Why so Few Homes in a Bay Area City Are Owned by Individuals
Only two of 12 properties on one block of Atherton, California are owned by individual people.
The city near San Francisco is one of the richest areas of the country, on average.
It's also part of a trend which has wealthy Americans creating trusts or LLCs to buy homes.
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On a given block in the city of Atherton, California, it's likely that more than half of the homes are owned by a trust or LLC rather than an individual — and it's part of a growing trend among America's wealthiest cities.
About 72% of home purchases in the 94027 ZIP code, which encompasses most of Atherton, were completed last year through trusts or LLCs, according to data from real estate website Redfin cited in a recent report from the San Francisco Chronicle. Atherton, located between the tech hubs of San Francisco and Palo Alto, has ranked as one of the wealthiest areas of the country for several years in terms of both average household income and most expensive real estate transactions and listings.
Atherton also houses some of the country's wealthiest people, from NBA stars like Stephen Curry to venture capital and tech executives like Marc Andreessen and Larry Page.
It's also a prime example of a new trend among the country's wealthiest homebuyers, according to the Chronicle. The 72% mark is the highest rate of LLC and trust home purchases for any Bay Area ZIP code with at least 15 home sales since Redfin's earliest data in 2000, the Chronicle reported.
On one block highlighted by the Chronicle's report, just two of the 12 homes are actually owned by individual people, with the rest owned by trusts, LLCs, or other kinds of corporations. While it's common to use trusts or LLCs to purchase properties you intend to rent to other people, they can also provide other protections when buying a home you intend to live in yourself and keep within your family.
"If someone sets up a trust, it's almost like a corporation that continues to live beyond the person," Michael Repka, CEO and managing broker for DeLeon Realty, told the San Francisco Chronicle.
A Redfin economist told the Chronicle one of the key reasons for the use of trusts is how much simpler it makes the inheritance process, as using a trust can often help the beneficiaries of a homeowner inherit a property without spending time in probate court.
Experts also said because they can be named anything, using a trust or LLC can provide public figures, like Atherton resident Curry, with extra privacy so a home is not just registered under one person's name.
Source: Business Insider
