The Buyer Who Swiped 830 El Camino Del Mar For $9,990,000

“Lord let there be one more boom”

Right on.

A rock star. A poet. An astrophysicist. A philosopher. Matt Cain. A Kennedy.

sf – so by simply buying this house, he’s “flashing it around in a most tasteless manner”????
He’s worked hard and earned his money – which is more than you can say for some trust-fund douche who’s inherited his money from mommy and daddy and would hardly be considered a “desirable steward of that wealth”.
Or are you just trolling?

wow, sf. so a wealthy lolly gagger is more deserving of such a beautiful and desirable homes because he/she didn’t have to work for it. this is such arcane and unenlightened thinking…

Anyone know when Sequoia is going public? The partners there must really need the liquidity.

Wow. It is pretty shocking that someone might think that inherited wealth is preferable to earned wealth. And the idea that money needs to be “stewarded”?! It isn’t like finite resources such as air, water or land; money doesn’t give a shit. If dude wants to spend every last penny, why do you care?

point is that realtors have been frothing here and elsewhere that some wave of IPOs will re-blow the dot-com 1.0 bubble. Can’t wait!
But . . . not gonna happen. Even if dot-com 2.0 ends up creating more wealth and has more staying power than 1.0, which is doubtful. In 1999 a web site was born, IPO’ed six months later, then quickly rose 500%. This created many dozens of millionaires or nearly so. Repeat 2 or 3 times every WEEK. Lots of house buyers there.
Now, VCs and a handful of founders rake in big coin but the masses receive very little. The VCs won’t, and know they don’t have to, hand over shares or options to the plebes. I have a good friend at Twitter who is a senior developer, 12 years out of Stanford with an engineering degree. Heads a good-sized team. He makes $130,000 and got a small number of RSUs. These vest over 5 years, bringing him about 30k a year more if he sells in the secondary markets, which he hasn’t yet. A good job but nothing close to a 1999 jackpot. New legislation ups the number of permitted stockholders to 2000, from 500, before you need to “go public.” This will slow the IPO pipe even more. Jack Dorsey might buy a couple houses, but a lot fewer than 10,000 new stock-option millionaires!
In this case, history will not repeat itself. Too bad for the realtors. But very good for homebuyers and muppet investors as they avoid buying into another bubble.

the realtors I know are more unhappy about the low sales volume than the “dearth of good inventory.” fewer buyers means less commission. Duh.

Anon1, all I do is carefully analyze the hype and I follow up and it drives you realtors nuts.
So the boosters tell us JCP as an anchor is going to “save” midmarket but I know retailing so I say it’s not going to do well as an anchor in an affluent area. I post information about some other malls anchored only by a JCP in affluent areas, and it drives the realtors and boosters nuts. They just want to spout, with no analysis. I do the analysis. It’s frequently less rosy than the spouting.
So boosters tell us the Zynga IPO will generate hundreds of millionaires all buying houses at any price, again, with NO analysis. Just spouting. They crank up their PR machines and they convince some newspapers to run with it. Hmmm, that hasn’t been my experience. So I dig. Doesn’t look to be the case – the options are mostly going to be underwater. NVJ brings up that RSUs are better than options because they always have value. So I look into it. I analyze it. No, taxes are high. No millionaires off the RSUs. Sorry.
You’ll note the papers don’t follow up. That’s because many many articles you read are actually written by publicists of interested parties and submitted. The papers make some minor edits and publish. The realtors aren’t going to hire publicists to push an article that the Zynga millionaires did not materialize. So I follow up.
You’ll also note the papers didn’t look at the taxes on the RSUs. No one did. No one. No one but me. Can any of you say you understood the issue as clearly as after I posted about it. Did you think anon1 was going to tell you any of this. No wonder he wants me to stop.
It’s mostly hard numbers, but sometimes you do have to make some reasonable assumptions and I post my assumptions, and examples for anyone to question and reanalyze if they want to.
I just can’t see how that gets your panties in such a bunch. Except for the fact that you can’t just spout any more. I think it irritates you. Sorry if the truth hurts. I’ve been saying that the tech wealth is already baked in to prices well before the IPO, not that it doesn’t matter.
That’s what I just reposted above. Can you go up, reread my post about no twitter and square IPOs and identify where I said anything different? If not, you probably want to quit while you are ahead.
No wonder you change your identity every year or so. I would too.

