| March 2012
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By Corrie M. Anders
One of Noe Valley’s newest residents is Richard Straver, a cofounder of the e-commerce business Tinypay.me. He just landed a studio for $2,500. Photo courtesy Richard Straver
Richard Straver could well be a poster boy for the latest tech boom that is creating high demand for homes and apartments in Noe Valley.
Straver was staying in San Bruno last summer after the company he cofounded relocated its headquarters from the Netherlands to downtown San Francisco.
In January, in high spirits because his girlfriend had left Holland to join him, Straver moved into a studio apartment on Grand View Avenue that cost $2,500 a month.
“It’s a large hunk of my salary, but I can afford it,” said Straver, co-owner of Tinypay.me, a Web platform that helps people sell goods online.
“It was like I don’t really care right now” about the price, said the 27-year-old entrepreneur. “It’s a nice, furnished apartment. It has sun in the morning, a patio looking over the city, and my girlfriend thinks it’s great.”
Make Way for More Friends
For more than a decade, Noe Valley has been a popular bedroom community for high-tech and biotech workers—many with top incomes—who commute to jobs in Silicon Valley. Google, Apple, and other tech giants have made life easy by providing free shuttle service to and from the neighborhood.
Now our quaint urban village is in line for a new wealth infusion, thanks to a dramatic growth in well-paying jobs in San Francisco and the prospect of instant millionaires when Facebook this spring holds an initial stock offering (IPO) that will raise billions of dollars for the company and its employees.
“We’re having another tech renaissance, and it’s definitely helping Noe Valley, for sure,” said Danielle Lazier, a real estate agent with Zephyr, whose clientele includes large numbers of tech workers.
“People are starting to buy, and I’ve heard more than once that part of their motivation to act now is that prices are going to go up because of the Facebook IPO and other IPOs,” said Lazier.
Indeed, the city is experiencing a tech surge that is mildly reminiscent of the late 1990s.
According to Laurel Bettike Barsotti of the Mayor’s Office of Economic and Workforce Development, high-tech companies have predicted they will add 8,000 new employees to San Francisco in 2012. That number will swell the ranks of tech workers in the city to over 38,000, Barsotti said.
Among the crowd will be workers from Twitter, Zynga, Linked-In, and Salesforce.com, all of which have announced expansion plans. And many of the newcomers may be looking for homes in Noe Valley.
Local merchants likely will embrace the new wave, even as others worry that higher rents and home prices will accelerate the exodus of waiters, clerks, and teachers from the neighborhood.
Matt Cain’s House Sold
Dozens of people toured a newly built condominium complex that opened last month at 28th and Church streets, with prices ranging from $849,000 to just over $1.5 million.
On the first day, a Google employee put in an offer to buy one of the six units.
A few blocks away, the Diamond Street home of San Francisco Giants pitcher Matt Cain attracted large crowds to open house tours last month.
“I thought it was great,” a curious Richard Mullen, a marketing specialist with the semiconductor firm Cisco Systems, said after inspecting the $1.8 million property.
In less than a week, the house had a buyer.
Nick Lambourne and wife Kirstin Smart recently bought a house on Sanchez Street that affords easy freeway access to Lambourne’s job in Sunnyvale. Photo by Pamela Gerard
Noe Valley has long been a magnet for tech workers who want to live in the city. The neighborhood has drawn many midlevel professionals, as well as executive luminaries like Twitter cofounder Evan Williams and Sun Microsystems cofounder Jonathan Schwartz.
The latest is Laura Shawver, CEO of Cleave Biosciences, a biopharmaceutical firm that last fall received $44 million in investor funding. In November, Shawver paid $1.3 million for a two-bedroom home on Alvarado Street.
Shawver, who made a job-related move nine years ago from Bernal Heights to San Diego, promised herself then that “if I ever moved back, I’d like to live in Noe Valley. So that’s what I did.”
Shawver said the appeal was a combination of Noe Valley’s charming houses, its central location, and the “great vibe”—qualities that also lured Nick Lambourne from an apartment in SoMa.
