Tag Archives: San Francisco

Bubble Trouble: Silicon Valley & San Francisco Housing Markets Head South

The underlying dynamics changed in August and have worsened since. And, this is still the tech boom.

It’s high time to unload houses and condos in Silicon Valley and San Francisco, one of the most expensive housing markets in the US. Sellers are now flooding the market with properties. Inventory listed for sale in those three counties that make up the area – San Francisco, San Mateo, and Santa Clara – surged by 102% in November compared to November last year, to 3,931 listings.

In each of the past three months, the number of active listings (new listings plus old listings that have not sold yet but haven’t been pulled from the market) was the highest since August 2014. The chart below shows the year-over-year percentage change in active listings. The red bars in the chart mark the beginning of bubble trouble in this housing market (all data via the National Association of Realtors at realtor.com):

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-active-listings-percent-change-2018-11.png

When inventories are piling up because sales are slowing, sellers have to figure out where the market is, and the market is where the buyers are, but buyers have become listless and refuse to participate in bidding wars. They see the prices and they do the math with higher mortgage rates, and they walk. So, motivated sellers have to do something to move the properties. And they started cutting prices.

In November, the number of properties on the market with price cuts, at 1,038, skyrocketed by over 400% year over year.

The chart of the year-over-year percentage changes in price cuts in Silicon Valley and San Francisco shows that the change of direction in the market occurred around August. By September, price cuts hit the highest level since Housing Bust 1:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-price-reductions-percent-2018-11-.png

The median asking price for the three counties had peaked in May at $1,369,200 and has since fallen by $132,100 or by nearly 10% from the peak, to 1,237,100. Median asking price means half are listed for more and half are listed for less. It differs from the median selling price at which homes are actually sold. Compared to November last year, the median asking price dropped by $71,200 or 5.4%:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-median-asking-price-2018-11.png

The chart below shows the percentage change of median asking prices, which clarifies further the underlying dynamics in the market:

https://wolfstreet.com/wp-content/uploads/2018/12/US-Silicon-Valley-San-Francisco-median-asking-price-yoy-change-2018-11-.png

After years of blaming the surging home prices in the area on a shortage of inventory for sale, the industry is suddenly faced with all kinds of inventory coming out of the woodwork, just as sales are slowing and as mortgage rates are rising, while the affordability crisis bites the market.

Buyers have lost their blind enthusiasm. They’re still buying, but at lower prices, and they’re taking their time.

Yet the hiring slowdowns – or worse, layoffs – at area tech companies and the broad wind-down of countless and hopelessly cash-burning start-ups – both a prominent feature of every tech downturn here – haven’t even started yet. The area is still booming and companies are still hiring, and this housing downturn is starting during the tech boom, and not as a consequence of a tech meltdown. Though share prices of local companies such as Google, Apple, Facebook, and many others have taken a big hit since the summer, we’re still far from a classic tech meltdown. That is yet to come.

The Case-Shiller home price index lags by about three months, but it too is now picking up the changes in the market: Seattle home prices dropped at fastest pace since Housing Bust 1, while the first price declines cropped in San Francisco, Denver, Portland, and other markets. Read…  The Most Splendid Housing Bubbles in America Deflate

Source: by Wolf Richter | Wolf Street

***

New-Home Prices Drop Nearly 7%, Supply Spikes to Highest since Housing Bust 1

Home builders not amused.

***

Update on the Housing Bust in Sydney & Melbourne, Australia

This is not exactly slow motion anymore.

