How well I remember my managing broker announcing at an office meeting years ago that Menlo Park was now a million-dollar town. Yes, thanks to the dot-com money flooding the Valley the average Menlo Park transaction price was now a staggering $1M! That was 1998, or maybe 1999, or maybe 2000--maybe I don't remember it all that well after all. But what I do remember, distinctly, is how proud my manager and I were that the city in which we lived and worked could call itself "a million-dollar town". Our town. A million bucks.
I don't remember this outburst of civic pride taking into account the downside of being a million-dollar town: that worthy people who, six months or a year before, could afford Menlo Park now couldn't. Maybe this escaped our attention because, back then, no one was protesting at Google shuttle stops.
San Francisco is the most recent Bay Area city to reach the million-dollar milestone, eliciting the usual oohing and aahing and clucking and other sounds of distress and astonishment from the national media. "In the souped-up world of San Francisco real estate...the cool million that would fetch a mansion on a few acres elsewhere will now barely cover the cost of an 800-square-foot starter home that needs work", says the Associated Press, reporting out of its bunker in the heart of Middle America. What, no granite?!
Who's to blame? Techies, of course--although, of course, no one's to blame--but this time, just to prove that no two real estate booms are alike, foreign buyers "accustomed to skyscraper prices for shoebox houses" are also bidding up prices and wantonly throwing cash around. "It feels like a very different city than it certainly did even 15 years ago", says one City agent. "So many of these buyers today, they have lived in London, they have lived in Hong Kong, they have lived in New York, and to them these prices are parallel. We can't compare San Francisco with median home prices even elsewhere in California because this is an international level we are dealing with."
Substitute "Palo Alto" for "San Francisco" (and "$2M" for "$1M") and you have an accurate picture of the real estate market, its principal players and the changes they've wrought here in the navel of Silicon Valley. Highly-compensated techies? Yup. Foreign buyers looking for schools, lifestyle and a safe place to park their money? Yup. Old-timers (anyone who's lived here more than five years) who see this as a battle for the heart and soul of "their" city? We got them too. People who won't be happy until Birge Clark, the venerated Palo Alto architect who back in the day designed so many of this city's signature Old California buildings, is exhumed and propped up in front of a drafting table and put to work turning Palo Alto into an architecturally-sanitized Disneyland version of its idealized self...here where everyone made their money sneering at tradition...and now they're traditionalists?
Ronald Chase, the San Francisco artist who made news recently by offering to give away over six-hundred of the three-thousand plus works he's accumulated in his eighty years, has an interesting insight into this. Asked if he resents techies pricing artists out of their old funky neighborhoods, he declines to swing at this softball. Instead, he responds that it's "inevitable". Artists are always the pioneers who turn blighted funk into the interesting funk that attracts the moneyed urban hip. Here in Palo Alto and Silicon Valley at large, the process is slightly different but the result similar: the engineers who created the wealth machine that priced out the plumbers and mail carriers were in turn priced out by a more-highly compensated generation of engineers, who in turn were priced out by a succeeding generation, and so forth, and so on, the generations seemingly shorter and shorter, until the cycles may someday be measured in months instead of years. Each supplanted generation worries about the effect its successor generation is having on Palo Alto's quality of life, either unaware of its own effect and the trauma it caused old-timers back in the day,or convinced that it raised the city to some unsurpassable level of perfection. "Okay, I'm comfortable with the Palo Alto I helped create. We can stop now."
Chase neatly sidesteps the loaded question of whether any city or neighborhood belongs to anyone--or does he? Would someone who calls displacement "inevitable" agree that Palo Alto belongs to the kids in my graduating class, Cubberley '71, priced out of their hometown decades ago? Or that I have an inalienable right to the Palo Alto I moved to in 1967, identical in all respects? Or that my wife should be able to walk down University Avenue and see the small-town downtown and small-town people she grew up with in the 1950s?
Cities are like people: the moment they stop changing is the moment they start phoning it in. We're losing good people and gaining good people. I have a feeling that's as kind as change gets.
More from JohnFyten.com, Silicon Valley Real Estate Explained (TM).
copyright © John Fyten 2014