News


Realtors: Facebook IPO is talk of the town

Both buyers and sellers buzz about Facebook's plans to go public

Editor's note: In an earlier version of this story, the Almanac erred in reporting the asking and sales price of a 1,082-square-foot home in Midtown Palo Also. This story has been changed to reflect the correct asking and sales prices.

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By Barbara Wood

Special to the Almanac

What will happen to the local real estate market when Facebook goes public?

That question was on the minds of just about everyone Menlo Park real estate broker Tom LeMieux spoke to last week after Facebook announced on Wednesday that it soon will make an initial public offering of stock that could make millionaires of many of the company's more than 2,000 employees working in its Menlo Park headquarters.

"I think this IPO is the talk of the town and the nation," said Mr. LeMieux, who works for Coldwell Banker in Menlo Park.

On Saturday, even his barber asked: "So Tom, are you going to be selling a ton of homes to Facebook employees when they go public?" he said. "Every buyer and seller I meet with, this is one of the first things that comes up."

Real estate broker Ken DeLeon, of DeLeon Realty in Palo Alto, says that just the rumor of Facebook's plans to go public may have fueled unusual January activity in Palo Alto, during a month that is traditionally slow for sales.

Palo Alto had 19 home sales last month, he said, with all selling for at least $200,000 over the listing price and three for more than $400,000 over.

Many buyers are trying to close deals before they face what they see as competition from the newly wealthy Facebook employees.

"People are so motivated right now," he said.

Last week a 1,082-square-foot home in Midtown Palo Alto, not far from the freeway, and on a 6,600-square-foot lot, was sold for $1.3 million with 17 offers. The asking price was $1.098 million.

"For 2012 Palo Alto's going to reach all-time highs," Mr. DeLeon predicted. "The first wave is going to benefit Palo Alto more than Menlo Park," he said. "The reality is, prices probably will go up 8 to 11 percent depending on the neighborhood, and maybe a little bit less in Menlo Park," he said.

Other real estate agents say the news of Facebook's IPO has already motivated some to sell their homes. Cutty Smith, a Woodside-based real estate agent with Keller Williams in Palo Alto, said that by Saturday she had heard from a client who wanted to put her Palo Alto home on the market and buy in either Menlo Park or Atherton. "I'm talking to potential sellers wondering about the timing," Ms. Smith said.

On the other side, "I have clients who have actually gone into contract sooner than they planned to try to beat this explosion," she said.

She, too, believes that Palo Alto will be the main beneficiary of an increase in sales activity. "However, because the inventory is so low, there will be spillover into Menlo Park, Woodside and Atherton," Ms. Smith said. "All these neighboring communities are going to benefit from this."

Mr. LeMieux was cautious. "I remember the same types of expectations in 2004 when Google went public," he said. "I think oftentimes the expectation doesn't match the reality, though."

People think they will see an "overnight phenomenon," he said. "The reality is these situations play out on a longer-term basis."

After the Google IPO in August 2004, Atherton's median sales price actually declined by 5 percent in 2005 before rising again by 11 percent in 2006 for a two-year 6 percent increase. Menlo Park did have a jump, with the median price increasing 24 percent between 2004 and 2005, but then increasing less than one percent more in 2006.

"That's not the hype that everyone was talking about back then," Mr. LeMieux said. "Over time, as their families expand and especially because Facebook is now headquartered in Menlo Park, I think Menlo Park will benefit."

All the agents cautioned that putting a home on the market at an inflated price is not likely to succeed, no matter how many newly minted millionaires are competing for the sale.

"The buyers are still brilliant," Mr. DeLeon said. "Overpricing doesn't really work."

Mr. LeMieux agreed. "I like to think buyers and sellers are smarter than that," he said. "We have very informed buyers here," he said, and the value of a home is still what recent comparable homes have sold for.

Those who still have dollar signs in their eyes might also do well to reflect on where Facebook employees currently live. According to a housing impact study prepared by the company as part of its request to expand the Menlo Park headquarters, 27.4 percent of Facebook employees live in San Francisco, 20.4 percent in Palo Alto, 9.5 percent in San Jose and 8.8 percent in Mountain View. Only 3.1 percent live in Menlo Park, 0.5 percent in Atherton, 0.4 percent in Woodside and 0.2 percent in Portola Valley.

New housing

For those Facebook employees who want to live within walking distance of their work, Facebook has been working with local developers to try to get some new multi-family housing built on the 700 and 800 blocks of Hamilton Avenue.

They have had discussions with the Sares Regis Group and others, Facebook spokesperson Tucker Bounds says.

"We have been working with local developers to find ways we can support new housing projects so that our growth doesn't negatively impact the integrity of the existing housing market," he said.

