It can be challenging for people moving to Silicon Valley to get a sense of pricing for home buying. So to compare “apples to apples,” let’s take a hypothetical case of a 4 bedroom, 2 bath home of approximately 2,000 SF house (appx 185 square meters) and see how the cost looks in one area versus another.
Today I compared several cities and areas using the formula: single family homes of 1,800 – 2,200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 5,000 SF – 10,000 SF that have sold within the last 60 days. The prices listed are the average from sales in this criteria, so areas with a higher volume of sales will have more stable averages than those with less sales to analyze. DOM means “Days on Market”, the number of days a home was listed as available before pending.
Please note that this is a rough sketch of home prices based on averages taken across large, diverse residential communities. There are many factors that will affect market value beyond these boundaries.
Now, on to the chart.
The Cost To Buy A 4 Bedroom 2 Bath Home In…
I have arranged this chart in descending order by Sales Price. This is usually how I organize the data, and you can see certain markets shifting position, moving up or down the order depending on what’s hot. Since Los Altos had no sales in the last 60 days, I have left it where it was in the last chart but cannot offer any numbers. Scroll down farther to compare this chart against past years.
Before we get into analysis, here’s a chart from October of 2019 for comparison. Back in 2019 I switched to analyzing the market using a 30 day window instead of the 60 days seen above. This short window of time was due to significant price changes over the course of the year – first dropping in the 2nd half of 2018, and climbing again in the latter half of 2019. You can see a chart from early 2019 down below.
In the past, I’ve done similar studies, but using a larger window of time to even out any aberrations.
In most cases, the most expensive and desirable places have either the best schools or shortest commute location or both. Had I ranked these for school scores, you’d find that Cambrian is fairly high up and a good “bang for the buck” location – though not a super short commute for folks who work in Mountain View (though not so bad for people working in Cupertino). None of these is especially close to North San Jose (Cisco).
Palo Alto is a gorgeous, exciting area with all kinds of wonderful features – beautiful neighborhoods, lower crime, great schools, short commute. It is usually the most expensive area on this list. But unless you found a successful startup company or inherit a couple of million bucks, it can be hard to buy a single family home there. Many people would like to live in the shadow of Stanford University, but the budget just won’t allow it. What, then?
Please use the list above as a way to get your bearings on nearby areas in the South Bay (southern part of the San Francisco Bay Area). This is not an exhaustive list – it’s just most of the areas closest to Highway 85 or the West Valley Freeway. You can study various cities, downs, and districts within the region at my stats site, popehandy.rereport.com. (Free and you do not have to register unless you want email updates.)
Finally, it should be noted that one of the main drivers of home values is school districts. In the San Jose / Silicon Valley area, the school district boundaries do NOT follow the city or town boundaries. Los Gatos, for example, has 3 different elementary school districts, with varying scores which impact home values. So too with Saratoga and many other areas, San Jose especially! All this to say that the figures above are only ROUGH GUIDES. When you break it down to micro-markets, the picture changes more. But as a starter guide, I think you’ll find the above info helpful to give you a general idea of how far your money can go in home buying for areas in Santa Clara County from Palo Alto to Blossom Valley.
Want to do a deep dive on any of these areas? Please visit my Valley of Heart’s Delight Blog to learn about them.
Historical Comparisons of Home Prices in the Same (or Similar) Areas
We’ll start off with something fairly recent, a report from April 3rd, 2019 using the same formula the October report from the same year.
April 3rd, 2019:
Today on the Valley of Heart’s Delight Blog, I looked at the real estate markets for Los Gatos, Saratoga, Cupertino, and Los Altos.
All four of these areas are known for good public schools, proximity to the coastal range, and a nice way of life. All but Cupertino have a quaint downtown area, and those three communities each have about 31,000 residents, while Cupertino is more than double that. For folks relocating to the San Jose area for work, most likely, all four will be considered if schools are a priority.
To see how these 4 highly regarded communities compare in terms of market conditions and what you can buy for your money, please visit:
Market comparison: Los Gatos, Saratoga, Cupertino and Los Altos on the Valley of Heart’s Delight Blog.
Silicon Valley neighborhoods
Los Gatos neighborhood videos
How to find the median rental price by zip code
As you may know, I have a number of blogs relating to Silicon Valley real estate (I will list them below). My family and I live in Los Gatos, and my office is in Los Gatos too, so my focus is that town and the nearby areas, such as Saratoga, Cupertino, Campbell, Monte Sereno, and parts of San Jose such as Cambrian and Almaden and Willow Glen. One area I’m working on for the blogs, as well as for my Facebook business page, Google + and Twitter are video “drive throughs” of neighborhoods. I’m starting in Los Gatos but eventually hope to get to all of the areas listed above.