Advertisements

San Francisco Bay Area Expats Are Driving Up Home Prices From Boise To Reno

In the not-too-distant future, it’s not improbable that low-wage laborers in San Francisco will be replaced by ubiquitous machines (the city is already home to the first restaurant run by a robot). And not just fast food workers, either – the jobs of teachers, fire fighters and law enforcement will all be assumed by robots, as NorCal’s prohibitively high cost of living and astronomical home prices spark a mass exodus of families earning less than $250,000 a year.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24cali.JPG?itok=aZQnQjNE

While this scenario might seem like an exaggeration (and it very well might be), we’ve paid close attention to the flight of Californians who are abandoning the Bay Area for all of the reasons mentioned above, as well as what Peter Thiel (himself a Bay Area emigre) once described as a political “monoculture” that has made California inhospitable for conservatives. And as if circumstances weren’t already dire enough for would-be homeowners (even miles away from San Francisco, relatively modest homes still sell for upwards of $2 million), a report published earlier this year by realtor.com illustrated how a lapse in new home construction has led to a serious imbalance between home supply and the increasing demand of the state’s ever-growing population, leading to a cavernous supply gap.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24california.jpg?itok=ltrugbRz

With this in mind, it shouldn’t be surprising that Californians comprise a majority of the residents moving into other states in the American West – even states like Idaho where the culture is very different from the liberal Bay Area. This week, Bloomberg published a story about how Californians constitute an increasing share of out-of-state homebuyers in small cities like Boise, Phoenix and Reno, which are significantly more affordable than California, and offer some semblance of the walkable urban environment that nesting millennials crave.

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.24maptwo.JPG?itok=fB95lYCO

As Californians sell their homes in the Bay Area in search of roomier, cheaper locales, they’re bringing the curse of surging property prices with them. In fact, the influx of Californians is the primary factor leading to some of the largest YoY price increases in the country, as Bloomberg explains:

About 29 percent of the Idaho capital’s home-listing views are from Californians, according to Realtor.com. Reno and Prescott, Ariz., also were popular. These housing markets are soaring while much of the rest of the country cools. In Nevada, where Californians make up the largest share of arrivals, prices jumped 13 percent in August, the biggest increase for any state, according to CoreLogic Inc. data. It was followed closely by Idaho, with a 12 percent gain.

Even in places like deep-red Idaho, these transplants are beginning to remake the terrain in their own image, as food co-ops and Women’s Marches starting to populate the landscape. Businesses are rushing to Boise to meet every desire of the newly arrived Cali transplants.

D’Agostino, the Bay Area transplant, isn’t ashamed of her progressive views and is finding her place: at the natural foods co-op downtown, the Boise’s Women’s March last year, and with the volunteer group she founded to collect unused food for the needy. But it was also good to get out of her comfort zone, she says. “I can’t remember a time when it’s ever been this divided, so the fact that I can have some interaction with people who might not have exactly the same beliefs as me, that’s fine,” she says. “As long as we can respect each other.”

It’s not new for politics to factor into moving decisions—it’s just that in the age of Trump, tensions get magnified. “What’s different now is how far apart the parties are ideologically,” says Matt Lassiter, a professor of history at the University of Michigan.

Politics aside, businesses are rushing into Boise to fill every West Coast craving. In nearby Eagle, the new Renovare gated community is selling 1,900- to 4,000-square-foot homes with floor-to-ceiling glass and “wine walls” that start at $650,000—a bargain by California standards, says sales agent Nik Buich. About half of buyers are from out of state, he says.

One couple even opened a “boutique taqueria” and another transplant is preparing to start a blog about his experience moving to Idaho.

Julie and John Cuevas left Southern California a year ago to open Madre, a “boutique taqueria” in Boise that would make many of their fellow transplants feel at home. It’s more fusion than typical Mexican fare, with taco fillings including kimchi short rib and the popular “Idaho spud & chorizo.” It would have cost them three times as much to open a restaurant in California, says John, a former chef at a Beverly Hills hotel.

John Del Rio, a real estate agent sporting a beard, baseball cap, and sunglasses, just registered moving2idaho.com, where he’s planning to blog about all the things that make his new home great. He left Northern California two years ago with his wife in search of a place with less crime, lighter regulation, and more open space. Del Rio, a conservative with a libertarian bent, is reassured to see average people walking through Walmart with handguns in their holsters. In Idaho, he says, “nobody even flinches.”

