California is a hub for millennial wealth.
The Coldwell Banker Global Luxury program worked with wealth intelligence data and research firm WealthEngine to analyze the lifestyles of millennial millionaires, from wealth creation and property investments to spending trends. It defined millennial millionaires as those ages 23 to 37 with a net worth of more than $1 million.
It also looked at the top 10 ZIP codes where these millennial millionaires live. Turns out, eight of those ZIPs are in California; of those eight, no fewer than seven are in Silicon Valley, from Cupertino to San Jose.
It’s not just millennial millionaires who are concentrated in California. According to the report, the state also has the highest population of millionaires overall, regardless of age. That doesn’t come as a major surprise, given that Silicon Valley is the country’s tech capital — but it does go to show the power Silicon Valley has in minting young wealth.
Silicon Valley offers a trifecta of tech, wealth, and real estate
Some of today’s most prominent tech companies emerged in Silicon Valley in the 2000s: Facebook, Twitter, Uber, and Tesla all got their legs in the area.
It follows that some of the biggest names in tech are known to live in some of the biggest price-tag mansions in the area. Look no further than Facebook CEO Mark Zuckerberg, who purchased a $7 million home in Palo Alto, or Snap. Inc. CEO Evan Spiegel, who bought a $12 million home in 2016 in the San Francisco neighborhood of Brentwood with his wife, Miranda Kerr. Then there’s Twitter and Square CEO Jack Dorsey, who bought his San Francisco home for $9.9 million in 2012.
And Silicon Valley is still busy minting new millionaires today.
“They’re 26 years old, only a few years out of school, and they have just gotten a big equity play of $5 million because of what they can do at their desk behind a computer,” Karen Yang of Coldwell Banker Residential Brokerage in Los Altos said in the report of California’s millennial millionaires. “They view real estate as a significant way to build wealth.”
In 2019, several Silicon Valley tech startups went public, amongst them Uber, Lyft, Slack, and Pinterest. Earlier this year, Nellie Bowles reported for The New York Times that “even conservative estimates predict hundreds of billions of dollars will flood into town in the next year, creating thousands of new millionaires.”
But while this may be good news for Silicon Valley’s young tech workers, it’s not without a dark downside. This influx of wealth is already driving what Bowles called a “housing madness.”
In fact, the housing situation in San Francisco is often now referred to as being in crisis. In August 2018, Business Insider’s Melia Robinson reported that 60% of tech workers — who are often paid more than the general population — said they couldn’t afford homes in the city. And even if you can find housing, chances are, you’ll be paying a lot of money for not a lot of space. In San Francisco, the median $1 million home will get you less than 1,200 square feet of space; that’s compared to the national median of 2,200 square feet of space for the same price.
The median home price in Silicon Valley right now is upwards of $1.2 million, Meira Gebel reported for Business Insider. If newly minted young millionaires are inclined to make real estate investment moves, they could drive these prices even higher. As Bowles reported, San Francisco single-family homes could cost as much as $5 million by 2024.
Now, some of the tech companies that contributed to the crisis are pledging big money to solve it. In June, Google pledged to invest $1 billion in land and building homes in the area, Daisuke Wakabayashi and Conor Dougherty reported for The New York Times. And on October 22, Facebook pledged $1 billion to help fix the affordable housing crisis, Business Insider’s Libertina Brandt reported.