Big Spenders Buoy Housing

The Wall Street Journal

27 January 2011

The U.S. housing market may be weak, but many big spenders are still lavishing money on luxury homes in the Bay Area.

Across the nine-county region, sales of homes priced at $2 million or more soared in 2010 over 2009, according to a preliminary analysis by DataQuick Information Systems. The number of such sales reached 1,216 last year, up nearly 20% from 1,016 in 2009, said DataQuick. While that was still far below the levels of 2005 through 2008, when more than 1,500 such sales a year took place, it was also far stronger than in the early part of the decade when less than 1,000 such sales a year occurred.

And the numbers might be even higher than indicated. DataQuick, which culls its data from public records, said its numbers don’t include the last week of 2010 and might not show all transactions priced above $2 million because some super high-end deals don’t show up in the public record for long periods.

The strength of high-end Bay Area home sales last year underlines the region’s recovery and how wealth here was relatively unaffected, compared with other parts of the nation. Indeed, over the past year, many technology companies have come roaring back, start-ups have started popping up all over Silicon Valley and San Francisco, and hiring wars have broken out.

Catherine Marcus, a Silicon Valley real-estate agent with Sotheby’s International Realty, says the “market in the super high-end was great” in 2010, with competition intense for some luxury homes. In particular, some Facebook Inc. former employees cashed out of their private-company shares and wanted to buy homes, she says, along with buyers from tech companies like Google Inc., LinkedIn Corp. and Hewlett-Packard Co.

Ms. Marcus adds that the mid-peninsula town of Atherton remained the most sought-after location for buyers. According to DataQuick, Atherton was the town with most sales priced above $5 million in 2010, with 20 such transactions. That was far above San Francisco, which was second with eight sales of $5 million plus in 2010.

The priciest Bay Area home transaction recorded in the public records in 2010 was for a two-story home in San Francisco’s Pacific Heights neighborhood. In December, the home, which public record puts at nearly 7,400 square feet, was sold for $15.5 million to Hos Pacific LLC.

John Paul Hanna, a Palo Alto-based attorney for Hos Pacific, says his client wishes to remain anonymous but adds that the purchase is an indication that “there is beginning to be a turnaround, with other instances of homes selling for surprisingly high prices.” He notes, “People are still looking for premium properties.”