In Boise alone, Californians made up 85% of new arrivals, and have driven home prices up nearly 20% in the span of a year. One realtor described the attitude of transplants as like “they’re playing with monopoly money.”

Nestled against the foothills of the Rocky Mountains, Boise (pop. 227,000) has drawn families for decades to its open spaces and short commutes. It’s been particularly attractive to Californians, who accounted for 85 percent of net domestic immigration to Idaho, according to Realtor.com’s analysis of 2016 Census data. While it has always prided itself on being welcoming, skyrocketing housing costs fueled by the influx is testing residents’ patience. In his state of the city speech last month, Mayor David Bieter outlined steps to keep housing affordable and asked Boise to stay friendly: “Call it Boise kind, our kindness manifesto,” he said.

It’s especially easy for buyers who have sold properties in the Golden State to push up prices in relatively cheap places because they feel like they’re playing with Monopoly money, Kelman says. The median existing-home price in Boise’s home of Ada County was $299,950 last month—up almost 18 percent from a year earlier, but still about half California’s. The influx is great news for people who already own homes in the area, says Danielle Hale, chief economist for Realtor.com. “But if you’re a local aspiring to home ownership, it feels very much that Californians are bringing high prices with them.”

And now that Trump’s tax reform package has been implemented, it’s only a matter of time before a whole new batch of Californian home owners, unwilling to forego their SALT tax write offs, start looking for greener pastures in low-cost red states.

Source: ZeroHedge

San Francisco “Poop Patrollers” Make $185,000

We wish we could say this was a satire piece, but a new story in the San Francisco Chronicle reveals just how lucrative collecting shit actually is

It’s but the latest in a string of shocking revelations to hit headlines throughout the summer exposing how deep San Francisco’s crisis of vast amounts of vagrant-generated feces covering its public streets actually runs (no pun intended). 

We detailed last week how city authorities have finally decided to do something after thousands of feces complaints (during only one week in July, over 16,000 were recorded), the cancellation of a major medical convention and an outraged new Mayor, London Breed, who was absolutely shocked after walking through her city: they established a professional “poop patrol”.

https://www.zerohedge.com/sites/default/files/inline-images/Poop%20patrol%20San%20Fran.jpg?itok=C9m3CJfI

As described when the city initially unveiled the plan, the patrol will consist of a team of five staffers and a supervisor donning protective gear and patrolling the alleys around Polk Street and other “brown zones” in search of everything from hepatitis-laden Hershey squirts to worm-infested-logs. At the Poop Patrol’s disposal will be a special vehicle equipped with a steam cleaner and disinfectant.

The teams will begin their shifts in the afternoon, spotting and cleaning piles of feces before the city receives complaints in order “to be proactive” in the words of the Public Works director Mohammed Nuru, co-creator of the poop patrol initiative. 

While at first glance it doesn’t sound like the type of job people will be knocking down human resources doors to apply for, the SF Chronicle has revealed just how much each member of this apparently elite “poop patrol” team will cost the city: $184,678 in salary and benefits.

https://www.zerohedge.com/sites/default/files/inline-images/SF%20Muni%20Castro%20St%20Station.jpg?itok=8LrvFb6U

The surprisingly high figure is buried in the middle of the SF Chronicle’s story on Mayor London Breed’s morning walks along downtown streets with her staff, unannounced beforehand to her police force and department heads so she can view firsthand what common citizens endure on a daily basis. 

After quoting Mayor Breed, who acknowledges, “We’re spending a lot of money to address this problem,” the following San Francisco Public Works budget items are presented:

  • A $72.5 million-a-year street cleaning budget
  • $12 million a year on what essentially have become housekeeping services for homeless encampments
  • $2.8 million for a Hot Spots crew to wash down the camps and remove any bio-hazards
  • $2.3 million for street steam cleaners
  • $3.1 million for the Pit Stop portable toilets
  • $364,000 for a four-member needle team
  • An additional $700,000 set aside for a 10-member, needle cleanup squad, complete with it’s own minivan

And crucially, there’s now “the new $830,977-a-year Poop Patrol to actively hunt down and clean up human waste.”