Right now, I’ve got 5 Los Gatos neighborhood videos on my YouTube channel, plus slideshows of a few more areas and parks. Additionally there are some slideshows up of Saratoga and parts of San Jose. Interested in an up close view of these parts of Silicon Valley? Please visit my channel: http://www.youtube.com/PopeHandy Or start with the Los Gatos playlist, below. The first one is a slideshow of Los Gatos as a general intro, and after that there is a mixture of slideshows and drive throughs. Enjoy!
Other blogs about Silicon Valley real estate, homes and neigbhorhoods:
Live in Los Gatos blog
Valley of Hearts Delight – aka San Jose Real Estate Los Gatos Homes
Belwood of Los Gatos blog
View available listed Los Gatos and Monte Sereno houses for sale.
Edit: I originally wrote this post on August 12, 2013, but it is still accurate today, January 25, 2018, and probably will be for years to come.
This morning I received an email from folks wanting to find a good area in which to move where they’ll have good schools but not pay the kind of prices they see in Palo Alto. Below is my response to them. I focus on Santa Clara County, and in particular the west valley areas from Los Altos to Almaden Valley or Blossom Valley areas of Willow Glen to Downtown San Jose, Santa Clara, Campbell, and back toward Los Gatos and its nearest parts. Below is my response – hope it is helpful to many of my readers! (The list is not exhaustive.)
The easiest way to check school scores is to use the site www.SchoolAndHousing.com
. It’s good for showing what house has which schools. The home search feature is not very good, though, so don’t use that. Best for home searching is www.MLSListings.com
, as it is the public branch of our agent MLS and it is updated continuously. Something to consider, though, is that the school scores do not tell the entire story
. There are many factors to include in your evaluation of a school, such as the variety of coursework offered (some schools may not have art or music, for instance), the availability of sports (for a balanced upbringing) and the overall feeling of a school (are the kids happy or are they overly pressured into excellence at a very young age?). For many of these things, the best approach is to visit the schools personally and request a tour
. See if you can chat with the parents who are waiting to pick their kids up after school to hear about their experiences. And of course read reviews online.
In terms of general areas to consider for schools near Mountain View, Palo Alto or Sunnyvale, in general, the better the schools, the more expensive the housing (whether to buy or to rent). Hence Palo Alto is extremely pricey because the schools are absolutely top. Here are some communities that have great schools or good to very good schools:
- Palo Alto (very costly)
- Cupertino (less expensive for the school scores compared to other areas up to #5 on this list)
- Saratoga (very expensive)
- Los Altos & Los Altos Hills
- Los Gatos & Monte Sereno (95030 & 95032)
- Parts of San Jose in Cambrian 95124 and Almaden 95120 (very good value)
- The Los Gatos Mountains (zip code 95033)
- Parts of Fremont (Mission San Jose area)
Also it should be noted that in many cases, it makes more economic sense to utilize private schools and to live in an area which is a little less costly, such as Santa Clara (part of SC has Cupertino schools, so that will be expensive) or parts of San Jose (part of west San Jose 95129 has Cupertino schools, and part does not). Many of my global clients initially do not see private schools as an option, for fear that all the kids in them will be from wealthy families and spoiled. But often that is not the case at all – the kids are from families who like the curriculum, the teachers, the overall approach of the school and literally make sacrifices to send their kids there. So I would advise that you at least have a look at that option since homes in the areas with the very best schools can be extremely costly.
You’ve probably heard that buying a home in Silicon Valley is a bit like purchasing real estate in Manhattan, London, Tokyo, Paris, or other regions where the prices are in the stratosphere. It’s true. It’s a strong seller’s market.
And yet, every day, homes are bought and sold in the San Jose – Palo Alto – Foster City area. They aren’t all cash; perhaps 20-30% are bought without any loan or mortgage, but the rest of the properties are sold with some sort of financing.
Here’s a quick summary of what is needed to buy a house, condominium, or townhouse in Silicon Valley (this list applies MOST of the time and with few exceptions):
- A large down payment is needed – usually 25% or more – to win in the multiple offer situations which are the norm right now.
- Nerves of steel: it’s scary to buy a house, but here, many homes are purchased without the normal contingencies for loan, appraisal or inspection. (But home sellers do provide a full battery of inspections that you can review before making your offer in most cases.)
- The ability to move quickly and decisively as the best homes sell very, very fast – often in a week to nine days. In the last 30 days, there were 385 houses which sold and closed in the city of San Jose. Of those, 282 went under contract and became pending sales in 14 days or less. That’s 73%. In Sunnyvale the numbers were 47 and 47, so 79%. Here you need to be 110% sure. If you give off signals that you are hesitant, your offer is unlikely to be accepted.
