A story today from Bloomberg News reporters Prashant Gopal and John Gittelsohn looks at the rise of real estate bidding wars as some of the overhang in the U.S. housing market gets cleared away. Those wars may be most intense in Palo Alto. Bloomberg’s Dan Levy noticed the emerging boom there last year, noting that Palo Alto was where earlier Silicon Valley property booms started. Now Gopal and Gittelsohn recount some telling examples of how heated things have become:
One home in Palo Alto, California, received 38 offers and sold for $1.65 million, or $452,000 more than its asking price, said Ken DeLeon, a real estate broker in Silicon Valley since 2002. Another client paid $2.56 million for a home in 2007 and is listing it for $3 million, with the expectation of receiving higher offers, he said. The seller wants to use the proceeds to buy a home in Saratoga, about 18 miles southeast of Palo Alto, where the market hasn’t heated up yet, DeLeon said.
Prices are hitting all-time highs, above Palo Alto’s 2007 peak levels, in the 94301 and 94306 ZIP codes, as buyers rush to purchase in advance of an expected flood of newly minted millionaires when Facebook Inc. (FB) has its initial public offering, DeLeon said. The Menlo Park-based social-networking company filed paperwork in February for an IPO that may result in a market valuation of $75 billion to $100 billion.
“It’s insane,” DeLeon, who brokered 101 home sales last year valued at $275 million, said in a telephone interview. “It’s probably the hottest housing market in the nation.”
So, not only are prices skyrocketing already, but they may be rising now based on the anticipation that they will shoot up even more after the Facebook IPO. Kind of makes it feel like the Naughty Aughties all over again, doesn’t it?