It can be really 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 areas and cities using the same formula: homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 6000 SF to 10,000 SF that have sold within the last 90 days (120 days when there’s less inventory, 60 when there’s more). Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor. What areas are most affordable? One way of analyzing this is the “price per square foot” figure. How competitive is it? Have a look at the DOM or “Days on Market” figure. All of these days on market are short, but they range from low to heart-skipping fast. Please also note that while most of these numbers are working on a handful of sales, Mountain View and Saratoga had only two each over the last 3 months that fit the criteria, so the data may not be as accurate in that row as others, like Cambrian in San Jose which had 23 sales in the same time. Now let’s have a look.
How much have prices changed? I’m trying a different approach this time to arrange the chart, showing areas that have moved up on the chart in white and those which have moved down in the darker rows. While that shows how prices have changed in relation to other areas, and for the most part the rankings don’t change very much. Compare each individual market to where it was last July and you’ll see that prices everywhere are up from summer 2017.
This chart was from last July.
Below is another flashback to March 2017. Do you notice the difference in ordering? A couple of markets have switched places, Sunnyvale and Saratoga, but there’s not too much different. For the most part, rankings have changed very little.
This next chart was from last March.
In most cases, the most expensive and desirable places have either the best schools or shortest commute location. 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).
What about a little longer term? What did this look like in 2013? Click through to see. Continue reading
If you’ve just been hired as a high level executive at Apple, Google, Microsoft or any other high tech or biotech firm in Silicon Valley, you may be coming to the San Francisco Bay Area and Silicon Valley from an enormous home (5000+ square feet) on an enormous lot (1 acre +). You are a raging success. You are highly regarded. You are on the top of your game. Your house “back home” displays your accomplishments.
You’ve heard that prices are bad here, but how much worse could they really be? Surely you could downsize a bit to a 3000 to 3500 square foot house on a half acre with a 20 minute commute, right? And you’d still have great schools for “resale value,” right? You are prepared to give up the full basement, the pool and tennis court and the 4 car garage. That is enough of an adjustment, isn’t it?
No, I’m sorry to say, it isn’t.
That house you are leaving behind in the suburbs of New York, Connecticut, Massachusetts, Chicago, Denver, Miami, Seattle, San Diego, or wherever you’re coming from is a super high end luxury home. It’s probably worth $1,500,000 to $2,000,000. But guess what? Here, in a nice area, that’s a 2000 SF house on a 10,000 lot in a good area that’s a tear down. And in traffic, it’s a 40 minute commute. Want an acre in an area with really good public schools at all levels? Think $3 million plus. And that doesn’t mean that the house will be turn-key. You will very likely have to remodel or personalize so that you are happy with it, as most of our houses were built between the 1960s and 1980s. (Here a 25 year old home is considered relatively young.)
Why make the sacrifice to live in Silicon Valley?
Why on earth should you move here to the San Jose area when real estate prices are so insanely high? Santa Clara County is bad, and San Mateo County is worse. Why would anyone make that kind of sacrifice in living space and prestige?
First, because this is a great place to live because of who’s here. Great minds have coalesced here. From the heavy hitters like Google and Intel to the many fresh startups, the spirit of entrepreneurship is alive and well and imbues much of the culture here. Diversity reigns – fabulous people have converged here from all corners of the earth, bringing with them a richness and vibrancy that is appreciated across the area. Want Ethiopian food? No problem. Thai? Easy. Korean, French, Honduran? Check, check, check. You name it, we seem to have it, whether it’s Middle Eastern, African, Asian, Pacific Islands, or European, there’s something for everyone. (OK I haven’t yet seen an Australian restaurant, but I also don’t know what counts as classic Australian cuisine other than Vegemite sandwiches and barbecues.)
Additionally, there are a number of great universities in the region: Stanford, UC Berkeley, UCSF (for medical), Santa Clara University, San Jose State, UC Santa Cruz (math, marine biology, astronomy and more).
Second, this is a fantastic place to live because the weather encourages a life where you’re not confined to your house and dependent on a big basement. We’re talking 300 sunny days a year. This January we hit 70F one day, which is not unusual. Back in the midwest or northeast, they have beautiful snow. Snow for months and months and months. Yes, it’s lovely, but doesn’t it get old? Here people are golfing, sailing, biking, hiking year round. There are weekend farmers markets open all year! Want snow? No problem, drive to Yosemite, Bear Valley or Tahoe. Enjoy the snow for the weekend – then drive home to the land of palm trees!
