Realtor Magazine ran an article declaring that many global home buyers consider U.S. real estate prices a bargain. (Related article that was the basis for this piece can be seen here.) Get into these articles just a little bit, though, and you can see that San Francisco and San Jose are exceptions, as are Los Angeles and San Diego:
The study found the following major markets were the most unaffordable:
- Hong Kong
- San Francisco
- San Jose
- San Diego
- Los Angeles
This study included medium and large cities. But what do you think would happen if they looked at the most desirable cities and towns nearby, the suburbs with low crime and great schools (or the areas of those 2 cities with the same)? That’s right, it’s worse – much worse.
Nicer suburbs will really cost you, especially those on “The Peninsula” or San Mateo County. Here’s a glance at the median and average sale price of houses sold last month (June 2015). Countywide it is $1,300,000 with homes selling at about 110% of list price.
Heading south does help. Just as San Jose is a little less expensive than San Francisco, so, too, is Santa Clara County a bit less than San Mateo County. San Jose considers itself the Capital of Silicon Valley – a big suburban, sprawling city of 1 million people reaching out to meet cities like Cupertino, Mountain View, Sunnyvale, Mountain View, and Santa Clara all here in the South Bay’s Santa Clara County. It’s not cheap here, of course. But compare the $1 million median sale price of a home here compared to $1.3 million a little north of here, and you’ll understand why it’s not just the better weather than brings people a little further south (the Peninsula gets more wind and fog than the South Bay does, generally).
These are tough realities for newcomers to the area, whether buying or renting (rents are possibly harder to swallow than purchases). I’d be doing you no favors to sugar coat the situation. Some companies will help by improving your relocation benefits package. None of them will enable you to move here and get as nice a house as what you’ve got elsewhere for a reasonable amount of money. They cannot and will not pay you enough for that to happen.
Even so, it’s worth it to make the leap. There’s so much to love about this vibrant area: great minds, fabulous international flavor, excellent education, wonderful weather with 300 sunny days a year in a subtropical climate, access to nearby beaches, San Francisco, the Monterey Bay, Wine Country and so much more. (And you don’t need to go to Napa or Sonoma for wine – there are about 2 dozen wineries in Santa Clara County alone! See A visit to Ridge Vineyards in Cupertino as one example.)
What does it really cost to buy a house in Silicon Valley? In Santa Clara County, the median sale price of houses is $1 million (May 2015) and the average sale price is just about $1,300,000. So you know it can’t be easy – these are for the whole county, not the areas with the best commutes, best schools, most charm, etc. And it’s worse if you go north, and into San Mateo County, where the median sale price is $1,325,000 and the average sale price is $1,660,000? (Please visit my RE REPORT for information on Silicon Valley real estate statistics. It is automatically updated each month.)
Today I’ll use the Altos Research charts to show the median LIST PRICES (sales prices often a little higher) of homes for sale in several Silicon Valley communities – just a sampling, not all of them, and then we’ll look at the median list price of just the lowest priced homes – those in the bottom 25% of pricing. Please note that the charts will be AUTOMATICALLY UPDATED each week, so this article should remain current.
The high tech epicenters: Palo Alto, Mountain View, Sunnyvale and Cupertino
Below please note the median list price of homes in the super highly desirable areas of technology intensity. These areas are always “sky high” relative to the rest of Santa Clara County (Palo Alto and Cupertino are noted for their exceptionally high scoring public schools, and Palo Alto has a very bustling, fun downtown area).
Next, what is the least you might expect to pay for houses in these same areas? Here’s a glance at the least expensive single family home segments. Palo Alto is just a hair under $1.95 million (these are likely mostly “fixers”), Cupertino comes in at $1.3 million, Mountain View again close behind at just barely under $1.3 million and Sunnyvale offers its most affordable homes at about $775 – $800k.
Please also see this article on another of my sites for more detailed information on the Cupertino real estate market:
For more information on the Sunnyvale real estate market specifically, please read this article:
Los Altos and Los Altos Hills
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 are versus another.
Yesterday 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. Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor. What areas are most affordable? One way of analysing 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-skippingly fast.
How much have prices changed? That really depends on where you live, or where you want to live. Here’s a flashback to fall 2013. Do you notice the difference in ordering? Campbell has moved up a notch or two, which is reflective of what we are seeing: Campbell is HOT!
This next chart was from November 3, 2013. No, it was never cheap in Palo Alto…
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). Continue reading
On another of my websites, I wrote about congestion and traffic patterns on Silicon Valley highways and roads. For many transplants to the San Francisco Bay Area and especially the Peninsula and South Bay areas, traffic is an enormous consideration on where to live and how much to pay for real estate.
If this is a topic that interests you, please take a look:
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:
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. 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, Honruran? Check, check, check. You name it, we seem to have it, whether it’s middle eastern, African, Asian or European, there’s something for everyone. (OK I haven’t yet seen an Australian restaurant, but I’m not sure that food from there is any better regarded than that from England. But generally, you get my drift.)
Additionally, and part of who’s here, we have 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. Listen: 300 sunny days a year. As I write this in late January 2015, we had a 75 degree day. 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. 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.)
Moving here means 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 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, but as long as huge companies continue to hire, there’s no reason to think that real estate won’t be a wise investment.