The SF Chronicle casually notes in parenthesis, “By the way, the poop patrolers earn $71,760 a year, which swells to $184,678 with mandated benefits.

https://www.zerohedge.com/sites/default/files/inline-images/San_Francisco_s__poop_patrol.jpg?itok=t01wpbhi

Though we’re sure the city’s giant $11.5 billion budget can handle the burgeoning clean-up costs, likely to blow up even further, we’re not sure how property owners paying hefty land and sales taxes which have soared over the past years will react. 

And with limited spots open on the new poop patrol team, and at a salary and benefits package approaching $200K, we can imagine people might give second thought to the prospect of shoveling shit on a professional basis

Perhaps the only question that remains is, what kind of resumé does one have to have to rise to the top of pile? 

Source: ZeroHedge

Seasoned Silicon Valley Techies Struggle On Six-Figure Salaries

https://i0.wp.com/media.breitbart.com/media/2017/03/dollar-bills-getty-640x480.jpg

Several Silicon Valley employees, including a software engineer for Twitter who made a $160,000 salary, were mocked online after complaining about their living standards in an article for The Guardian.

In the article, entitled “Scraping by on six figures? Tech workers feel poor in Silicon Valley’s wealth bubble,” the employee complained that his six-figure salary was “pretty bad” for the area.

“I didn’t become a software engineer just to make ends meet,” proclaimed the employee“Families are priced out of the market.”

“The biggest cost is his $3,000 rent – which he said is ‘ultra cheap’ for the area – for a two-bedroom house in San Francisco, where he lives with his wife and two children,” reported The Guardian sympathetically. “He’d like a slightly bigger place, but finds himself competing with groups of twenty somethings happy to share accommodation while paying up to $2,000 for a single room.”

“Prohibitive costs have displaced teachers, city workers, firefighters and other members of the middle class, not to mention low-income residents,” they continued. “Now techies, many of whom are among the highest 1% of earners, are complaining they, too, are being priced out.”

The Guardian also covered other Silicon Valley employees in the piece who were earning “between $100,000 and $700,000 a year” but still allegedly had trouble “making ends meet.”

“One Apple employee was recently living in a Santa Cruz garage, using a compost bucket as a toilet. Another tech worker, enrolled in a coding boot camp, described how he lived with 12 other engineers in a two-bedroom apartment rented via Airbnb,” The Guardian reported.

“It was $1,100 for a fucking bunk bed and five people in the same room. One guy was living in a closet, paying $1,400 for a ‘private room,’” one man complained, while a female employee added, “We make over $1m between us, but we can’t afford a house… This is part of where the American dream is not working out here.”

Other established San Francisco residents mocked tech employees for their complaints.

“Scraping by in the Bay Area on a six-figure salary sure must be difficult!joked San Francisco Chronicle reporter Lizzie Johnson.

Source: By Charlie Nash | Breitbart

Rare Video Footage from 1906 Shows Amazing Bustle of San Francisco’s Market Street

A Trip Down Market Street‘ was shot on April 14, 1906, just four days before the San Francisco earthquake and fire, to which the negative was nearly lost. It was produced by moving picture photographers the Miles brothers (Harry, Herbert, Earle and Joe). Harry J. Miles hand-cranked the Bell & Howell camera which was placed on the front of a streetcar during filming on Market Street from 8th, in front of the Miles Studios, to the Ferry building.

A few days later the Miles brothers were en route to New York when they heard news of the earthquake. They sent the negative to NY, and returned to San Francisco to discover that their studios were destroyed.

Filmed during the era of silent film, Sound Designer and Engineer Mike Upchurch added sound to enhance the incredible video and immerse viewers into the hustle and bustle of San Francisco’s Market Street at the turn of the 20th century. Upchurch adds:

Automobile sounds are all either Ford Model T, or Model A, which came out later, but which have similarly designed engines, and sound quite close to the various cars shown in the film. The horns are slightly inaccurate as mostly bulb horns were used at the time, but were substituted by the far more recognizable electric “oogaa” horns, which came out a couple years later. The streetcar sounds are actual San Francisco streetcars. Doppler effect was used to align the sounds.

