SoCal luxury housing market suddenly booms as thousands of millionaires are crowned overnight
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The thousands of SpaceX employees that recently became new millionaires thanks to the historic initial public offering (IPO) will have a significant impact on Southern California’s real estate market, according to a new report.
SpaceX debuted at $135 per share on its June 12 opening day, and briefly skyrocketed past $200, creating nearly 4400 millionaires and making the company’s founder, Elon Musk, the world’s first trillionaire.
While the company moved its headquarters to Texas, SpaceX maintains an active engineering and production hub at Hawthorne in Los Angeles County with over 7660 employees.
With its Hawthorne location, real estate agents from “Hawthorne to Manhattan Beach, Venice and Santa Monica report early inquiries on $5-million-plus properties, raising fears of speculative price spikes and even tighter inventory,” according to the LA Times.
“People are starting to look, and most will spend $5 million or more,” a real estate broker told the Times.
“I think real estate agents are feeling optimistic. I think there will definitely be an uptick, but I don’t know if it will be a sustainable thing. There might be some superficially inflated prices,” another agent added.
The median single-family home price for California is $930,260 according to the California Association of Realtors – the highest in the country – while the median price in Los Angeles County is around $999,000.
While SpaceX stocks have fallen to around $164, it is still nearly a 21% increase from its IPO price of $135, meaning employees remain positioned for a highly lucrative payout.
However, for the vast majority of SpaceX shareholders, there is a “lock-up” period that prevents them from selling shares right away. Instead of the typical 180-day lock-up, investors who hold pre-IPO shares can only sell their shares based on the aerospace company’s tiered, rolling schedule.
Paul Habibi, a real estate expert witness and UCLA lecturer, told the Times he thinks it will take several months for the housing market to feel the full effect of SpaceX’s IPO.
One of the new SpaceX millionaires has already had their sights on a $32 million property in Brentwood, Cory Weiss of Douglas Elliman told the Times.