2014’s Priciest Silicon Valley Home Sales Share Common Threads

David Barca, vice president of Pacific Union’s Silicon Valley region, authored the following article, which originally appeared in the Palo Alto Weekly on Dec. 26.

Our local real estate markets have seen a significant uptick in sales activity at the highest end of the spectrum thus far in 2014. According to MLS data, there were 17 $10 million-plus single-family home sales in the communities of Atherton, Palo Alto, and Woodside between Jan. 1 and Nov. 30, a 70 percent increase from that same period in 2013.

This year’s 10 most expensive home sales in the aforementioned communities that were listed on the MLS through Nov. 30 ranged from $27.4 million to $13.5 million — six in Atherton, and two each in Palo Alto and Woodside. The properties run the gamut in terms of size, from a 13,558-square-foot mansion in West Atherton to a relatively modest 5,240-square-foot home in the coveted Old Palo Alto neighborhood.

Although these 10 top-dollar homes are unique on their own, a few common threads weave through the transactions:

Springtime Sales

Seven of these homes sold in the second quarter, underscoring that real estate activity heats up in the spring and early summer when sellers are likely to encounter many buyers hoping to land a home before schools close for the summer. At that time of year, even the priciest properties can attract motivated, fast-acting buyers. For example, two Atherton homes that sold in late June – one for $14 million and one for $13.5 million – were gone in just four days.

The Appeal of New

Newer homes are increasingly popular in the Bay Area, particularly given the influx of buyers from Asia that tend to prefer more recently built properties. Six of this year’s 10 most expensive homes were constructed since the turn of the most recent century, including No. 1 and No. 2: $27.4 million in Atherton and $25 million in Woodside, respectively.

That’s not to say that a home with a little more history won’t appeal to buyers, especially in superheated markets like Palo Alto. The aforementioned Old Palo Alto home, built in 1925, sold for about 2 percent more than original price, the only one of the 10 priciest properties to command a premium.

Hefty Prices Per Square Foot

Paying top dollar per square foot holds especially true at the highest end of our real estate market. The average price per square foot paid for these 10 homes was $1,935, compared with $1,100 for all properties sold in the three communities from January through November.

A three-bedroom home in Woodside that sold in September offers a drastic example of what some affluent, motivated buyers are willing to pay: At just less than 6,000 square feet, the home sold for its $25 million list price, which translates to a staggering $4,170 per square foot.

Proper Pricing Key

Our local real estate markets have recently involved frenzied competition, in which multiple bidders drive the final sales price far beyond the original. In one July instance, a brand-new home in Downtown Palo Alto sold for more than double its original price.

Six of the 10 most expensive homes appear to have been accurately priced, with half of them selling for their exact asking prices, and one fetching a modest premium. The other four homes may not have been priced correctly, allowing buyers a bit of wiggle room to write lower offers.

One such home in West Atherton, initially priced at $16.9 million, sat on the market for almost a year before selling for $15 million, 88.5 percent of its original price. This highlights the fact a property must be priced accurately in order to sell quickly, even in markets where willing buyers far outnumber the inventory of available homes.









(Photo: Flickr/Jeremy Brooks)

HP, eBay and now Symantec: Welcome to Splitsville

For Silicon Valley, 2014 is the year of the breakup.
William Hewlett and David Packard’s iconic 75-year-old Palo Alto company is dividing into a PC-printer business and an operation that sells business hardware, software and services.
San Jose-based eBay Inc. is peeling off its PayPal electronic payments unit.
Symantec Corp., based in Mountain View, is dividing its security software unit from its data storage software business.

HP, eBay and Symantec are all splitting up into smaller, more-focused companies in order to compete with younger competitors.

An activist shareholder is calling for EMC Corp. to give up control of Palo Alto-based VMware Corp.
And an analyst has suggested that it’s also time for San Jose-based Cisco Systems Inc., to separate its businesses.
“Developments speak to the growing pressures/growth challenges that mature technology stalwarts ... are facing in today’s evolving technology landscape,” Daniel Ives, an analyst at FBR Capital Markets, said in a report.
Rapid adoption of mobile, the cloud and Big Data analysis are causing an unprecedented wave of separations at some of the most powerful companies in Silicon Valley and the world.
Collectively, the companies that have announced breakups — or are being pressed to take drastic action — employ more than 30,000 people in Silicon Valley.
The 2014 wave of breakups will ripple through Silicon Valley’s workforce and its commercial real estate scene — as well as global capital markets. In one sense, it reflects a healthy economy, with even lumbering giants like Hewlett-Packard Co. showing enough agility to attempt massive change. In another sense, it poses the ultimate challenge for the corporations that form the backbone of the tech economy: How to survive over long periods of time in the face of tectonic technological change.
Along the way, rest assured of one thing: The executives who engineer Silicon Valley’s splits are likely to walk away far wealthier than they would have otherwise — and the bankers who execute the divorces are in for a fee bonanza.

