of sites that have been approved for higher density construction but high rises have not been built. This is due to the financial climate, rather than regulations.
San Franciscans are not eager for dramatically higher density in the more established residential neighborhoods, so the bulk of any construction would have to be downtown and in the eastern neighborhoods. It is not clear whether building many more high rises there would bring housing prices down. Vancouver has built more high rise condos that SF possibly could, yet housing prices there are as expensive as SF (to buy; renting is cheaper there). One thing Vancouver has that SF doesn't is high-rise clusters in the suburbs. High rise construction around BART stations, for example, would be a good place for growth.

Posted by: Dan at August 12, 2012 10:45 AM

I'll bet there will still be a ton of real estate buying activity coming from FB employees. Even with FB stock down, there's a lot more compensation coming through soon. From the 10-Q:

We estimate that an aggregate of approximately 273 million shares underlying Pre-2011 RSUs will vest and settle between October 15, 2012 and November 14, 2012.

That's $5.7 billion (at $21/share) coming this fall. Note these RSUs are like options with a strike price of zero, so there's no such thing as "underwater."

Posted by: noodle at August 12, 2012 6:02 PM

@Braham ... here are a few

http://www.slate.com/blogs/moneybox/2012/05/20/in_menlo_park_a_jobs_boom_is_illegal.html

San Mateo County, where Menlo Park is located, has about 40 percent the population density of Bergen County in New Jersey. It would be trivially easy to fit more people there. But it isn't simply "difficult" to create dense housing stock, it's basically illegal. Menlo Park contains vast swathes of land zoned as fit only for "residential estates" where by law lots must be at least 20,000 or 15,000 square feet per home. Even in the relatively small portion of the city where apartment buildings are legal, they're subject to the following rules:
(1) Minimum lot area -- Seven thousand square feet; (2) Minimum lot dimensions -- Eighty feet width, one hundred feet depth for lots ten thousand square feet or more in area; seventy feet width, one hundred feet depth for lots less than ten thousand square feet in area; (3) Setbacks: (A) Front Yard. There shall be a front yard setback equal in depth to at least fifteen percent of the total lot width at the front property line. In no case shall this distance be less than twenty feet. (B) Side Yard. There shall be an interior side yard setback of at least ten feet. Corner side yard setbacks shall be a minimum of 15 feet from the street side of a corner lot. (C) Rear Yard. There shall be a rear yard setback equal in depth to at least fifteen percent of the total lot width at the front property line. In no case shall this distance be less than fifteen feet. (D) Distance between buildings. The minimum distance between main buildings on a lot shall be one-half the sum of the height of those buildings, but in no case shall this distance be less than twenty feet. The minimum distance between a main building located on one property and a main building located on an adjacent property shall not be less than twenty feet. (4) Land cover by all structures shall not exceed thirty percent; (5) Height of structures shall not exceed thirty-five feet; (6) Driveways and open parking areas shall not exceed twenty percent of lot area; (7) Landscaping and open spaces, not including driveways and open parking areas, shall occupy not less than fifty percent of the lot area;
Note that doesn't make Menlo Park unusual. It's instead quite typical for suburban America except for the fact that it's smack dab in the middle of a booming sector of the American economy. But this all amounts to a statutory cap on the population of the Silicon Valley area. Not only is most of the developable land reserved exclusively for large single-family detached houses, but even the small amount of land that has been set aside for denser dwellings can't be developed very densely at all. What's wrong with a building of over 35 feet? Why is it important to restrict building footprints to 30 percent of the lot?

Posted by: badlydrawnbear at August 13, 2012 5:07 AM

Also, RE professionals should consider the huge number of commissions they are giving up (emphasis mine) ...

http://www.forbes.com/sites/timothylee/2012/05/11/silicon-valley-is-stuck-in-an-uncanny-valley-of-density/

A good way to see why this is wrong is to compare San Francisco to New York, another city that’s severely constrained by geography. A friend kindly crunched the numbers and sent me the results by email. He points out that if San Francisco were half as dense as Manhattan, it would have 1.1 million people instead of 805,000. And if San Jose were half as dense as Brooklyn, it would have 2.3 million people instead of 945,000. The peninsula between the two could also be much denser.

SF and SJ should be having construction booms, employing thousands of workers building new homes and businesses, expanding infrastructure, and generating millions in commissions for the RE industry (not to mention the tax revenue for the State) simply by allowing the already urban centers of the Bay Are to be, well, a little more urban.

Posted by: badlydrawnbear at August 13, 2012 5:38 AM

And as if to prove my point about un-affordability SF Curbed has this ...

... a Craigslist ad for one half of a queen-sized bed for $450 a month on Nob Hill.

http://sf.curbed.com/archives/2012/08/10/its_tough_out_there_but_at_least_hes_not_asking_for_sex.php

Posted by: badlydrawnbear at August 13, 2012 8:08 AM

Much of the western side of San Mateo County is green belt, which lowers density relative to Bergen County.

