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What's Happening to Real Estate in Palo Alto? It’s Getting Frothy Again

Are we heading for another bust?

The other day as I was getting groceries out of my car, an enterprising young man approached me and asked if I was willing to sell my house. 

“My client, a senior executive at Facebook, is interested in moving into this neighborhood,” he explained.

The man was well dressed and clean cut, and his business card indicated he worked in real estate, so I said, “There is a house down the street selling for $6.3 million. I’ll sell you mine for an even $6 mil.” 

Without even batting an eyelash, he said, “I’ll talk to my client and let you know.” Then he walked off to find the next willing seller.

The last time this happened was in the summer of 1999. About once a week, a real estate broker would knock on my door asking if I’d sell. The clients—Cisco, Yahoo, Ebay executives—wanted to live in the neighborhood, and they had money to spare. Six months later the dot-bomb hit, and no one knocked again, until now.

While the rest of the country struggles to crawl out of the hole that is the Great Recession, it is clear the Palo Alto economy is booming. The Palo Alto Weekly ran a cover article recently called “Growing Pains.” A surfeit of new housing developments planning to rely on Caltrain were reviewed. The article claimed there is a mandate for thousands of new homes in our area and then proceeded to detail the challenges our neighborhoods are facing from increased traffic, parking and overall congestion. 

And it’s not just overcrowding on our streets; our schools are jam-packed too. In the past few years, , largely as a result of the rental market and the many new families moving into the area to take advantage of the plethora of jobs. Officials continue to debate the need to open another elementary school. The district has even resorted to hiring a “residency officer” to ensure students actually live in the neighborhood of the school in which they are attending. With all of this chaos, is it any wonder our

I had hoped the lessons learned from the recent fiscal crisis would bring some measure of humility to Our Fair City. More neighborliness, more restraint, less bling and more barbecue. And it did, for a while. But now that the rah-rah is apparently back, I worry what it means for our children and our community.

According to The New York Times, the real estate market continues to see depressed pricing, low demand and weak sales. At least that is the case everywhere else. Here, things are bubbling. 

Palo Alto real estate broker Bruce Whitson says that “up until a month ago or so, buyers and sellers were at a standoff, waiting for the other to blink. Well, buyers blinked. Properties are being purchased with quick closes and many with multiple offers at or above asking price.” His guess is that things will only get better.

But I wonder, better for whom? As we leapfrog from town to city, what gets lost in the process? There has been ongoing construction on my street for the last four years. Cottage after cottage has been torn down and replaced with a monolith. I don’t know a single new neighbor who has moved into these homes. Admittedly, I’m too busy to bring over the requisite welcome cookies, but they are too busy to even say hello on the rare occasion we pass each other on the street. It seems to me, these new neighbors aren’t looking for a neighborhood; they just want the address.

So if Mark Zuckerberg wants to buy my house for $6 million, he can have it. Don’t get me wrong. I love my house. But there are a lot of things I can do with that money, and, if history truly does repeat itself, we are in for another fall. Of course, then I'd have to figure out where I would live, and I hear the rental housing market is tight. Oh well, better luck next time, Mark.

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