Market Street – San Francisco 1906 – After the Earthquake – DashCam View – Silent

Source: Twisted Sifter

Blackstone Deal Hammers San Francisco Commercial Real Estate

Signs of a bust pile up.

https://s14-eu5.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Frealtywebspot.com%2Fwp-content%2Fuploads%2F2013%2F12%2FSan-Franciscojpg.jpg&sp=ceebd64f920ab89d649ffcd73201b4f0

Private-Equity firm Blackstone Group is planning to acquire Market Center in San Francisco, a 720,000 square-foot complex that consists of a 21-story tower and a 40-story tower.

The seller, Manulife Financial in Canada, had bought the property in September 2010, near the bottom of the last bust. In its press release at the time, it said that it “identified San Francisco as one of several potential growth areas for our real estate business and we are optimistic about the possibilities.” It raved that the buildings, dating from 1965 and 1975, had been “extensively renovated and modernized with state-of-the-art systems in the last few years….” It paid $265 million, or $344 per square foot.

After a six-year boom in commercial real-estate in San Francisco, and with near-impeccable timing, Manulife put the property on the market in February with an asking price of $750 per square foot – a hoped-for gain of 118%!

Now the excellent Bay Area real estate publication, The Registry, reported that Blackstone Real Estate Partners had agreed to buy it for $489.6 million, or $680 per square foot, “according to sources familiar with the transaction.” The property has been placed under contract, but the deal hasn’t closed yet.

If the deal closes, Manulife would still have a 6-year gain of nearly 100%. But here is a sign, one more in a series, that the phenomenal commercial real estate bubble is deflating: the selling price is 9.3% below asking price!

The property is 92% leased, according to The Registry. Alas, among the largest tenants is Uber, which recently acquired the Sears building in Oakland and is expected to move into its new 330,000 sq-ft digs in a couple of years, which may leave Market Center scrambling for tenants at perhaps the worst possible time.

It’s already getting tough

Sublease space in San Francisco in the first quarter “has soared to its highest mark since 2010,” according to commercial real estate services firm Savills Studley. Sublease space is the red flag. Companies lease excess office space because they expect to grow and hire and thus eventually fill this space. They warehouse this space for future use because they think there’s an office shortage despite the dizzying construction boom underway. This space sits empty, looming in the shadow inventory. When pressure builds to cut expenses, it hits the market overnight, coming apparently out of nowhere. With other companies doing the same, it creates a glut, and lease rates begin to swoon.

Manulife might have seen the slowdown coming

Tech layoffs in the four-county Bay Area doubled for the first four months this year, compared to the same period last year, according to a report by Wells Fargo senior economist Mark Vitner, cited by The Mercury News, “in yet another sign of a slowdown in the booming Bay Area economy.”

Announced layoffs in the counties of San Francisco, Santa Clara, San Mateo, and Alameda jumped to 3,135, from 1,515 in the same period in 2015, and from 1,330 in 2014 — based on the mandatory filings under California’s WARN Act. But…

The number of layoffs in the tech sector is undoubtedly larger, because WARN notices do not include cuts by many smaller companies and startups. In addition, notices of layoffs of fewer than 50 people at larger companies aren’t required by the act.

The filings also don’t take attrition into account – when jobs disappear without layoffs. “There is a lot of that,” Vitner explained. “When businesses begin to clamp down on costs, one of the first things they do is say, ‘Let’s put in a hiring freeze.’ I feel pretty certain that if you had a pickup in layoffs, then hiring slowed ahead of that.”

And hiring has slowed down. According to Vitner’s analysis of state employment data, Bay Area tech firms added only 800 jobs a month in the first quarter – half of the 1,600 a month they’d added in 2015 and less than half of the 1,700 a month in 2014.

