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Welcome to the richest place in America

06-11-2014

Welcome to the richest place in America that you've never heard of: Average house price in Atherton, California rockets to $6.7m as Silicon Valley moguls and Chinese tycoons battle for its mansions

Plots in Atherton, Zip Code 94027, are selling for $1,100 a square foot
Prices have soared 40 percent in last six months alone since it appeared in the Forbes list of most expensive zip codes

80 percent of buyers pay in cash, realtor who has bought a private plane to show properties to clients, claims

Town sees frenzied bidding wars between Silicon Valley billionaires and Chinese and Indian tycoons
The 'super nova' property bubble means that many of the buyers purchase a mansion without ever seeing it

But town doesn't have any designer boutiques or Michelin-starred restaurants
Google chief executive Eric Schmidt and has a home there
By Richard Alleyne In Atherton, California

It doesn't have any designer boutiques and certainly no Michelin-starred restaurants.

There are no sweeping vistas of coast or countryside and its streets are not peopled by the fashionable and the famous.

Yet Atherton, a small suburban town in northern California, has quietly overtaken the likes of Beverley Hills and uptown Manhattan to be the richest piece of earth in America.

 

 

The flat wooded plain, five miles square, has been crowned the most expensive Zip Code in the US by Forbes, with average house prices running at $6.7m and plots going for $1,100 a square foot.

But now its secret is out and values have shot up by a further 40 per cent in the last six months alone.

'To say it's on fire is an understatement,' said Eugene Korsunsky, a local realtor. 'It’s supernova hot. There are billionaire buyers from all over the world falling over themselves for a piece of Atherton.

'Mansions over the price of $10m are being paid for in cash in just a matter of days - often without being seen.'

The area, nestled between San Francisco and San Jose, has always been affluent ever since it was the favoured location for the summerhouses of local industrialists and businessmen.

But the rise of Silicon Valley and the international super-rich, especially in China and India, have seen prices skyrocket in the last few years.

The town is 45 minutes south of San Francisco, and just 15 minutes from the headquarters of Facebook, Google and most of the major technology giants in Silicon Valley.

Billionaires among its 7,000 residents include the executive chairman of Google Eric Schmidt, Hewlett Packard's president and chief executive officer Meg Whitman, and the investor Charles Schwab.

But being named the most expensive Zip Code – 94027 – has sparked a frenzy among the Chinese and Indian buyers who want the cache of living in the town.

In the first quarter of 2014 there were seven sales above $10m in the area.

Ken DeLeon, of DeLeon Realty, has already sold $300m worth of property this year including a mansion for $14 million to a Chinese buyer in less than three days.

His sales are so buoyant he has bought an aircraft to show perspective buyers an aerial view of the area and a Mercedes Limousine to whisk them around its oak-lined streets.

'There is no doubt it is the best market in America even better than Manhattan,' he said. 'Being named the most expensive area in the U.S. has become self-fulfilling.

'Chinese buyers are so prestige driven and want to be able to say they live in the richest town in all America. Once they have bought a house they often knock it down to build a bigger one.'

He said that he felt that the boom was based on solid foundations and not a bubble.

'I think it is built on real wealth,' he said. 'Not just speculation. I think we have several more years of growth left. It’s a real property boom and not just a bubble.'

He said that 40 percent of $5m houses were bought for cash, and 80 percent of $10m homes. 

His company has just bought a $500,000 Cirrus GTS aircraft to show them the beauty of Atherton from above.

DeLeon says that the market is getting competitive and he can spend as much $250,000 of his own money giving homes a facelift to beat off rivals and can spend as much as $10,000 on promotional videos for the properties that are being bought without a viewing.

DeLeon said that two years ago there was a frenzy of homes being bought at the $5m mark, but now it is more like $10m. He said that 80 percent of the buyers pay in cash.

Korsunsky, of Intempus Realty, said: 'We have high demand, low supply and lots of rich people who want to live here.'

Stare down any of it’s quiet, sun-dappled avenues and you would have no idea you were in the richest town in America.

Apart from its location, Atherton, which only has 2,500 homes, is an unlikely spot for the super-rich.

It is flat and heavily wooded with oak, palm and redwood trees and its mansions are all hidden behind gates, hedges and walls.

There are no businesses allowed in the area but it has its own police force, town hall and library. There are two private schools and a private university within its limits.

A previous resident Olive Holbrook-Palmer left her 22-acre estate to the town in 1958 which is now used as a park.

Its weather is good even by California standards. The neighbouring Redwood City boasts the slogan: 'Climate Best By Government Test'.

It is named after Faxon Atherton, a businessman and property speculator, who purchased a lot of the area in 1860 at a cost of $10 an acre.

His land remains the central attraction of the area, being the home of the Circus Country Club, with its own polo pitch and tennis court.

Inevitably such a frenzy is having its downside, with historic properties being ripped down to make way for new mansions.

Marion Oster, president of the Atherton Heritage, said it was a ‘worry’ but that  ‘Atherton will get through this’.

‘It is a very private town so we get a lot of people that want privacy,’ she said. ‘We don’t get the kind of wealthy people that have big parties. 

‘We are disappointed that a lot of older homes are being knocked down to be replaced by bigger places. A lot of the ranch style homes are going to be replaced with two storey houses with a basement.’

Asked what it’s like to live in the wealthiest town in America, she said: ‘We don’t advertise it. It is more of a low-key place and we like it that way.

‘We worry about the building boom and cannot help but wonder when it is going to stop. But I am sure we will get through it.’

She said they have to fight hard to keep some of the historic properties.

One 19th century home was recently saved by being cut in half and moved by road to a neighbouring plot. Oster spent $3.4 million of her own money to preserve a Victorian fountain and home.

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