@tipster
“When was the twitter IPO? When was the Square IPO?
Apparently, IPOs have far less of an impact on the real estate market than they used to.”
Where’s the analysis in that statement? You imply by the fact that a rich guy bought an expensive house without a prior IPO that it somehow invalidates the idea that tech IPOs will have an impact on real estate, but that is flawed logic.
By the way, I did an analysis on a recent thread on Facebook and showed that it’s IPO was going to result in hundreds of new millionaires, possibly around a thousand, and that was when FB was lower than it was today.
On top of that, it doesn’t really matter if it’s millinoinaires, 900,000-aires, or 300,000-aires. Any significant number of people getting a large windfall at the same time will have an impact on the real estate market. This effect is already obviously happening right now in SF and many peninsula cities where tech folks tend to live.
Lastly, most of us who think an IPO can have an impact don’t think that the impact can only exist post IPO, it can happen before as well, but the IPO releases a lot of wealth, and will have a greater impact post IPO.

Tipster failed to address being called-out on his statement about a lack of a Twitter IPO.
To make my point again, do you think people are not getting liquid?
“Twitter found one such buyer recently: Saudi Prince Alwaleed bin Talal, who announced in December that he had acquired a $300 million stake in Twitter. The deal was done entirely through private share purchases from existing stockholders, Fortune reported.”
http://money.cnn.com/2012/02/14/technology/twitter_stock_sales/index.htm
And guess what, it’s not only social media companies that are doing/have done this.

I saw that list of tipster’s use of approximate terms that you had posted, R. I didn’t really understand how that pertained to the discussion though. Just because a person has used approximations doesn’t mean that they don’t also use hard numbers.

R, sorry I the “editor” deleted that post. I do speculate, but I state when I do.
I don’t recall any qualifiers in the article about all the hundreds of Zynga millionaires, nor do I recall NVJ qualifying his statement that RSUs are guaranteed to have value. I think it’s better to use qualifiers where appropriate.
Joshua, I will try to respond but I need more info. First, when is the timeframe you are talking about. Was that investment right around the time HP announced twenty six thousand layoffs? Did it say whether the Prince’s investment was to employees or could it have been VC firms with investors outside of the area? If it didn’t, why did you not use a qualifier?
Hopefully, my points are clear. I DO understand your and lyqwyd’s points. Of course there is wealth being created. But my point is that by the time of the IPO, that tech wealth is already largely baked into prices. Yes, some of it is locked up via RSUs that have limited liquidity until after the IPO (banks will loan, but you do have to pay interest), but that isn’t where the big money usually is.
The big money is from options, the vested ones are not that illiquid, and if you look at Zynga, the pre-IPO sharespost price was $14 and now it’s bouncing between $5 and $6. Someone with vested options at $4 has lost a huge amount of money.
So wealth is declining for a lot of people too. I didn’t see where that was factored into your analysis.

Tipster, stay on topic. You wrote, “When was the twitter IPO? When was the Square IPO? Apparently, IPOs have far less of an impact on the real estate market than they used to. Who’d have thunk?”
Point being founders, employees and investors now sell a whole bunch of stock before the IPO. It happened with FB, ZNGA, P and a bunch of other companies. There’s a lot of liquidity sloshing around regardless of IPOs.
You were wrong in your post above, just own up to it and move on.
p.s. though your HP reference is way off topic, do note that those layoffs are scheduled to be completed in 2014, and there is no indication as to what geographical areas will be affected.