The HP Way
Hewlett-Packard, which employs 5,000 workers in Silicon Valley, is so representative of Silicon Valley’s business culture that the garage where it was born is a state historical landmark, so it embodies something of the other companies on the rocks.
“All of them are facing declines in their main markets and the central question is, how do they get growth?” said Prof. Charles O’Reilly of Stanford’s Graduate School of Business.
HP answered that question successfully several times in its 75-year history, shifting from instruments to minicomputers and then on to printers and PCs.
This came from an organization in which each division was responsible for both the mature products and coming up with new ideas in growth areas. “There was an immense amount of innovation,” O’Reilly said.
All of that ended under CEOs Carly Fiorina and Mark Hurd, who tightened up the organization and drove costs down — in part by strangling funding of research and development. While that helped them to excel at PCs and printers, it blinded them to the big shifts to tablets, smartphones and the cloud.
“Now they are basically a decade behind on key innovations and have lost the engine that allowed them to remain competitive,” O’Reilly said.
If HP’s plan fails and this icon of the Valley vanishes, chances are the emotional impact will be greater than the economic toll. That’s because its rivals are similarly heavily invested in the Bay Area, including Dell, IBM and other breakup candidates like EMC and Cisco.

Unlocking ‘shareholder value’
Angelo Zino, an analyst who follows HP and EMC at S&P Capital IQ, says his firm has strong “buy” recommendations on both stocks because they are undervalued and big companies with slow growth are looking for strategic ways to extract shareholder value.
That can mean breaking up the company, selling off assets or merging with another company, something that the Wall Street Journal reported that EMC and HP each discussed and rejected.
Those talks came over the summer after EMC came under breakup pressure from activist shareholder Elliott Management Corp., one of a group of such investment protagonists that have reportedly built up a collective war chest of about $111 billion.
Elliott wants EMC to break up its so-called “federation” of three businesses — EMC’s core storage and security business, virtualization pioneer VMware and cloud computing software developer Pivotal.
CEO Joe Tucci doesn’t like the idea, telling Bloomberg, “If you break it up, you just weaken every part. So I just think it’s better together.”
If EMC, which has 2,900 employees in Silicon Valley, fails, it could have a net positive impact on Silicon Valley. That’s because the businesses of its two forward-looking tech units, VMware and Pivotal, are based here and presumably could grow, with or without EMC. Moreover, many of the upstarts challenging EMC’s core business, like Pure Storage and Nimble Storage, would benefit.

Cisco situation
Cisco, the region’s second-biggest tech employer with 15,633 local workers, doesn’t have an activist angling at it, yet, but at least one analyst thinks it should.
Mark Sue of RBC Capital Markets, after the HP news broke, said the San Jose company could break off what he calls “Cisco Solutions” — its mature networking equipment business — from a riskier innovation business he calls “Cisco Cloud.”
“Cisco Cloud could pursue bold deals to acquire early stage tech companies and invest in R&D to drive growth from new technologies and solutions without concerns about cannibalizing Cisco’s legacy platforms,” he wrote.
But another analyst, Amitabh Passi of UBS, said a Cisco breakup doesn’t make sense for much the same reason Tucci has to not want to bust EMC apart.
“Sure, different businesses have different growth profiles, but we don’t see a compelling case to break apart the company when there are cross-selling and synergistic advantages,” he said.
Stanford professor O’Reilly, though, said Cisco may need to do something to jump start innovation. It tried something in 2007 it called “boards and councils” which tasked leaders of business units with generating new ideas that could become $1 billion businesses. That led to the push into consumer lines like the once-popular — but doomed — Flip camera. The idea was tossed in 2011.
“They screwed that one up,” O’Reilly said.
As with EMC, bad news for Cisco could be good news for others in the Valley, like its software-defined networking challengers PLUMgrid in Sunnyvale and Big Switch Networks in Santa Clara.

