The capacious Los Altos Hills estate commands a sweeping view of Silicon Valley. The infinity pool and hot tub gurgle pleasant notes, and its vineyard annually yields cases of Cabernet Sauvignon.
The mansion will soon be on sale for $15 million. Michael Repka of DeLeon Realty expects a healthy interest in the five-bedroom estate on three, verdant acres. “It’s really easy to get to Sand Hill Road,” said Repka, noting the famed wellspring of Silicon Valley startup cash. “I wouldn’t be surprised if we had a venture capitalist here.”
Luxury homes — even amidst the economic downturn — are in high demand.
The number of U.S. homes selling for more than $2 million shot up by 72% last year, according to an analysis by CoreLogic. Leading the charge was the Bay Area, with the world’s highest concentration of billionaires. The largest jump in the nation, up nearly 300%, came in upscale East Bay cities. San Francisco, Santa Clara and San Mateo counties weren’t far behind.
CoreLogic deputy chief economist Selma Hepp, who authored the new report on luxury homes, said stock market gains and the demand for more space for working from home during the coronavirus pandemic have driven luxury and second-home sales.
“What surprised me was how much new wealth … has been created,” Hepp said. Some of the purchases may have been driven by investors cashing in stock-market windfalls or rapid gains in crypto-currency portfolios, she said. “Housing, in the end, is a much safer asset.”
East Bay cities, including Oakland, Piedmont and Berkeley, saw the biggest jump in sales of homes over $2 million in the country, according to the CoreLogic analysis. Alameda County topped the list with a 270% increase between 2020 and 2021. Santa Clara County (up 165%) and San Francisco and San Mateo counties (up 100%) also saw some of the fastest growth in luxury sales among large, affluent communities.
Some of the rise in Bay Area homes topping $2 million can be attributed to the already high prices for Bay Area homes before the pandemic, Hepp said. The median price of a Bay Area home checks in at more than $1 million, a luxury price by most U.S. standards.
Overall sales of existing single-family homes in California grew 8% last year.
The robust high-end market comes as millions of Californians continue to struggle through the wreckage of the global health crisis. Unemployment in the service industry remains high, and tenants and landlords have requested more than $5 billion in rental assistance.
Inequality is expected to grow in the coming years. The global population of ultra-high net worth individuals, with more than $30 million in personal assets, is forecast to more than double between 2016 and 2026, according to The Wealth Report.
Luxury sales were driven by strong stock market gains through 2021, as well as the ability of high earners to work remotely and not diminish their incomes. Nationally, sales of estates for more than $20 million almost doubled during the pandemic.
Exclusive Silicon Valley communities continue to see prices climb by leaps and bounds. The average price in Atherton rose nearly 15% year-over-year in April to $9.7 million, jumped 18% in Los Altos to $4.6 million, rose 5.5% in Los Altos Hills to $5.4 million, and increased about 6% in Palo Alto to $4.3 million, according to data from Golden Gate Sotheby’s International Realty.
Homes in these cities generally spent less than two weeks on the market before being snapped up. The typical home in Los Altos sold in just a week in April.
In Sotheby’s annual report on the Bay Area, the broker said 2021 “saw a huge surge in luxury sales, with a doubling of sales across all luxury price categories.” The company even raised the threshold for considering a property “luxury” from $4 million to $5 million because so many Bay Area homes were topping the lower mark.
“There’s no shortage of money here in the Bay Area,” said Chris DuBois, vice president of sales in Alameda County for Sotheby’s. During COVID, he added, “people definitely wanted more space.”
The number of homes selling for between $2 million and $3 million in Alameda County went from about 500 in 2020 to nearly 1,100 last year, DuBois said. At the same time, the number of single-family homes in Berkeley selling for between $3 million and $5 million tripled.
The rush to East Bay communities like Piedmont and Berkeley was partially driven by city dwellers looking for suburban homes, he said. East Bay communities remain a relative bargain compared to prices in San Francisco and Silicon Valley.
One new home in Berkeley, up a hillside with a 50-step staircase to the front door, lasted just five days on the market. Bidding started at $2.5 million, and a San Francisco couple snapped it up for $3.8 million.
It wasn’t even finished, DuBois said. “It had nice views, it had a lot of things going for it,” he said, “but it needed some things.”
Repka sees the implications of ever-escalating home prices. The workers supporting the professionals buying estates are pushed out of the region by rising housing costs. “Affordability is a real issue,” he said, noting that DeLeon offers discounted services for certain workers hoping to buy in Silicon Valley.
But the high-end market remains a robust and competitive piece of the housing market and is forecast to remain strong.
“The people here are so successful in everything they do. If they have a hobby, they take lessons in it,” Repka said. “In everything they do, there’s a desire to be good. There’s a desire to win.”