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California Bay Area Mansions Are in High Demand, Due to Tech Boom

 

Real estate agent Alex Wang was beaming with pride as he showed off his latest listing, a $4-million spread in the upscale community of Los Altos Hills, California.

"This house also has a wine cellar, sauna, a media room, even a putting green," says Wang.

It may sound over the top, but houses like this one represent one of the few robust economic sectors in the nation.

Welcome to the Silicon Valley real estate market, where a high-end housing boom is being fueled by a mini-tech rush, especially surrounding social media.

In Palo Alto, home of Facebook, the median selling price of a single family home increased to $1.3-million in June, up nearly 5 percent over last year, according to research company DataQuick.

The same time period saw home prices rise in Los Altos, and in Mountain View, where tech companies like LinkedIn and Google have created wealthy stock owners, and workers, willing to pay top dollar for a short commute, coveted public schools, and happening neighborhoods.

"The social media and explosion of high-tech IPO's are also creating a new work environment where people aren't always in the office," says Allison Buffum, marketing manager with SummerHill Homes. "They want to be able to be at home and work as well, and they want the best home they can afford."

Some can afford a lot. Yuri Milner, a venture capitalist from Russia recently set a new record by shelling out $100 million for a spread in Los Altos, while Facebook CEO Mark Zuckerberg recently paid $7-million for a five bedroom home in Palo Alto.

Economist Steve Levy with the Center for the Continuing Study of the California Economy says people relocating to the Valley are competing with locals "who who suddenly come into IPO wealth or have gotten a salary increase and are thinking about maybe moving to a better area.Two groups of people bidding on a stock of housing that isn't growing at all."

The expanding wealth, and a limited supply of homes for sale, is sparking new construction and fierce bidding wars. 

Alex Wang says he sometimes sees 17 or 18 offers on a property.

What's more, serious buyers are snapping up pricey properties for sometimes hundreds-of-thousands of dollars over asking. And forget about financing. Many of these buyers are paying in cash, and closing in a week.

Still to come, the so-called "Facebook Effect," as the social network giant expects to go public with what some predict will be the hottest initial public offering ever.

"I think that Facebook is going to have a huge effect on the local economy, bringing in young talent from all over the world," says Wang.

Economists say that influx of talent and wealth will likely boost demand for luxury homes even higher, fueling a limited, but very real economic recovery in Silicon Valley.

Claudia Cowan currently serves as Fox News Channel's (FNC) San Francisco-based correspondent. She joined the network in April 2008.

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