'Facebook Effect': Palo Alto Home Prices Up, Inventory Down

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Mark Zuckerberg may have been content renting a modest bungalow, but chances are the coming wave of Facebook millionaires have something more grand in mind. At least that's the thinking behind the so-called "Facebook effect"-- the anticipated demand for high-end housing following the company's May IPO. Since the beginning of the year, prices have climbed more than 10 percent in Palo Alto, Calif., where the company is headquartered.

But while prices have gone up, inventory has declined by a whopping 57 percent. Some brokers suggest that potential home sellers are holding onto their houses, waiting for the IPO to pop so that they can list for higher prices. The increased demand can also be attributed to non-Facebook buyers trying to get into the market before it gets even more crazy expensive. According to Altos Research, the median price for a single-family home in the neighborhood is just over $2 million.

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Homes in the Hot Palo Alto Market
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'Facebook Effect': Palo Alto Home Prices Up, Inventory Down

Location: 878 Moreno Ave.
Price: $2.7 million
Beds/Baths: 5/3
Sq. Ft.: 2,688

This home, located on a spacious 7,800 sq. ft. lot, was completely remodeled two years ago. It has modern, top-of-the-line appliances, and dual-zone heating and air conditioning.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 878 Moreno Ave.
Price: $2.7 million
Beds/Baths: 5/3
Sq. Ft.: 2,688

The house features mahogany hardwood floors and lots of space with high ceilings.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 878 Moreno Ave.
Price: $2.7 million
Beds/Baths: 5/3
Sq. Ft.: 2,688

Outside there is a large fenced in yard with a patio.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 646 Forest Ave.
Price: $1.85 million
Beds/Baths: 3/3
Sq. Ft.: 1,633

This stylish contemporary modern home is just a block and a half from downtown Palo Alto.

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Location: 646 Forest Ave.
Price: $1.85 million
Beds/Baths: 3/3
Sq. Ft.: 1,633

Enjoy private outdoor entertainment spaces and bright rooms with vaulted ceilings before going out on the town.

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Location: 646 Forest Ave.
Price: $1.85 million
Beds/Baths: 3/3
Sq. Ft.: 1,633

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 1856 Mark Twain St.
Price: $2.7 million
Beds/Baths: 4/3
Sq. Ft.: 2,590

Check out this beautiful home just blocks away from a park, library, and a community center.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 1856 Mark Twain St.
Price: $2.7 million
Beds/Baths: 4/3
Sq. Ft.: 2,590

It features hardwood floors, high ceilings, and a separate artist studio.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 1856 Mark Twain St.
Price: $2.7 million
Beds/Baths: 4/3
Sq. Ft.: 2,590

See the listing for more details, or see more homes for sale in Palo Alto, Calif.

Location: 1565 Webster St.
Price: $5.5 million
Beds/Baths: 5/6
Sq. Ft.: 5,485

This Spanish-style home in Old Palo Alto features high exposed-beam ceilings, regal arching doorways, and a terracotta tile roof.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 1565 Webster St.
Price: $5.5 million
Beds/Baths: 5/6
Sq. Ft.: 5,485

In true California style, the backyard contains an immense flagstone covered patio, with a well tended garden complete with fruit trees.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 1565 Webster St.
Price: $5.5 million
Beds/Baths: 5/6
Sq. Ft.: 5,485

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 3085 Alexis Drive
Price: $3.75 million
Beds/Baths: 5/4
Sq. Ft.: 4,270

This home is beautifully situated on a 1.43 acre lot, with open views of greenery and hills.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 3085 Alexis Drive
Price: $3.75 million
Beds/Baths: 5/4
Sq. Ft.: 4,270

It boasts an enormous newly updated kitchen with a breakfast area, and two updated master suites, one of which is equipped with a balcony.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 3085 Alexis Drive
Price: $3.75 million
Beds/Baths: 5/4
Sq. Ft.: 4,270

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 3309 Kenneth Drive
Price: $1.6 million
Beds/Baths: 4/3
Sq. Ft.: 2,027

This “one of a kind” Eichler has a wrap around side and back patio.

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Location: 3309 Kenneth Drive
Price: $1.6 million
Beds/Baths: 4/3
Sq. Ft.: 2,027

It also features enlarged bedrooms, and always feels bright with extensive lighting and ceiling soffits.

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
Location: 3309 Kenneth Drive
Price: $1.6 million
Beds/Baths: 4/3
Sq. Ft.: 2,027

See the listing for more details, or see more homes for sale in Palo Alto, Calif.
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But is this localized housing boom just the beginning of another bubble? Broker Michael Dreyfus warns that if Facebook's IPO doesn't go as well as hoped, the Palo Alto housing market can face "a great big crash." And fears were rekindled when Facebook reported that revenue fell between the fourth quarter of 2011 and the first of 2012.

Meanwhile, check out this gallery of some of the high-end Palo Alt homes where Facebook's newly rich might be living.

See also:
Home Sales See Best 1st Quarter in 5 Years, Realtors Report
Buying a Home Won't Get Much Cheaper

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