Posted by: Dan at August 13, 2012 8:20 AM

I'm not commenting to provide a data-driven argument here, but at least on the Peninsula, we have a somewhat unique situation where there are major employers (FB, Google, Apple, etc) smack in the middle of suburbia. If you spend any time up and down the Peninsula, you will easily see that the same housing patterns exist: lots of 2-4 story apartment/condo units between 101 and El Camino Real, then huge swaths of SFH's either interspersed in those regions, or in the areas west of ECR. Once west of 280, it's either open space or very low density, high cost land (Los Altos Hills, Portola Valley, Woodside, Hillsborough).

So the only easily developable land is that aforementioned 101 to ECR corridor, as well as some stuff east of 101, which if you pay attention, is actually seeing a fair amount of development. San Mateo, RWC, even Palo Alto have significant higher-density housing developments being built right now. The one major anti-development struggle on the Peninsula right now is the Cargill Saltworks area in RWC.

My point being, there is development going on, but keep in mind this is in the background of a swath of geography that just 50 years ago was mostly orchards and low-density suburbs.

The Bergen County analogy is a bit of apples to oranges, as those communities are much more established NYC bedroom communities, and they've had lots of time to infill. Moreover, I don't know the referenced stat of San Mateo being 40% the density of Bergen County, but keep in mind San Mateo County includes everything west of Crystal Springs Reservoir, including the hills above Woodside, La Honda, and all the coastal areas from Pescadero through Half Moon Bay up to Pacifica - extremely low density where the cows probably outnumber the humans.

Posted by: Unplugged at August 13, 2012 10:20 AM

Working in reverse order…badlydrawnbear: I agree that if I had my druthers, San Jose (and particularly, downtown San Jose) would be denser, with higher buildings. One of the bloggers you cite just can't believe this state of affairs:

In the 19th Century, the most innovative cities tended to also be the fastest growing. New York, Chicago, and Detroit all grew by an order of magnitude in the late 19th and early 20th centuries as key American industries grew in them. Skyscrapers sprang up in these cities’ downtowns. In New York and Chicago especially, developers built dense, walkable neighborhoods to accommodate the surging demand for housing. And this, in turn, helped keep supply in balance with demand and avoided large price increases.

This isn’t happening in Silicon Valley. If Wikipedia is to be believed, the tallest skyscraper in San Jose, the self-styled capital of Silicon Valley, is a pathetic 22 stories tall. Silicon Valley continues to be dominated by low-density, suburban patterns of development, even as housing prices have skyrocketed.
The link he provides to a list of tallest buildings in San Jose names The 88, at 286 ft.

But you can buy 2 Bed, 2 Bath condos in The 88 on the resale market quite easily for < $485 per ft.². Are pro higher density/supply-side advocates saying that price level represents a "large price increase"?

Perhaps the housing credit bubble collapse didn't make the effect on the price level easy to discern.

An equivalent condo in a similar building in San Francisco would be about $710 per ft.² (although I am not a real estate agent, and I'm willing to be corrected on that).

One alternative explanation (I'm not particularly attached to) is that perhaps most Silicon Valley workers just want to live in an environment akin to what the slate.com blogger describes as "quite typical for suburban America" and be car-dependent and not live in a "dense, walkable neighborhood to accommodate the surging demand for housing".

Posted by: Brahma (incensed renter) at August 13, 2012 11:39 AM

Is downtown SJ a dense walkable urban environment???
Can condo dwellers walk to a grocery store nearby, drop off dry cleaning, do some shopping, run other errands without a car on the evenings and weekends?

I don't know.

Posted by: badlydrawnbear at August 13, 2012 12:23 PM

badlydrawnbear: Yes, it is. Just looking at the WalkScore for any unit at The 88(since we're talking about that building as an example), generates a score of 98: Walker's Paradise.

Even if you don't trust that metric, I can say from personal experience when I lived in Downtown SJ in the late nineties (not in a high-rise), that I could easily walk to neighborhood coffee shops, restaurants and stores, including dry cleaners and the post office, without incurring the hassle and cost of getting into, driving and re-parking my car.

And that was during a time when downtown SJ was what would be referred to by the hoity toity types that usually comment on socketsite as "a sketchy area". I assume that things have improved dramatically since then (both in terms of increased neighborhood amenities and decreased "sketchiness"), if only because there's been a lot of new residents introduced to the area because new condo buildings like The 88, City Heights, Axis, etc. have been built and attracting residents (even if not at the demand level that their developers would have liked).

Posted by: Brahma (incensed renter) at August 13, 2012 1:37 PM

"...if I had my druthers, San Jose (and particularly, downtown San Jose) would be denser, with higher buildings."

The reason that downtown SJ caps out below thirty stories is that it is right on the approach path to the SJC airport. There's even an art installation atop the Adobe HQ that responds to the noise of incoming air traffic.

But downtown San Jose doesn't need to be super tall to become dense. Most of the infill projects completed in the last couple of decades are much taller and denser than what gets built in the less dense parts of San Francisco.

badlydrawnbear - The downtown SJ grocery scene has been on a roller coaster. Currently there are OK options and in the recent past it has been both better and worse. You can live car free in downtown SJ pretty easily though most people have cars since parking is bundled with housing so why not?

Posted by: The Milkshake of Despair at August 13, 2012 1:42 PM

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