The U.S. housing market is still struggling to improve but you wouldn’t know it by the looks of things in Menlo Park, California. This small town just happens to be the new headquarters of a little social network called Facebook, and people have been lining up to buy houses to be closer to the action. In fact, prices have jumped more than 10% in the last year, but the average sales prices on par with London, Manhattan and Beverly Hills.
This small city of 30,000 is located in the heart of California’s Silicon Valley and is situated next to Palo Alto, home of Stanford University and Facebook’s previous headquarters. Real estate in this region has been among the nation’s most expensive for years but, unlike other regions across the country, it’s not suffering a housing crisis. In fact, it’s actually experiencing a housing shortage. High paying technology jobs in this region are in demand, and this region has withstood the current housing crisis quite well. The bad news for buyers is this shortage could get in worse in the coming months. Facebook is about to go public, which means hundreds of new millionaires will be looking for housing close to work.
Prior to Facebook moving into town, the average sales price for housing was about $840,000 in Menlo Park. Since Facebook’s move a few month’s ago, the average sales price has shot up to about $1.29 million according to DataQuick, as executives and speculators have bought to be closer to the center of the social networking universe. That’s a huge jump in a short amount of time. While Facebook’s IPO will open the flood gates of young millionaires looking to buy hot real estate, it’s not just the sales market that’s hot in this town. Rentals have skyrocketed as well.
It wasn’t too long ago where you could rent a small single family home for about $3,500 per month. This is still quite expensive, but it would be a bargain in Menlo Park today as the average single family rental is about $6,000 per month. Although Facebook has taken Menlo Park real estate prices to a new level, it’s not just Facebook people buying and renting homes. Linked In, Skype and other companies buy and rent corporate homes for important hires to be closer to work, which has also contributed to the housing shortage in the area.
While many places around the country are still struggling with unemployment and housing issues, you wouldn’t know it if you visited Menlo Park, California. Unemployment is less than 2% and housing is in huge demand. If you walk the streets long enough in this town, you might just forget that you’re living in the year 2012.
Photo Source: California, Alex E. Proimos
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Good post. Menlo Park market does suffer from a BIG lack of inventory. As a Menlo Park broker since 1978, I would caution about reading too much into monthly average sales prices. Prices in Menlo Park have been flat to slightly increasing the past year. We may be in for a big jump in values unless inventory increases soon. A listing in my office list price $1.249M just sold well over list with 8 offers. Current inventory in Menlo Park is about 1/3 pf normal. Same for Palo Alto and San Carlos.