Comments

 +   Like this comment
Posted by Phil
a resident of Atherton: other
on Feb 8, 2012 at 12:20 pm

Some of the blighted areas which were selected for redevelopment in North Fair Oaks areas could benefit from the gentrification. It would take new homeowners with vision and realtors to show properties that have potential. Imagine living two blocks from Atherton without the heavy tax burden. Redwood city is still climate best by government test.


 +   Like this comment
Posted by sara spang
a resident of Menlo Park: Central Menlo Park
on Feb 8, 2012 at 3:38 pm

I paricipated in the Facebook Charette last March, 2011, both as a Realtor and Member of the American Institute of Architects, (see the Almanac, March 9,2011). A highly talented and inspired team of architects and designers took a futuristic look at the new Facebook Menlo Park campus and surrounding residential, commercial and environmental community. The dreams and inspirations were captivating. I participated on the Yellow Team..a group of us interviewed the members of the Belle Haven community and set about designing homes to meet lifesyle, aesthetic and community committments. All be it these architectural dreams are in the future, there will be a current need for living space near the campus. Certainly not overbuilt mediterranean mansions, but higly innovative architectural rentals, townhomes. Menlo Park has a great future in the redesign of an already thriving community.


 +   Like this comment
Posted by Phil
a resident of Atherton: other
on Feb 8, 2012 at 8:20 pm

But new high density condos and their ilk concentrate too many people and cars which will need a percentage for low income integration. Cleaning up single family dwellings...for single families is the best idea. Younger professionals are attracted to a better standard of living without CC&R's and constantly rising association fees. The houses are already there. Few condos have sustainable gardens for composting which single family homes have plenty of room. It has been proven too many tomato throwers will thwart Menlo's growth.


 +   Like this comment
Posted by MP
a resident of Menlo Park: Downtown
on Feb 8, 2012 at 9:06 pm

Readers & journalists, CHECK the FACTS!

I looked through the list vs. sale price records for PA during January on redfin, and there were just as many places that sold for under asking as over. Yes, there were a couple places that sold for $200k+ more than asking, but I also saw many that sold for $50k-200k UNDER asking.

Don't believe a word that a realtor tells you. They are stirring up the pot trying to create a feeding frenzy for their clients and make more commission.


I'm disgusted that the Almanac would help the trade again. Can I have free publicity and false statements to help my business too?


 +   Like this comment
Posted by MP
a resident of Menlo Park: Downtown
on Feb 8, 2012 at 9:11 pm

[Post removed. The Almanac made the mistake, not Mr. DeLeon. He gave us the correct numbers; they got jumbled in the note-taking.]


 +   Like this comment
Posted by w patterson
a resident of Menlo Park: Sharon Heights
on Feb 9, 2012 at 8:21 am

Please read the front page of the Wall Street Journal. Today's paper dedicates two full pages of reporting on the impact of FaceBook on the local real estate market. Welcome to all the employee's of FaceBook. Your contribution to our community will be positive and spectacular A younger and talented demographic is most welcomed.


 +   Like this comment
Posted by Central Menlo
a resident of Menlo Park: Central Menlo Park
on Feb 9, 2012 at 12:27 pm

Here's a link to the WSJ article...

Web Link


 +   Like this comment
Posted by Middle Class Renter
a resident of Menlo Park: Menlo Oaks
on Feb 9, 2012 at 12:27 pm

I'm sure this is all great news for homeowners looking to sell but it's awful news for those of us who live and work in Menlo Park, but aren't so financially blessed that we can afford to purchase a house. I am a renter whose rent has increased almost 15% in the last year with no signs of slowing. There have been no improvements to the property I rent and the property was paid off long ago according to public record, so I can only guess that the reason the owner continues to raise rents is because he can. There are no rent controls in place to protect us blue collar service workers who live and work in Menlo Park. Since Facebook moved in there are hardly any properties available for rent, and prices have increased dramatically in the last year.


 +   Like this comment
Posted by Phil
a resident of Atherton: other
on Feb 9, 2012 at 3:03 pm

@ middle class renter. Perhaps it is time to look at the homes located in 'the block' of North fair oaks,a middle class neighborhood just of El Camino. There are bargains to be had and with some sweat equity would be better than making your landlord rich. You just wouldn't be living next to the 'beautiful people'.


 +   Like this comment
Posted by Frugal
a resident of Menlo Park: Central Menlo Park
on Feb 9, 2012 at 4:35 pm

If I were a realtor anxious to earn $120,000 commission for a $2,000,000 sale and maybe do only 40 hours of work for that, I'd discourage sellers from asking top dollar. It makes selling a whole lot easier.


