DC Real Estate Versus the Facebook Effect

• May 22, 2012
• 2 Comments

by Shilpi Paul

Rowhouses in San Francisco

It is no secret that housing prices are prohibitively high in San Francisco, and with the recent creation of several thousand new Facebook millionaires, prices are set to shoot up even more.

Yesterday, Trulia’s Jed Kolko took a look at the “Facebook Metropolitan Area” — the area within a ten-mile radius of Facebook’s campus — and found that average home prices and rents are increasing at an even faster rate than in San Francisco proper. While rents increased by about 10 percent since last year in all of the San Francisco bay area, they increased by 12 percent in the Facebook Metro Area. Asking home prices also increased 1.4 percent in the area around the Facebook campus. Kolko noted that a limited area for new development and the influx of wealth will probably keep prices on the rise in the greater San Francisco area for a while:

As Facebook’s flush owners realize their gains, there’ll be even more money chasing real estate in the Facebook metro area and in the San Francisco Bay Area generally. This new wealth should push up prices more than rents since many of Facebook’s employees will make the move to homeownership.

To see how prices in San Francisco compare to DC, we got some help from a San Francisco-based friend who works in the real estate industry and has lived in both cities to help us find neighborhoods that felt similar to one another. We used Trulia’s Heat Maps for DC and San Francisco to see how home prices compared. Trulia’s data was based on home sales from February to April of this year. We used rentometer to determine average rents for two-bedroom apartments in both cities.

The findings were interesting; home prices are significantly higher in comparable neighborhoods in San Francisco, but rents seem to be about the same. We wonder if rentometer is a little outdated and hasn’t take in new data since San Fran’s huge rent increase in the past year; a quick look at livelovely.com seems to show that rents for two-bedrooms in Noe Valley are reaching into the mid-$3,000’s, for example.

This article originally published at http://dc.urbanturf.com/articles/blog/dc_real_estate_versus_the_facebook_effect/5566

2 Comments

1. chris said at 4:39 pm on Tuesday May 22, 2012:
   Interesting, not sure how to explain it. I am guessing it’s partially that DC is home to lots of affluent lawyers and lobbyists, but we lack the mega-wealthy Finance and Tech class. Plus, SF is a more established city. SF has long been one of the premiere US cities, DC has really only been turning around for the past 10-15 years. We're getting the young 20/30 something yuppies to move in, but they haven't been here long enough to put down roots and buy houses in the city. Most of the DC big money still in the suburbs.

1. Tom A. said at 9:33 pm on Tuesday May 22, 2012:
   These figures must be skewed by condo sales. The chart shows that 50% of the homes in Cleveland Park are sold for under 350k? I doubt even 5% of single families sold that low. According to Redfin, there are currently ZERO houses for sale for under 350k in Cleveland Park, but there are 15 condos. Maybe SF has a much lower percentage of condos than we do.