Undoing EBay’s PayPal acquisition
EBay, with 4,700 workers in San Jose, is another company that missed opportunities to innovate with its PayPal unit, according to one of the payments company’s original executives, Keith Rabois.
“PayPal has missed the last decade in the United States,” he said on Bloomberg TV. “In the United States, there has been an incredible innovation in payments over the last decade and PayPal hasn’t participated in any of it, whether it’s Square or Stripe, Braintree — which they had to acquire — Bitcoin, and the derivative consequences of Bitcoin.”
Rabois and other members of the “PayPal mafia” applauded eBay CEO John Donahoe’s decision late last month to do the spinoff that activist investor Carl Icahn had pushed for earlier in the year.
It was a move that caught many by surprise because Icahn had ended his proxy fight months before.
“We put a list of New Year predictions together every year and eBay spinning off PayPal was on there for a few years,” said Scott Kessler of S&P Capital IQ. “If you separate these businesses, they will become more focused and more innovative. You probably create better opportunities to create more value.”
EBay’s marketplace business is facing a potential challenge from Alibaba Group Holding Ltd., its much bigger Chinese counterpart, which just raised $25 billion in a historic IPO. That means that shrinkage at eBay may not send talent or resources directly to a local competitor.
But if PayPal falters, chances are that electronics payments groups at Google Inc., Apple Inc., Square or another local payment tech startup will arise to supplant it.

Symantec’s solution
Symantec Corp., which employs about 3,000 in Mountain View, is the latest big Valley tech name to announce a breakup.
It unveiled its plans on Thursday to separate its legacy data security business from the data storage software business it bought when it paid $13.5 billion for Veritas Software in 2004.
Slumping PC sales have cut the need for Symantec’s antivirus software but, as with Cisco, analysts are divided on the wisdom of the move.
Richard Williams of Summit Research in a note to shareholders written before the split was announced said he thinks it is a good idea: “In this case both Symantec (the security software company) and the erstwhile Veritas were viable businesses on their own.”
Also writing before the announcement, Kevin Buttigieg of MKM Partners wasn’t so sure, saying the move won’t help growth and operating margins and it’s not clear who the buyers of either unit might be.

 “A break-up could be potentially very disruptive,” he wrote. “Following the acquisition of the storage business with Veritas Software, Symantec missed several quarters while consolidating back- and front-office functions in an effort to drive greater efficiencies.”
That kind of reasoning perks the ears of shareholders and activist investors circling Silicon Valley companies. With the split-ups of HP and eBay already announced, and the potential for more, 2014 is poised to become a signal year in the region’s business history.
And while the gyrations that the companies — and their employees — go through may cause discomfort, think of it as growing pains for Silicon Valley. 

Article and Photo Sourced From:  http://www.bizjournals.com/sanjose/print-edition/2014/10/10/hp-ebay-and-now-symantec-welcome-to-splitsville.html?s=image_gallery

Number of underwater homes falls 40 percent as Silicon Valley rebound continues

Continuing last year's trend, Silicon Valley's economic recovery has resulted in more homeowners coming up from under water, with the latest figures revealing that about 8 percent of properties remain at values lower than what they were pre-recession.

The Santa Clara County Assessor's Office announced Wednesday that the expected recovery means more people will see their property taxes increase, but maintained that the hit -- which can be as high as 24 percent in some areas -- is a good thing in the bigger picture.

"Equity is coming back, and people are breathing a sigh of relief," said David Ginsborg of the assessor's office. "Properties are worth more than what people paid for it. Of course that means an increase in taxes, but nobody likes to buy a piece of property and have it worth less than they paid three years later."

This Tuesday, Aug. 21, 2012, photo, shows an exterior view of house with a pending home sale sign in Palo Alto, Calif. (Paul Sakuma/AP Photo)

By state law, when a property's market value drops below what was paid for it, the assessor has to recalculate taxes to reflect that decline. But if the price bounces back, the assessor can increase the property valuation at more than the 2 percent annual limit set by Proposition 13, up to its original tax base.

"It's a good news bad news thing," said Colleen Badagliacco of Legacy Real Estate in San Jose, a former chair of the California Association of Realtors task force on distressed properties. "The lord giveth and the lord taketh away -- we all like to buy low and sell high and keep property taxes low and reap the equity but it doesn't always work that way."

According to the report, in 2012 there were 136,000 residential and commercial properties assessed below their value when purchased. In 2013, that number dropped to 81,000.

"This year, even with surging market values, as many as 40,000 properties are expected to remain below their Proposition 13 value," said Assessor Larry Stone.

Stone said the area seeing the largest growth this year is South County -- Gilroy and Morgan Hill.

"Those were the areas hardest hit, where property values declined by as much as 60 percent," said Stone. "This year they are leading the resurgence."

