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 and areas using the same formula: homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 5000 SF to 10,000 SF that have sold within the last 30 days (short window of time due to price changes in the last 6 months or so – first dropping in the 2nd half of 2018, and now nosing up again).
DOM means “Days on Market”, the number of days a home was listed as available before pending.
Please note that this is a rough estimate of home prices. In many areas, cities, or towns, there can be multiple school districts. In those cases, the home price will be impacted by which school district the property is located within. (If you are interested in prices for similar homes a year or two ago, please also scroll down to find similar charts and data.)
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 if you didn’t 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 / similar areas
Here’s similar info from about 14 months ago (one change is that the lot sizes used before was a range of 6,000 to 10,000 SF, and in 2019 I went down to 5,000). I also thought it would be useful to share the number of sales represented, since obviously a small number may not be truly representative of home values in today’s market.
January 25, 2018: Continue reading
As I was going through old blog posts, I found this brief installment from April 17th, 2014. Often I write that the current hot sellers market in the Bay is “prolonged,” “steady,” or “persistent,” but seeing these two headlines from over 3 years ago really shows just how unyielding it has been. It is highly unusual to be in such a strong, drawn-out market, but there’s no clear indicator that things will change anytime soon, either. Buyers and renters might find some relief now that autumn is here in hopes that it brings the usual seasonal cooling.
Find the original post immediately below. – Update October 22nd, 2017
Here are the headlines from the San Jose Mercury News in mid April 2014:
Rental article: Bay Area apartment rents set record 4/16/14
Excerpt: Bay Area apartment rents are rising at nearly double-digit annual rates and have reached record levels, according to a report released Tuesday, prompting some analysts to warn that the region’s economic boom could be choked off by the relentless rise….. Among the Bay Area’s three largest cities, San Jose had an average asking rent of $2,066 during this year’s January-March quarter, up 10.3 percent from the same period last year, RealFacts reported. Oakland had an average rental rate of $2,187, up 12.3 percent, while San Francisco posted an average of $3,057, up 9.5 percent.
Home buying article: Bay Area home prices jump year over year
Excerpt: March marked more than 20 consecutive months of year-over-year price gains for single-family homes in the East Bay, South Bay and Peninsula, according to real estate information service DataQuick, which released a report on March sales Wednesday…. The San Diego-based company said that prices were up 29.2 percent from the previous March in Alameda County to $575,000. In Contra Costa County, prices rose 22.8 percent to $425,000. Santa Clara County gained 20.3 percent to $800,000, and San Mateo County was up 13.2 percent to $860,000.
Whether you buy or rent, prices have been rising dramatically. When factoring in what housing will cost, include the trajectory of appreciation per month.
It’s a hot seller’s market in Silicon Valley, but it’s also a time of great job growth here! Each week I get calls or emails from people considering job offers in Cupertino, Palo Alto, Mountain View, Sunnyvale, Menlo Park, San Jose and nearby. Many of these recruits are interested in areas with superior public schools.
What’s the cost of buying a house of about 2,000 square feet with 3-5 bedrooms and great schools? A few communities with better education are these: Los Gatos, Saratoga, Cupertino, Palo Alto. We’ll consider these to provide a sense of prices in similar areas.
Here’s a quick look at what single family homes have been selling for over the last three months:
- Los Gatos: mostly $1,200,000 to $2,200,000 depending on the school district, averaging about $1,700,000
- Saratoga: mostly $1,400,000 to $2,300,000 depending on the school district, averaging about $1,900,000
- Cupertino: mostly $1,700,000 to $2,100,000 depending on the school district, averaging about $1,950,000
- Palo Alto: mostly $2,000,000 to $3,300,000 depending on the school district, averaging about $2,650,000
If you are new to Santa Clara County, you may be wondering if this is correct. It is…
Please continue reading here:
How do prices compare between Los Gatos, Saratoga, Cupertino and Palo Alto?
Today we’ll take a look at the housing market from a very high overview position, that is, by metro area within California. How’s the San Francisco Bay Area, which includes Silicon Valley, faring in comparison to the rest of the state? And how is the real estate market within the 9 Bay Area Counties? Have a look at the statistics to get a sense of the market at a glance. (Note: SFH stands for Single Family Homes.)
Silicon Valley is found primarily in Santa Clara County, but also substantially in San Mateo County. There are some pockets, very small, also in Alameda County and Santa Cruz County. Santa Cruz County is not considered part of the SF Bay Area, but part of the Monterey Bay Area and the Central Coast (the SF Bay area is considered Northern California.)
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:
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.
Comparing real estate market conditions in Almaden, Los Gatos, Saratoga, Cupertino, Sunnyvale and Los Altos
For people relocating to Silicon Valley, often there’s not just one city, town or area which seems like a good fit. Sometimes it may come down to what your money can buy or how difficult it is to purchase in one area versus another. This is frequently the case with the “West Valley” areas where schools are good and the neighborhoods are tidy.