Third, this is an exceptional place to live because of what’s nearby. Within an hour or two we have San Francisco, the Monterey Peninsula and Carmel, Napa and Sonoma Valleys (wine country). Within 3-5 hours we enjoy Yosemite, Lake Tahoe, Santa Barbara and much of the California Coast. (California has an incredible array of climates and a diversity of agriculture and economy seldom seen anywhere.) Minutes away, take a little trek around the valley’s mountains and hills, which are full of open space preserves, county, and local parks which make for a great escape from the hustle and bustle of the valley floor.
Moving might mean giving up the palatial house and garden and realizing that your accomplishments are simply not going to be reflected in a ginormous house and yard. The house and yard are often more reflective of when you bought rather than how you were able to buy.
The good news for those who buy here is that Silicon Valley continues to expand and be in demand. Hiring is strong. Economically, tech is leading the way and this area was one of the first to emerge from the Great Recession. Prices are tough to swallow, now more than ever, but as long as huge companies continue to hire, there’s no reason to think that real estate won’t be a wise investment.
How do home prices compare between Los Gatos, Saratoga, Cupertino, Campbell, and areas of San Jose such as Cambrian, Almaden and West San Jose?
Yesterday on my Live in Los Gatos blog, I compared a number of “west valley” areas in Santa Clara County, or southern Silicon Valley, to provide a sense of how much home you can get for your money in Los Gatos, Saratoga, Cupertino, Campbell, and areas of San Jose such as Cambrian, Almaden and West San Jose. I used my Altos Research weekly newsletters, which provide a snapshot view of four real estate pricing tiers for various cities or areas. In these, you see the median list price per quartile with the type of square footage, lots size, beds and baths found for each one.
Let’s look at Cupertino first, since I get a lot of folks wanting to relocate to Silicon Valley for Apple employment, and many of the new recruits have heard about the wonderful public schools in that city – a major draw. A few years ago, it was very possible to purchase a small house in Cupertino for under a million dollars. But have a look at the chart below and check out the days on market as well as the other data….
In many areas, the most affordable homes are the ones that get gobbled up fastest. Why is it that in Cupertino, the lowest priced listings are on the market the longest? It’s not their size – I can tell you this from two decades of experience selling homes in the Bay Area. It is very likely that these properties are not too livable as a group. They probably need serious remodeling or rebuilding (and perhaps expansion as well). Most buyers do not have the cash to totally “rehab” a house, especially if they are starting at over $1,000,000. If you want to live in Cupertino and not throw a ton of money into the existing house, or tear down and rebuild, you’re most likely to need a budget closer to $1.3 or $1.4 million as a starting point. Want to be able to walk to Infinity Loop? Make that $1.5 or more – and you will still need to do some remodeling unless it’s very small!
What about other nearby Silicon Valley communities and neighborhoods? Please have a look at the full article with charts for a number of areas (plus one for all of San Jose).
What does it cost to buy a house in Santa Clara County? And San Mateo County? Both are home to “Silicon Valley”!
Silicon Valley is a large area, with much of it in Santa Clara County (where San Jose is the largest city with almost one million residents) and most of the rest is in San Mateo County along the San Francisco Peninsula. So what does it cost to buy a house in these areas? Today I spent some time on MLSListings.com, our local multiple listing service, and pulled the data, which I hope that newcomers will find very helpful.
Below is a chart of single family homes purchased between October 1 2013 and the end of January 2014 by price point.
Santa Clara County sales of single family homes:
As you can see, only a tiny fraction of homes sell for less than $400,000. Most people pay between quite a lot more, with many sales happening in the $600,000 to $1,000,000 range (and it’s more in the areas with best schools and short commutes, generally, so many are much higher, too). The average Santa Clara County home sales price was $1,002,119 and the average price per square foot was $526.
How about San Mateo County prices? As you may know, The Peninsula is pricier than it’s warmer neighbor to the south. But how much more will it cost you?
Santa Clara County sales of single family homes:
The average sales price was in San Mateo County for the last three months was $1,254,114 and average price per square foot was $625 (all sizes of houses and lots throughout SMC). This is about 20% than Santa Clara County.