“Point being founders, employees and investors now sell a whole bunch of stock before the IPO.”
Yes, that WAS my point. Do you not understand this? That was my exact point. It’s been my point for months.
And if they do that, home prices will be affected before the IPO. And so the impact of the IPO will not be as great as it was, because prices have already been affected. If 35 people sell in the months before the IPO and 35 people sell in the months after the IPO, assuming the share prices stay the same, the IPO should not be making any difference in house prices.
And that was what I was saying in my original post above: this is proof that A)people sell lots of stock before the IPO and B) they can then buy houses with that cash. But when the IPO comes around, prices already reflect the ongoing cash out, which occurs over time.
With two exceptions:
1. Share prices have been generally lower after the IPO than they were before it. So the IPO should generally represent the peak.
2. Some people are locked up and may be reluctant to take a loan, so the IPO unlocks them. But these people generally have not been the heavy hitters.
Now there is lots to home prices, not everyone in the bay area works for 5 companies. But with respect to the handful of companies that IPOd, the difference of the IPO was much less than in years past *because* the employees can get out before the IPO, unlike in earlier times.
Capiche?

Your post actually makes the most sense you’ve made in years.
Except for this: “1. Share prices have been generally lower after the IPO than they were before it. So the IPO should generally represent the peak.”
I mean, if you take out ZNGA, LNKD, YELP and really all recent IPOs except FB, then your statement might be true. But if you include all recent local IPOs, most have gone up (and yes, some back down) since IPO.

lyqwyd, it’s interesting that you mentioned rents as some evidence of your point. As soon as I clicked “post” above, I realized I should have included rising rents in my discussion! Look around. That too is a state-wide and nationwide phenomenon. Again, SF is no different and there is zero evidence that “tech” is driving anything. Rents always rise after a recession as people who doubled up or moved back with mom and dad set out on their own again. Because people still cannot, and do not want to, buy houses (as seen with continuing low prices), rents have seen bigger than normal leaps this time around as far more “move-outers” are renting rather than buying (again, see low sales volume in SF and everywhere). None if this is any different in SF and provides no support to an theory of a tech/housing boom.
While SF can diverge from the bigger picture short-term (we saw that in 1997-2000), that is not happening now and there is just no evidence of it. People in Riverside who look no further than Riverside would also conclude that “Riverside is uniquely seeing improvement.” SF is following right along with the broader trend. Crawling slowly out of a massive hole, indeed bigger than the country generally, but still not even close to anything resembling fast-rising prices. Probably just keeping up with inflation.

And here’s my deleted response:
“The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,491, up from $1,473 in April, and down from $1,533 a year ago. Adjusted for inflation, last month’s payment was 47.0 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 60.8 percent below the current cycle’s peak in July 2007.”
And in factual news:
30 year fixed rate from April 1989: 11.05%
30 year fixed rate from July 2007: 5.71%
30 year fixed rate from June 2012: 3.69%
I’ll give you one guess as to why the monthly payment is down.. Any guesses? Come on RfR, you can figure it out!

tipster knows little about tech and even less about facebooks RSUs. as NVJ pointed out, taxes are not due until 6 months after the IPO for most fb’ers. however, this is not because of the lockup per se but rather their vesting schedule. see this forbes article for an explanation:
http://finance.fortune.cnn.com/2012/05/18/facebook-stock-spooked-taxes/
or go back to fb’s S-1 for the final word:
http://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm
RSUs granted prior to January 1, 2011 (Pre-2011 RSUs) under our 2005 Stock Plan vest upon the satisfaction of both a service condition and a liquidity condition. The service condition for the majority of these awards is satisfied over four years. The liquidity condition is satisfied upon the occurrence of a qualifying event, defined as a change of control transaction or six months following the effective date of our initial public offering. (p 48)
note the last line.
the mystery is why tipster bothers, especially since he is so wealthy that even in a year like 2009 when his income was cut in half, he spent less than 5% of it on housing, transportation, clothing, food, entertainment and vacations. seems like he should have better things to do with his time.