There are two statistics which are especially helpful in understanding the Santa Clara County real estate market. One is the “days on market” or DOM. The shorter this is, the hotter the market – and the harder it is to purchase. The second is the sale price to list price ratio, which hints at the existence of multiple offers, overbids, and buyers giving away all of their rights.
Today, then, we’ll have a look at these, starting with Almaden, the southernmost area, and working our way north along the coastal range. The charts below are all for single family homes (houses and duet homes, not condos or townhomes).
Almaden Valley is a district within the city of San Jose. Its boundaries roughly follow the 95120 zip code, though there are some parts of nearby zip codes which somewhat overlap into Almaden too. How’s the Almaden market? Red hot! Days on market is crazy low – a mere 16! And the average sale price is almost 104% of list price…and rising!
Almaden Valley, San Jose, 95120 days on market and sale price to list price ratio
Can you buy a home with a contingent offer, subject to selling your current home, in Silicon Valley?
In many parts of the United States, it is not uncommon to write a purchase offer on a property which is contingent upon, or subject to, selling the buyer’s current home. Contingent offers are not very common in Silicon Valley, generally. They are unlikely to be successful if the property has been on the market only a week or two, but if the offer is otherwise really strong, home sellers may consider it. We see a few of them happen here and there, so it’s not impossible to be successful with this kind of real estate contract, but it does pose a few extra challenges. Let’s see what might improve the odds of success with one of these.
What could make a contingent offer strong?
One thing, of course, is cash. Right now in Silicon Valley, anywhere from 30-35% of all sales are without a mortgage or loan, they are all cash deals. So if the sale will mean that once the buyer’s house or condo sells and closes, the purchase can happen without a loan, that’s good – no loan means less risk that it won’t close. Even if the resulting sale isn’t 100% cash, if the sale will bring more than 20% loan to value into the next transaction, it will help.
Terms can really impact whether or not a contingent offer will go through. Some offer terms can be appealing to San Jose area home sellers too, such as a flexible close of escrow date or the option to rent back (at cost or for free).
Many other issues must be factored in, of course. How strong is the market for the property that needs to be sold? This plays into the issue of risk. If it’s an area in high demand, and the home is priced aggressively, or if it is already sale pending, this may lessen the concern that it won’t sell at all. It’s important to share market conditions with the listing agents and sellers so that they have a good understanding of the situation.
Finally, it should be noted that Silicon Valley is composed of many, many niche or micro markets. While some areas are “on fire” – Palo Alto, Menlo Park, Mountain View, Sunnyvale, Cupertino – others are simply good (Silver Creek, Los Gatos, Almaden) and certain areas and price points (think luxury market) are close to balanced. Depending on where and what you hope to buy, a contingent offer may be more or less likely to be successful.
Cambrian Park, Santa Clara County
Announcing newly on MLS and at low price for Alta Vista School, quiet street, updated/remodeled condition and oversized lot! 5114 Nerissa Way, a 1,233 sq. ft., 2 bath, 3 bdrm single story “Room to add on!”. Now
– Fabulous price!.
Property information not available
Moving to Silicon Valley: is it possible to get a house here that’s as nice as the one you currently own?
I am frequently contacted by extremely bright, successful engineers or high tech professionals who are in large homes on large lots with great schools in less expensive areas of the country. They want to move here because Silicon Valley is the hub of innovation, our weather's great, crime's low and there's so much to do in this region. They know that housing costs here are extraordinarily high, but they hope that the salaries are commensurately high such that they can replicate the home & lifestyle they currently have – but put it here.
But that really doesn't work. Unless someone's relocating here from Boston, New York, Tokyo or Paris (or somewhere equally astronomically priced), the salary offered in Silicon Valley will not usually make that kind of housing duplication possible.
To move here normally means downgrading the house and paying more for it. Yes, incomes are a little higher but not nearly enough to match the discrepancy in real estate prices. I tell people, as a rule of thumb, that when you move here you will pay twice as much and get half as much. (Salaries? You get a little more. Not twice.)
Sometimes I get the comment "I don't want to move to Silicon Valley and have my family's lifestyle negatively impacted by having to live in a smaller house. I want the quality of life to go up, not down."
That is completely understandable. People who move here don't do it because of housing. Lifestyle often is better here. Shoveling snow? Forgetaboutit. We have 300 sunny days a year on average – if you love to be outdoors, your lifestyle will be far better here where the weather is subtropical. We have the Pacific Ocean an hour or less away, San Francisco an hour away, about 2 dozen wineries, theatre, museums, the Sharks, parks and trails. Our population is highly diverse and highly educated. Crime is low. There are a thousand reasons why the lifestyle here probably is far better than in other parts of the country… but it's not if you equivocate housing with lifestyle.