 +   Like this comment
Posted by Don't make assumptions
a resident of Menlo Park: Central Menlo Park
on Feb 9, 2012 at 5:05 pm

Phil, I don't know who Middle Class Renter is, but given that neither of us know his/her situation, why would we want to try to advise him on where to live? Maybe he works close enough to his home to walk to work. Maybe he has children in a nearby school that they like and want to stay at. You're making assumptions about this person whose circumstances you can't possibly know.

Middle Class Renter is making a larger point and offering a valuable perspective that might not occur to many homeowners. Telling him to move away from the "beautiful people" is an amazingly flippant response. And it's one more assumption that serves to demean the poster.

And still another assumption: that MCR believes that rich people are "beautiful people." I don't know if he does or not, but I would be willing to bet he doesn't believe the landlord who is gouging him is beautiful.


 +   Like this comment
Posted by Working Girl
a resident of Atherton: other
on Feb 9, 2012 at 6:53 pm

To Frugal's comment: There is almost always more than one real Estate agency involved in selling a home and then the fee is divided 4 ways two agents/two principals. Assuming they were to charge and be paid a 6% commission on a 2 million dollar home. That means the selling agent earns a $30,000. paycheck before taxes not $120,000.
Oh and...where Frugal gets the estimated 40 hours of work, I have no idea. Maybe he should give Real Estate Sales a try if its so easy.


 +   Like this comment
Posted by w patterson
a resident of Menlo Park: Sharon Heights
on Feb 9, 2012 at 8:04 pm

Working girl needs to reconsider her math and assumptions. Most realtors get 80 percent of the house commission. Hence, the realtor for little work recieves some $48,000.00. Even if it is a lot of work placing signs in the street, it seems pretty generous for putting a buyer and seller together for a transaction. Contracts are drafted by the attorney's for the NAR to protect the Realtor. Sales is a great business, but hardly requires a genius to do the work.
Those legacy realtors will continue to reap the rewards, along with the children who now follow in their path. Kind of like a franchise.
Good choice if you are successful. Tough business nevertheless.


 +   Like this comment
Posted by Cuts Like A Knife
a resident of Menlo Park: Fair Oaks
on Feb 9, 2012 at 8:23 pm

This article is simply another advertorial written by the Almanac to appease the Chamber of Commerce and its realtor constituents. The US has unimaginable debt and, in 2012, is likely to engage in hostilities with Iran, Syria or both. Such an event could cost home owners 5-10%, and if you overpaid for high density housing, it could cost you 20%.


 +   Like this comment
Posted by Phil
a resident of Atherton: other
on Feb 10, 2012 at 1:01 pm

@ Don't Make... "maybe" the word "perhaps" was overlooked. The response was to what was posted, with no presumption only suggestion to a 'woe is me'. Sharing ideas is part of the 1st Amendment, discouraging a suggestion resides in third world regimes. However, relating the word 'gouging' to a landlord charging fair market rates is THE obvious assumption. Maybe the increases of sewer, fire protection, school bonds and garbage rates was overlooked? There are viable alternative housing choices available in the local free market without the need for rent control or other authoritarian intervention. Tough neighborhoods take tough residents, but are a bargain.


 +   Like this comment
Posted by Ethan
a resident of Menlo Park: University Heights
on Feb 10, 2012 at 1:11 pm

There goes the neighborhood.


 +   Like this comment
Posted by IMHO
a resident of another community
on Feb 10, 2012 at 3:08 pm

Thank God, Face Book didn't open up on the Coastside. I feel so lucky living in a sparely populated community.


 +   Like this comment
Posted by FIX THE ARTICLE
a resident of Menlo Park: Downtown
on Feb 10, 2012 at 3:11 pm

I see the inaccurate statistic is still in the article:
"Palo Alto had 19 home sales last month, he said, with all selling for at least $200,000 over the listing price and three for more than $400,000 over."

I can check Redfin and see half a dozen places that sold for LESS than asking in PA last month.

Fix the article! Write the Truth.


 +   Like this comment
Posted by Mom of 2
a resident of Menlo Park: Downtown
on Feb 10, 2012 at 3:20 pm

I'm with Middle Class Renter. My husband and I have been renting, saving and investing for years while renting in Menlo Park and I thought we were finally in a position to buy when this latest bubble exploded. Bad timing I guess, but it is increasingly difficult to make the transition from renting to buying in Menlo Park or PA. Mediocre, small 3/2's or townhouses are not worth $1.5-2m regardless of how many facebook millionaires exist.

But in real estate, it only takes 1 (fool). Don't let that be you.