“Employment in the tech sector has clearly decelerated over the past three months,” he said. “As job growth slows and the cost of living remains as high as it is, that’s going to put many people in a difficult position.”

It’s going to put commercial real estate into a difficult position as well. During the boom years, the key rationalization for the insane prices and rents has been the rapid growth of tech jobs. Now, the slowdown in hiring and the growth in layoffs come just when the construction boom is coming into full bloom, and as sublease space gets dumped on the market.

Here’s what a real estate investor — at the time co-founder of a company they later sold — told me about real estate during the dotcom bust. All tenants should write this in nail polish on their smartphone screens:

It was funny in 2000 because the rent market was still moving up. We rejected our extension option, hired a broker, and started looking around. As months went on, we kept finding more and more, better and better space while our existing landlord refused to renegotiate a lower renewal. We went from a “B” building to an “A” building at half the rent with hundreds of thousands of dollars of free furniture.

The point is that tenants are normally the last to find out that rents are dropping.

“All it takes is a couple of big tech companies folding and the floodgates open, causing the sublease market to blow up, rents to drop, and new construction to grind to a halt,” Savills Studley mused in its Q1 report on San Francisco. Read…  “Market is on Edge”: US Commercial Real Estate Bubble Pops, San Francisco Braces for Brutal Dive

by Wolf Richter | Wolf Street

House Prices In ‘Gayborhoods’ Have Soared 20% In Three Years

Commercial Street in Provincetown on Cape Cod.

Gay Americans can take pride in these house prices.

Over the last three years, home prices in neighborhoods popular with cohabiting, married or partnered gay men have grown by an average of 23%, according to research by the real-estate website Trulia. Similarly, prices have risen in neighborhoods that are popular with cohabiting, married or partnered gay women — by an average of 18%. “In honor of Gay Pride this year [the last weekend in June in many U.S. cities], we wanted to revisit these neighborhoods and find out what’s changed,” says Trulia housing economist Ralph McLaughlin.

Among the areas characterized as male “gayborhoods,” prices rocketed 65% to $260 per square foot in the 92262 ZIP Code of Palm Springs, Calif., between 2012 and 2015 and rose 47% to $768 in the 94131 ZIP Code, which comprises the Noe Valley, Glen Park and Diamond Heights neighborhoods of San Francisco. One theory: “If you are not raising children, you have two male incomes and have more money to devote to improve their home environment,” says Gary Gates, a demographer and research director of the Williams Institute for Sexual Orientation Law and Public Policy at the University of California.

Among neighborhoods popular with lesbians, prices rose 64% to $389 per square foot in the Redwood Heights/Skyline area of Oakland, Calif.

Many of these neighborhoods are in metro areas that have also experienced sharp price gains. But housing in almost all of the so-called gayborhoods was more expensive than in nearby sections, Trulia found. Homes in the Castro neighborhood of San Francisco cost $948 per square foot, which is 34% more expensive than the San Francisco metro area as a whole, while West Hollywood, Calif., and Provincetown, Mass., are 123% and 119% more expensive, respectively. Guerneville, Calif., was the only area less expensive than its wider metro-area comparable, but only by 2%.

Where gay men’s neighborhoods are getting more expensive
ZIP Code and city Median price per sq. foot, June 2012 Median price per sq. foot, June 2015 % change in price per sq. foot, June 2012–June 2015
92262: Palm Springs, Calif. $158 $260 65%
94131: Noe Valley/Glen Park/Diamond Heights, San Francisco $522 $768 47%
92264: Palm Springs, Calif. $174 $240 38%
48069: Pleasant Ridge, suburban Detroit $137 $188 37%
94114: Castro, San Francisco $699 $948 36%
90069: West Hollywood, Los Angeles $611 $802 31%
75219: Oak Lawn, Dallas $185 $225 22%
33305: Wilton Manors, Fort Lauderdale, Fla. $249 $292 17%
19971: Rehoboth Beach, Del. $193 $203 5%
02657: Provincetown, Cape Cod, Mass. $604 $616 2%
Average for all gay men’s neighborhoods $188 $238 23%
Note: Only ZIP Codes with at least 1,000 persons are included in the analysis. Average growth rate is weighted by number of gay households, so the listed percentage increase is different than the simple percentage change between average price per foot in 2012 and 2015. Data in this report are different from our report in June 2012 because of new MSA definitions and observed time period of listings (month vs. previous year in the June 2012 report)