Other areas of the county, particularly in the north, saw property values surge much more quickly. Now that the southern areas are bouncing back, property owners there can expect to see valuations rise significantly.

"Gilroy will see increases as much as 24 percent, Morgan Hill as much as 19 percent," said Stone, who added that it also depends on the type of property, with condominiums seeing a higher assessment growth than single family homes.

Stone said that property owners should find solace in the fact that every $1 dollar in increased taxes means a $100 jump in equity.

Badagliacco said there's been a building boom in South County, and some of the reassessed value is due to new properties that list for $700,000 or more that boost the value of the area in general.

"It definitely helps pull them up," she said. "It drives people to Morgan Hill or Gilroy to look at homes, and lets say you're a savvy shopper and you see a home for $800,000 to $900,000 with all the bells and whistles. You'll find a fairly good selection of older homes with a similar square footage and might be able to save $100,000 by looking at them."

Homeowners will receive notices of assessed values after they are finalized by July 1. Those who disagree with the new appraisal can contest the judgment; Instructions will be provided along with the notice.

Article and Photos Sourced from:  http://www.mercurynews.com/business/ci_25898399/second-year-more-santa-clara-county-homes-resurface

Gardening goes high-tech in Silicon Valley

Gardening is getting an infusion of high tech as startups in Silicon Valley and elsewhere turn their technological skills to the popular hobby.

A social gardening and food-growing app is being developed by a San Francisco startup, and an affordable hydroponics setup for the home gardener is just reaching the marketplace, developed by a Southern California startup with offices in Berkeley.
Beyond that, big agriculture is going high tech, too. The inaugural Silicon Valley AgTech conference in Palo Alto this month drew a big crowd of consumers and major agricultural companies.

Laura Boughner, of Oakland, removes onion grass from a rose bed at the Morcom Rose Garden in Oakland, Calif., Saturday, April 26, 2014. Gardening is getting an infusion of high tech as startups in Silicon Valley and elsewhere turn their technological skills to the popular hobby. (ANDA CHU/Staff )

"This is like the perfect storm," said the event's organizer, Roger Royse of the Royse Law Firm in Palo Alto. "We have venture capital, we have technology and we have agriculture, but tech did not seem to be talking to agriculture until we started this group."
While the conference was more about technologies for large-scale farming, Royse said tech is coming to home gardening too.
"There's a lot for the home," he said. "Everybody seems to be getting into this growing-their-own-food thing. It's become a community in itself, so there's social networks growing up around it."
Gardening apps have blossomed at the Apple and Android app stores. There are dozens of planners, calendars and plant guides available, including garden monitors and popular apps like Gardening: The Ultimate Guide (free, iOS), and The New Sunset Western Garden Book ($14.99, iOS). Garden Manager (free, Android) sends alarms when it's time to water and fertilize your plants. With the Organic Gardening Planting Planner (free, iOS) or OG Planting Planner (free, Android), you can create your own garden and be alerted to planting and harvesting times and weather conditions.
Another gardening product soon to make its debut is an app from Sausalito-based Earthwire, which is preparing to launch a social app for gardeners. It's a kind of Facebook for the trowel and mulch set, according to its developers, a father and son team.
"We have built an interactive, mobile application that allows people to connect locally and regionally, communicate on what they're growing in their own backyards and form consortiums to grow that food and share it together," founder Drew Youngs said while taking a break at the AgTech conference.
Once pretty much confined to growing pot indoors, hydroponic farming has become a big business in growing fruits and vegetables, and has dawn interest from hobbyist gardeners. But hydroponics has remained a fairly demanding craft, requiring skills beyond those of the average gardener.
Hydroponics involves growing plants without soil -- in water, sand or gravel with added nutrients. Regular measurements of the acidity, electrical conductivity and temperature of the nutrient solution are necessary, as is care in adding just the right amount of nutrients. A startup called Sustainable Microfarms, based in Los Angeles and the Bay Area, has developed a small system called the Genesis Dosing Controller that takes the guesswork out of hydroponics, allowing at-home gardeners to grow everything from lettuce and tomatoes to strawberries and peppers.
"We build a product that takes out the need for you to have any prior understanding of hydroponics or plant biology or engineering," said Sanjay Rajpoot, who started the company while he was still at student at the University of Southern California.
"The reason why hydroponic farming or at-home farming hasn't caught on is because it takes a lot of work, a lot of effort and costs a lot of money," Rajpoot said. He said his system monitors the accidity, the concentration of nutrients and the temperature, and automatically maintains the optimal level of nutrients to make sure the plants are always growing at their best.
At $750, though, it may be beyond the reach of some amateurs even though it's much cheaper than competing systems and runs on a 5 to 100 gallon reservoir. On 5 gallons of water, you can grow five tomato plants, or 100 plants on 100 gallons -- a reservoir size that the company says is not uncommon.
"You are looking at a faster grow rate, less labor, and higher turnover rate in comparison to soil growing," said Ryan Tjan, a company spokesman.
A granddaddy of hydroponics, Lawrence Brooke of General Hydroponics, calls home hydroponic farming "a growing potential marketplace." He's waited a long time for it to happen.
Starting in Berkeley in 1976, Brooke grew peppers and sweet basil for a trendy Berkeley restaurant, later moving to Sebastopol. Now based in Santa Rosa, Brooke said the company sells growing systems and nutrients worldwide.
"I don't care if they grow pot or food, but systems for home gardeners are slowly finding their way out of the closet and into garden," he said. "You can grow the best food in world with hydroponics."
Richard Aylard, owner of Rasa Hydroponics and Organics in San Jose, said some of his customers are home gardeners and some are businesses, including several that grow mixed salad greens for restaurants. Aylard said he uses a home hydroponics setup to grow kale, lettuce, basil and heirloom tomatoes.
"A lot of people are into growing their own food. Neighbors and friends will say your plants are doing so well, I want my vegetables to look like that. That's how we get a lot of customers," Aylard said.