^anon at 4:36. While rents have gone up around the country for the reasons you cite, rents in SF have gone up more (both on a percentage basis, and even more on an absolute basis). According to trulia, SF had the third highest annual percentage increase of major markets nationwide. The (relative) strength of our economy, and in particular the health of tech, is clearly driving that diversion from the mean. Oh, and rent increases of 11% per year are not “just keeping up with inflation”. You need to do a little more research before making your assertions.
http://money.cnn.com/2012/04/05/real_estate/buy-rent-home-prices/index.htm

@anon
From SF Chronicle (original data & quotes are from WSJ) article on April 25, 2012:
“While rents in other parts of the country are rising around the pace of inflation, at 2.7%, the average rental price in San Francisco shot up by 15.8% from a year ago.”
and
“San Francisco rental-home owners and brokers say they are being deluged with applicants for apartments that would have barely gotten a nibble a year or two ago. Some property managers say they are boosting rental prices by 30% to 40% when units turn over.”
do you think that is the same as what’s happening nationwide?
Another article, this time from business week, on May 11, 2012:
“Twitter’s relocation next month to Mid-Market, an area better known until now for drug deals, graffiti and vagrants, has sent rents up as much as 60 percent in a business district that didn’t exist a year ago.”
and
“That type of growth is making San Francisco the best U.S. office market as demand from Internet and social-media companies surges”
another thing that’s happening nationwide and nothing to do with tech right?

c’mon lyqwyd, some random articles citing nothing?
Take a look at http://www.google.com/url?sa=t&rct=j&q=detroit%20rent%20increase&source=web&cd=1&ved=0CFoQFjAA&url=http%3A%2F%2Fwww.coseoproperties.com%2Fstorage%2FApt%2520Michigan%2520Survey%2520Mid%2520Year%25202011.pdf&ei=3WziT-XIJMGU2AWNxKjgCw&usg=AFQjCNF-UuZOcCxmoFkr1iHcGJ8re5tgFg&cad=rja
“The largest increase in rent growth from the 4th
quarter of 2010 occurred in the Detroit market,
where rent increased from $623 to $1,148
or 84.3%.”
84.3% increase in 6 months?!?! Wow, Detroit must have hordes of tech workers!
Seriously, I don’t even dispute that tech workers are a decent chunk of the local economy and affecting rents. I’m just saying that elsewhere it is some other segment of the economy (mining, farming, drilling, finance – all booming and non-existent in SF – we’re missing out!), and the ultimate impacts on home prices are just about the same as in SF. Still slow.

Price is not decreasing YOY in San Francisco this spring and now summer. Per MLS SFRs, D1-D9 4/1/12 – 6/20/12: 461 sales $586 psqft. SFRs, D1-D9 4/1/11 – 6/20/11: 453 sales $545 psqft.

And Rates YOY?

@RfR
“Trying Again
If all this Tech Money is Flooding BA housing
Why are Guys paying less in Morgage”
The money is going into down-payments.
Also, last year rates were at about 4.5%, now they are about 3.75%, meaning that although the payments are down, interest rates are down more, so while payments are down, the corresponding mortgages are slightly higher.

@tipster
Note that I quoted you directly and you said options. If you want to chastise somebody, make sure the error wasn’t yours.
And why the focus on Zynga, it’s irrelevant. What matters is the IPOs in aggregate. Facebook is paying the the taxes for it’s employees, others are still using options. Zynga is a nice example for your purposes, but it’s only one of a number of IPOs.

hey guys — the purchase made the national rag sheets and confirmed that Jack Dorsey is the buyer: http://www.radaronline.com/exclusives/2012/06/twitter-tycoon-jack-dorsey-new-home-photos

super hideous house btw. i hope he tears it down.

Like most 2012 purchases, getting this home for $10mm looks pretty good in the context of recently $6mm listed, $11mm traded 178 Sea Cliff.