Using the 2010 Census, McLaughlin calculated the share of households with same-sex couples in every ZIP Code. Focusing on the top 10 among these ZIP Codes, he then calculated the median price per foot of homes for sale in each ZIP Code on Trulia as of June 1, 2015, and compared it with June 1, 2012. He excluded neighborhoods with populations of less than 1,000. Gayborhoods are defined in the census as those with the highest proportion of same-sex cohabiting couples. (The census doesn’t measure sexual orientation.)

Why the discrepancy in price growth between the two? “The top gay-men neighborhoods are places where prices were already high relative to their metros and were not hit as hard during the housing crash as other less expensive neighborhoods,” McLaughlin says. Gay female couples are more than twice as likely to have children as are gay male couples, he adds, “so it could be that gay women seek up-and-coming neighborhoods with good schools to raise their children.”

Many of the neighborhoods on the list of gayborhoods are also places where people are less likely to have children, Gates says. “This survey is picking up neighborhoods where proportionally, fewer households have children in them,” Gates says. “This survey could be picking up a very practical economic reality.” Wellfleet and Provincetown, both on Cape Cod in Massachusetts; Rehoboth Beach, Del.; and Palm Springs are also popular among retirement communities, he says. “The Castro in San Francisco, while popular with both gay men and lesbians, is not high for child-friendly amenities for families,” he says.

Where gay women’s neighborhoods are getting more expensive
ZIP Code and city Median price per sq. foot, June 2012 Median price per sq. foot, June 2015 % change in price per sq. foot, June 2012–June 2015
94619: Redwood Heights/Skyline, Oakland, Calif. $237 $389 64%
30002: Avondale Estates, suburban Atlanta $114 $173 52%
02130: Jamaica Plain, Boston $303 $414 37%
94114: Castro, San Francisco $699 $948 36%
95446: Guerneville, north of San Francisco $270 $335 24%
01060: Northampton, Mass. $197 $216 10%
19971: Rehoboth Beach, Del. $193 $203 5%
01062: Northampton, Mass. $190 $196 3%
02657: Provincetown, Cape Cod, Mass. $604 $616 2%
02667: Wellfleet, Cape Cod, Mass. $326 $323 -1%
Average for all gay women’s neighborhoods $133 $157 18%
Note: Only ZIP Codes with at least 1,000 persons are included in the analysis. Average growth rate is weighted by number of gay households, so the listed percentage increase is different than the simple percentage change between average price per foot in 2012 and 2015. Data in this report are different from our report in June 2012 because of new MSA definitions and observed time period of listings (month vs. previous year in the June 2012 report)

There are other possible limitations to house-price rises within a gayborhood. A neighborhood may need to be “socially liberal” for an increase in same-sex households to increase house prices, a 2011 study by researchers at Konkuk University in Seoul and Tulane University in New Orleans found. They looked at Columbus, Ohio, and, adjusting for factors such as housing, crime and school quality, analyzed house prices with how residents voted in a 2004 ballot initiative on the Defense of Marriage Act. They found a “positive and significant” impact on prices, but only in more liberal locales.

Diversity is good for the economic development of cities and housing prices, according to Richard Florida, an urban theorist and author of “The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life,” a book that was republished last year a decade after it was first released.

Florida found that high-tech hot spots followed the locational patterns of gay people. Other measures he created, such as the Bohemian Index, which measured the prevalence of artists, writers and performers, had similar results. “Artistic and gay populations,” he wrote, “cluster in communities that value open-mindedness and self-expression.”

By Quentin Fottrell. Read more in Market Watch