Apple donates $500,000 to Silicon Valley anti-poverty group

The tech giant has teamed up with Google, LinkedIn, and others in an effort to fight poverty during a time of rising tensions in Silicon Valley.








FORTUNE -- Apple (AAPL), the world's most valuable tech company, has donated $500,000 to the anti-poverty initiative SF Gives, Fortune has learned from two sources familiar with the matter.

The Cupertino, Calif.-based tech giant joins a list of 15 corporate contributors that includes Google (GOOG), LinkedIn (LNKD), and Zynga (ZNGA). Launched in early March, SF Gives is the brainchild of Salesforce.com (CRM) CEO Marc Benioff and Daniel Lurie, CEO of the nonprofit Tipping Point. The goal: have 20 businesses contribute $500,000 each, or $10 million total, to fund local charitable programs.

The arrival of an initiative like SF Gives comes at a precarious time for Silicon Valley. Critics of the thriving tech industry have blamed companies for a meteoric rise in rents and increased evictions. In recent months, protesters have blocked Google's employee commuter buses, held a rally at the annual Crunchies tech awards gala, and stood outside the San Francisco home of Google Ventures partner Kevin Rose, distributing flyers and holding signs maligning Rose as a "parasite" and "leech." Many people also complain about the tech industry's limited track record in philanthropy, despite the huge profits generated by some of its biggest names.

For the most part, signing up high-profile tech companies hasn't presented a huge challenge thanks to Benioff and Lurie's Silicon Valley connections. Still, while SF Gives is close to hitting the $10 million mark by its Wednesday deadline, 10 or so companies have declined to chip in. According to Lurie, their reasons vary. "For some, they feel like they're doing their own thing: They're giving back [already], and they're involved," he says. Other companies don't generate revenue and feel it's inappropriate to give away their investors' money. "Then, there are others who just fundamentally believe that a company shouldn't be doing philanthropy and that individuals should do it," Lurie says.

SF Gives wouldn't be the first time Apple has made a charitable contribution. The company has given $70 million to The Global Fund to Fight AIDS, Tuberculosis and Malaria, raised from the sale of (PRODUCT) RED-themed devices and donated tens of millions to Stanford hospitals. Apple declined to comment about its donation to SF Gives.

From Lurie's perspective, local tech businesses that are transforming the Bay Area's financial and demographic landscape have a responsibility to improve the lives of everyone in the community. Many companies, like the ones contributing to SF Gives, are excited to close what he calls an "opportunity gap" for the 1.3 million Bay Area locals currently living below the poverty line, he says. Each company that makes a donation to his organization can appoint an employee to a kitchen cabinet of directors that will decide which programs to fund.

While SF Gives is predicated on the idea of giving back to the community, it could also help rehabilitate Silicon Valley's reputation with local residents who are critical of the tech industry and its limited track record of philanthropy. Adds Lurie: "We'll win some people over, and some we won't. But it won't stop us from continuing to push."

article and photos sourced from:  http://tech.fortune.cnn.com/2014/05/05/apple-donates-antipoverty/