- It’s a big help if you have a really good Realtor who’s known, liked and respected in the local real estate community. Listing agents will prefer to work with an agent who’s trusted. In some areas, like Palo Alto, many homes sell “off market” and then the full inventory tends to be known only by those local and trusted agents.
- A strong lender, especially if you are coming from abroad, who’s experienced in tracking work history, credit, etc. in other countries (and in some cases other languages). Don’t just walk into a bank and pick someone. Get a good recommendation, either from someone at your company who’s had a similar experience or from your Realtor, who should be used to working with international home buyers.
- Being clear on priorities and being able to put them in order is crucially important. It’s usually not possible to get everything on the wish list and also get it in budget. So decide which is most valuable to you: schools, commute time, home type (perhaps you can get what you want, where you want – but only if you buy a condo?), commute time or?
Those are the key ingredients. Perhaps the hardest one, when getting started, is the last one. Let’s talk about that.
Priorities list: pick any 2 out of 3
A request I often get is to find a nice sized home and yard in good shape with good schools and a commute to Palo Alto that’s under an hour. So far, so good. Then comes the desired price tag: under $1,200,000 or under $1,500,000. You can get the home, yard, schools, and commute, but it won’t be under $1.5 million for a good sized, remodeled house and a big yard with better schools. The price tag fitting that description is probably closer to $2 million due to our clogged commute routes.
One of the best areas in terms of schools and pricing is Cambrian, which is a part of San Jose, with either the Union School District or the Cambrian School District. You can get a Cambrian home with good schools for under $1.4 million and it will have a decent sized lot, be in good condition, etc. But the morning commute to Palo Alto will likely be a little more than an hour, and the evening commute perhaps 80-90 minutes, depending on where in PA or Cambrian you’re going and what time it is. A nice house in east Los Gatos with the same schools but more house and yard will probably run around $1,700,000 to $1,800,000 for 2500 SF on a 10,000 SF lot.
Cupertino has great schools but the houses there tend to start at around 1.5 million – so if you are ok with a townhouse or condo, that might work.
The upset as reality sinks in
Most home buyers, even if they’ve studied the market here intensely before arriving, go through some strong emotional stages as they learn the real estate ropes and what their budget can and cannot buy. Sometimes the main shock hits before arriving, though. Recently I got an email from someone moving here from the south, who lamented the situation with a question along these lines: “can you explain to me why home prices in Silicon Valley are 5-6 times more than they are in Atlanta?” It is that bad, yes, and I am sorry. It is upsetting. The faster you can move through the shock and upset, the sooner you’ll be able to clear the emotional clutter and buy that next home and really settle in.
Focus on the positive
The good news is, aside from the cost of housing and the traffic, San Jose – Sunnyvale – Los Gatos and whole Silicon Valley region really is a wonderful place to live. We enjoy 300 sunny days a year on average. San Jose has often been named the best place to raise kids. The intellectual climate cannot be beat as we have great minds from all over the world here. The coast is close, and so is San Francisco. If you do buy a home, appreciation may be substantial, far more than in most of the U.S., if you can “buy and hold“. (We’ve had a lot of real estate corrections and downturns since the 1940s, but look at some old Los Gatos real estate home prices then and see the buy and hold value at its best.)
If you’re moving to pricey Silicon Valley, your goal may not be to find the very most expensive places to live. However, if you are coming here and looking for great schools, it’s very likely that the list of places with fantastic public schools will overlap considerably with that of expensive real estate.
A couple of weeks ago, the Business Insider compiled a list of the 20 most expensive zip codes in the area, and also compared the median sale price in 2014 with that of the same zips in 2013 so you can see how much prices are rising. These are the median sale price and does not reflect cost per square foot. If you want a 2,000 SF house, you may not easily find it in the toniest areas!
Their 2014 Silicon Valley areas include zip codes within Atherton (94027 median sale price $3.9 million in 2014) , Los Altos Hills, Palo Alto, Portola Valley, Hillsborough, Saratoga, Cupertino, Los Gatos, Menlo Park, Sunnyvale, Mountain View, Redwood City, Belmont, San Carlos, and the Almaden Valley area of San Jose (95120, median sale price $1.177 mil in 2014). Since it’s by zip code, some towns or cities show up twice, for more and less costly parts of that community.
Surprising omissions are Woodside and Los Altos.
Not sure how Almaden could be more costly than those two areas, but this is the list they compiled. Read the whole article with the specifics here:
The 20 Most Expensive Zip Codes In Silicon Valley