Sales numbers reported by a leading Los Angeles luxury home sales broker show that a significant number of high-net-worth individuals from Silicon Valley are buying second homes in the Silicon Beach/Westside area of L.A.
Whether they want to be closer to business interests or to the leisure culture L.A. has to offer, the number of buyers with a Silicon Valley mailing address who purchased a home in the region that includes Bel Air, Beverly Hills, Malibu, Marina del Rey, Santa Monica, West Hollywood and the surrounding areas has been growing.
Westside Estate Agency (WEA) reported in an analysis of its monthly micro-reports an almost three-fold increase in real estate sales in the most sought-after neighborhoods in the Westside/Silicon Beach area, home of LA’s burgeoning technology industry, from 2007 to 2016, with most of the growth happening in the past two years.
WEA specializes in luxury properties valued at more than $1 million in the Westside, a market that grew 71 percent from the second to third quarters of this year and was up 11.5 percent compared to the third quarter of 2015.
According to Data provided by CoreLogic, a real estate data and analytics company based in Irvine, California, the number of buyers in the 13 zip codes loosely called Westside in the period January through mid-October 2016 who listed a property tax mailing address in the San Francisco area was 21, the highest number since before the economic downturn in 2007.
Silicon Beach has become the second-largest tech hub in the country behind Silicon Valley, Forbes reported. So it makes sense that tech executives from San Francisco may find themselves in need of a home base when they visit operations in L.A.
Stephen Shapiro, co-founder of WEA, said the high-net-worth buyers enjoy the L.A. lifestyle, and there is a larger selection of luxury estate homes to choose from in L.A. than in San Francisco.
“They are looking for property on the beach where they can relax,” Shapiro said.
He said some of the homes may only get used a few days a year, but that the strength of the Westside luxury market makes homes a good investment, which appeals to high-net-worth individuals.
WEA has facilitated Westside purchases by Larry Ellison of Oracle, Sean Parker of Facebook and Napster, Blake Kerkorian of Sling Media, and Evan Spiegel of Snapchat, and recently hosted a meeting in Silicon Valley to connect with that region’s top realtors.
Ultra-wealthy clients expect one-on-one attention, Shapiro said, and focusing on their needs has helped him grow his business from renting houses to film and record industry customers in the 1970s to a company with multi-million dollar listings.
“Most of our business comes from referrals and previous clients,” he said. “Good clients view us as a partner and use us over and over.”
A 2015 Ipsos MediaCT survey said high-net-worth millennials were the most likely age group to purchase a new home in the next year. Both millennials and Gen Xers in the category were expected to pay an average of around $5 million for new homes. High net worth is generally defined as having more than $1 million in liquid assets.
So what features are important to an uber-wealthy millennial tech executive looking for a $5 million-plus home?
The survey showed the luxury buyer is looking for a smart home that’s fully automated and wired; that is LEED-certified or meets other sustainability criteria such as solar power; has an open floor plan; and has a home gym, a theater and a safe room.
They are also looking for four or more garages and a wine cellar or wine room, and may want an outdoor kitchen and deep water dock or pool.