Southern comfort
Area’s warm weather, big homes draw techies seeking second properties
LOS ANGELES — Tech moguls looking to buy a trophy home have long turned to Southern California.
Billionaire Larry Ellison has become almost legendary for purchasing prized beachfront Malibu properties. Amazon.com’s Jeff Bezos spent $24.5 million for a Beverly Hills compound. Sean Parker, of Napster and Facebook fame, dropped $55 million last year to buy Ellen DeGeneres’ mansion.
They were all upstaged in December when “Minecraft” creator Markus Persson, a Swedish tech billionaire, forked over $70 million for an epic custom mansion in Beverly Hills. It’s fitted with iPad-controlled fountains, vodka and tequila bars, a $200,000 candy room and an onyx dining table for 24.
‘Peaceful retreat’
But L.A.’s appeal among techies is spreading beyond the mega-rich, with tech industry buyers from Silicon Valley spending more and more time in the area — and snapping up real estate in Southern California. They include Facebook and eBay executives as well as angel investors and startup entrepreneurs.
“We’ve seen an uptick in buyers from the technology industry over the last several years — some moving to Los Angeles and some buying second homes here, as a kind of peaceful retreat,” said Charles Black, executive vice president of marketing and strategic development at Hilton & Hyland, the listing agent in the Persson sale.
Those who have put down roots in L.A. cite a mix of personal, financial and work-related reasons: Compared with the Bay Area, the weather is warmer and the lifestyle more laid-back. With San Francisco home prices at staggering highs, Southern California means more space for less money.
And with a growing tech scene, plus the lure of tech-entertainment content partnerships in Hollywood, there’s more business to do in L.A. In 2014 the Los Angeles-Long Beach region broke into the top five metropolitan areas by venture capital investment for the first time, with 171 deals totaling $2.05 billion, according to the National Venture Capital Association, whose records go back to 1995.
Last year, the number of homes in the region purchased by buyers who listed a mailing address in the greater Bay Area more than doubled from the year before, hitting the highest number since 2007, according to data provided by CoreLogic DataQuick.
Andrew LePage, an analyst with the housing data service, noted that the figures actually could be higher because wealthy buyers often purchase homes using names and addresses of other people and some might have used the new L.A. address as their mailing address.
Although he primarily lives in San Francisco, entrepreneur and investor Justin Yoshimura focused on Southern California when it came time to buy property, with the aim of making it his home away from home.
In December, he paid $2.04 million for a three-bedroom, three-bathroom Santa Monica home, $250,000 below listing. Every few days, the 25-year-old flies north for the workweek, returning on weekends.
‘It’s very cheap’
“Compared to San Francisco in particular, it’s very cheap,” said Yoshimura, who founded and later sold a loyalty platform for retailers called 500friends. “Santa Monica is one of the most desirable neighborhoods in L.A., and I have a yard with a pool and a beautiful home for less than what I would pay for an equivalent-sized condo in San Francisco.”
Tami Pardee, a real estate agent specializing in West L.A., is representing several tech buyers from up north. She estimated that 10 percent of current clients live in Silicon Valley, including engineers from Facebook and several venture capitalists. The budgets are high: anywhere from $2 million to $5 million for a home.
“They’re buying second homes — or third or fourth homes,” she said. “We’re seeing it a lot.”