Lambourne, 33, and his wife, Kirstin Smart, 32, bought a $1,430,000 home on Sanchez Street that provided Lambourne with good freeway access to his job in Sunnyvale, where he is a senior manager for Broadcom, a semiconductor firm.
And “it seems like the kind of neighborhood we’d want to settle in for a longer term,” added Smart. “It has a nice family feeling and it felt more European—we could walk to everything.”
Rental Market Heats Up
Real estate specialists confirm that an influx of residents is pumping up rents and home sales in San Francisco in general and Noe Valley in particular.
The demand for apartments has been so strong that San Francisco bungeed from seventh place to the second hottest rental market in the U.S.—after Silicon Valley, of course—according to Marcus & Millichap, a national real estate firm.
The company forecast that rents in San Francisco would increase 5.9 percent to an average of $1,947 per month.
But landlords in Noe Valley will boost rents this year at an even faster pace, according to Jeffrey Mishkin, a Marcus & Millichap executive. New tenants may easily pay 10 percent more than the previous renter.
Anyone who’s looking for an apartment on Craigslist can feel the pain already.
A sampling of Craigslist postings shows that the $1,562 average rent sought last month for a studio didn’t change much from a year ago. But the price for a one-bedroom apartment was up 18 percent, to $2,516. A two-bedroom rental was up a stunning 48 percent, to $3,432.
Homes Values Rising
Buyers, too, may be paying more to live in the neighborhood, where the typical house already costs above $1 million.
“They’re young and they’ve got money, and they like the feel of a neighborhood like Noe Valley,” said Patrick Carlisle, a real estate analyst with Paragon Real Estate. “They’re not Pacific Heights people. They want low-key.”
Carlisle said the demand for homes began to kick in last year, and “it’s really rocking and rolling in Noe Valley right now.”
At the end of the third quarter in 2010, for example, only 33 percent of the houses for sale in District 8 found buyers. The percentage rose to 50 percent and stayed there for most of 2011. Then it bounced above 60 percent in the fourth quarter, “which is insanely high,” said Carlisle.
The sales continued to climb during the first five weeks of this year, he said, making “the fourth quarter of 2011 look like a low period.”
Still, few are predicting a return to the frenetic days of 1999-2005, when bidding wars were rampant and anxious homebuyers plied sellers with cookies and tearful letters.
“Is it going to be the dotcom days revisited? Probably not. I don’t see that special kind of mania,” said James Wavro, who owns a Noe Valley-based rental property management firm.
“We had a perfect storm back then,” he said, the phenomenon of a brand new industry being created at a time when the nation’s economy was in generally good shape.
Surge Lifts Some Boats
Tech’s economic impact extends beyond apartment prices and home sales.
Honeycomb, a hair salon in the “mini-mall” on 24th Street near Sanchez, this month doubled its size from four chairs to eight, after taking over the space next door that once housed Big Discount Cleaners.
“We had gotten too big,” said owner Gillian Hanson. “We knew we had to expand.”
In addition, Hanson also plans to stay open several hours past her normal 7 p.m. closing time at least one day a week to accommodate late-working professionals.
“Their buses don’t get in till 7 to 8 o’clock,” she said. “And we’ll do a little happy hour with beer and wine and perhaps bring in a deejay and make a little party.”
PlumpJack Wines also has experienced an increase in traffic at the store at 4011 24th St.
Starting last year, “We’ve been seeing more new customers, more young people, and more people with good disposable incomes,” said Elio Longobardi, the store’s manager for the past nine years.
Rather than expensive Cristal or Dom Perignon champagnes, Longobardi said newcomers tend to gravitate toward distilled spirits to make the cocktails they’ve discovered on the bar and restaurant scene.
District 8 Supervisor Scott Wiener applauded the “positive economic impact” of people patronizing “many of the small businesses and going out to restaurants” in Noe Valley.
But he warned that the high-tech resurgence also created “more competition for housing, which raises property values and makes it harder for people to buy, and raises rents.
“That’s a real challenge,” he said, adding that the city needed to produce more housing to accommodate moderate-income workers.
It’s too late for Longobardi, PlumpJack’s manager. Unable to afford a house in Noe Valley, he moved two years ago to Oakland.