 +   Like this comment
Posted by These comments are ugly
a resident of Menlo Park: The Willows
on Feb 10, 2012 at 7:46 pm

Dear Facebook,
Please disregard the "ugly" comments above as they are generally not representative of the community as a whole. Our community is typically filled with open, welcoming, honest, hard-working, family-oriented, community-conscious, and sometimes colorful, citizens, but one look at this message board (here and elsewhere) and you might think otherwise. It's the lonely, angry, bitter, bored, uninformed, medicated and 'should-be-medicated' who you see here lurking, criticizing, applying flawed logic and making ignorant assumptions. It's a sad, but small, portion of the overall community. Maybe I'm wrong, but I, and my neighbors here in the Willows, welcome you to Menlo Park, regardless of whether you choose only to work here, or if you choose to work, live, shop and "post messages" here. Have a good night.
Cheers,
A happy, third-generation, resident


 +   Like this comment
Posted by Scott Lohmann
a resident of Menlo Park: other
on Feb 11, 2012 at 11:01 am

Thank you "third-generation, resident", I could not have said that better myself. History is in the making right now, we should feel very proud, excited and positive about Facebook's move to our fine city. An incredible forward thinking and society changing company! Thanks for taking over that 1M sq.ft. vacant building too!


 +   Like this comment
Posted by Almanac staff
a resident of another community
on Feb 13, 2012 at 10:41 am

In response to the writer who believed the article contained incorrect information about January sales in Palo Alto, we asked broker Ken DeLeon to clarify the statements, which are correct.
Here is his clarification:

"For my statement I was talking about listings that have come on in January, not just sales that have closed in January, for the market really picked up in January 2012, whereas some that closed in Jan. were from last year.

"My statement was that 3 homes have sold for over $400,000 and the average jump for all homes that were listed in 2012 and have closed did well. Here are the 7 closed sales of this year from 2012 listings (ranked by amount sold over list price):

812 Lincoln list price is $1,599,000 and sales price is $2,086,000 ($487k over)

769 Rosewood list price is $1,050,000 and sales price is $1,515,000 ($465k over)

2928 Bryant list price is $1,098,000 and sales price is $1,523,000 ($425k over)

1136 Webster list price is $1,599,000 and sales price is $1,950,000 ($351k over)

185 Walter Hays list price is $1,398,000 and sales price is $1,655,000 ($257k over)

3258 Emerson list price is $1,798,000 and sales price is $2,000,000 ($202k over)

2340 Dartmouth list price is $2,798,000 and sales price is $2,850,000 ($52k over)

"There are several pending sales (hence the 19 sales at the time) that I know what they sold for but that information is not public yet so I cannot disclose that information yet as I was told the sales price by another Realtor in confidence. But I can tell you that the average amount of these homes going above list price is over $200,000.

"When I said homes are doing amazingly well in January I meant homes that came on in January, as you can see from the 7 that have closed thus far this year. But I meant homes that came on in Jan. 2012, not homes that sold in 2011 (slower market) and closed in January. The closed sales always lag what is really going on by a month if not more.

"Also, I said that on average homes are selling for more than $200,000 above list price, but not that all homes are selling for above $200,000 in list price. Note that of the 7 homes in PA that have closed this year, 6 of the 7 did sell for more than $200,000 above list price so almost a perfect record."


 +   Like this comment
Posted by MP
a resident of Menlo Park: Downtown
on Feb 13, 2012 at 12:50 pm

There are 12 single family homes with January Sold dates that show a sales price less than the List Price:

ADDRESS LAST SALE PRICE Dif from List
2030 PARK Blvd 1,400,000 (390,000)
554 KINGSLEY Ave 3,800,000 (200,000)
1220 HAMILTON Ave 2,035,000 (160,000)
1191 LAURELES Dr 1,170,000 (120,000)
959 OREGON Ave 1,199,000 (99,000)
1137 FOREST Ave 1,299,700 (98,300)
3170 ROSS Rd 1,515,000 (85,000)
3798 LAGUNA Ave 2,420,000 (78,000)
3726 CARLSON Cir 1,226,000 (62,000)
2220 BRYANT St 1,740,125 (54,875)
154 BRYANT St 2,700,000 (50,000)
434 FULTON St 950,000 (45,000)


So yes, if you are only looking at listing that came on in January and sold in January, your numbers may be different, but you are distorting the data. The article didn't say you were only looking at a portion of the January sales, so very misleading to buyers and sellers alike.

I still would rather the Almanac take 5 minutes to validate someones quotes rather than taking their word for it, and allowing them to put whatever spin that best serves their marketing needs.


 +   Like this comment
Posted by PD
a resident of Woodside: other
on Feb 15, 2012 at 3:01 pm

I'm not sure where this person has received their information,
but every property on "MP"'s list closed escrow in either November or December of 2011 with the exception of the property on Laureles, which is located in Los Altos.


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