If you are moving to Silicon Valley, whether San Mateo or Santa Clara County, you should know that things are a little different in fall and winter than they are in spring and summer. Here are just a few areas that might not be intuitively obvious to the newcomers.
First, a word on appearance. In Santa Clara County, we have two primary sets of hills – one closer to the Pacific Ocean and Monterey Bay (west side), and one closer to central California (east side). Because our local weather is dominated in very large part by the Pacific Ocean, much of the weather blows in from the coast. A lot of the rain gets dumped in the coastal range, also known as the Santa Cruz Mountains. Less makes it all the way to Los Gatos, less still to downtown San Jose, and a much smaller amount to the east foothills and places such as Alum Rock Park. The coastal range (also called just “the hill” by locals) is green year round as it is full of redwoods and other trees which love the moisture. The east side, though, is more grassy, fewer trees, and gets far less rain. In winter the grasses are a lovely green. With drought or in summer, however, the grass turns brown or pale yellow.
For people coming from the east coast, the hills there are more likely green in summer and brown in winter. Here, though, it is the opposite. We don’t usually get rain in summer, so the grasses die and the hills go brown.
Rain, when we get normal patterns, usually begins in November and comes and goes between then and late April. In a typical year, San Jose gets 15-20″ of rain (Los Gatos more, the Los Gatos Mountains much much more). If we get an El Nino pattern year, temps will be warmer than usual and rain will be much more common than typical. It’s not much fun to have an El Nino year, but right now we desperately need the rain, so folks here are all hoping for it.
Second, a word on roads and travel. Silicon Valley enjoys a sub-tropical climate with mild temperatures and not too much rain, even in a normal year. With very little rain most of the time, our streets and highways can develop a dusty, oily film. Whenever we get rain after a dry spell, those highways and roads can be slicker than you might expect. It’s not that we need a ton of rain for the surfaces to become more slippery, either. A very small amount of precipitation can do the trick, so be careful!
If your destination requires going over “the hill”, be triply careful! Too many people, whether regular commuters or first time adventurers, either tailgate or drive too fast, and it can make it too easy for accidents to happen when a little weather is added into the mix. Continue reading
It’s an old question – should you find your Realtor first or your lender first? I would like to suggest that you find your Realtor first, and then ask your real estate agent for a list of reputable, trusted loan agents or lenders.
Because as with all professionals, lenders (and Realtors) are not created equally.
You will probably spend a LOT more time with your Realtor in viewing homes, reviewing disclosures, writing the contract, meeting inspectors, and so on – so I do suggest that you begin by very carefully choosing the right real estate licensee or broker for yourself. A good Realtor can probably give you between 3 and 10 names of trusted, reputable, reliable, knowledgeable lenders. From there you can interview and choose someone.
It is extremely important that your lender be good at what he or she does. A bad lender – and there are many of them – could cost you the sale, but definitely will create undue stress, will waste your time and ultimately cost you money. This is no exaggeration.
In our hot Silicon Valley real estate market, when there are multiple offers, many listing agents will phone the buyer’s lender to see how solid the buyers are and how decent the lender seems to be. The better loan agents will answer the phone when called – because they are anticipating the call. The lesser ones are not paying attention and don’t pick up. That small decision, one way or the other, can be critical! Just today I spoke with a high powered agent out of Saratoga who told me of this very scenario. She concluded “the lender who didn’t take my call cost the buyer the sale”. Yes, it matters that much.
A poorly organized loan agent may misplace documentation, causing you to miss work so that you can get it to him or her again in a rush (under pressure of the loan contingency removal date). I have known buyers to lose time from work due to the ineptitude of a loan agent (but not one that I suggested).
All deadlines must be agreed to by buyers and sellers in writing, no exceptions. Can you imagine what it’s like to ask your lender how many days will be needed for the loan contingency, only to have to extend it not once, but a few times, because it’s just not done yet? A lousy lender will make this happen. Sometimes they are submitting loan packages based on old guidelines rather than current ones. You and I won’t be involved at that microscopic level – but if the lender messes up, we’ll hear about it later.
In the worst case scenarios, a really terrible mortgage banker or broker will cause so many delays that you close escrow late, causing you, the buyer, to pay some of the seller’s coverage costs. If the rates go up during all of the delays, you may pay a higher interest rate too.
That’s the gloom and doom of it.
In my real estate practice, often about half of my clients come to me with their own lender. Although this is not ideal (it’s better if the Realtor and lender go into it with a good working relationship), often it works out OK. But sometimes it’s a train wreck. This doesn’t happen, at least not in my experience, if you get a lender I’ve already vetted. Or if you’re working with another great Silicon Valley Realtor, one that he or she has screened. I would not suggest someone incompetent or who will screw up the transaction – of that you can be sure! I want you to buy your home as much as you do, and I want it to be as smooth and hassle free as possible. A bad lender can put all of that in jeopardy, though.
Visiting Silicon Valley for job interview and considering a relocation: how to get a feel for where to live?
A few times a month I get phone calls from people considering a relocation to Silicon Valley. In most cases, a trip out to Palo Alto, Mountain View, Sunnyvale, Cupertino, San Jose, Menlo Park or somewhere else in the South Bay or Peninsula is planned. These questions always arise:
What should we see when visiting Silicon Valley?
What neighborhoods should we consider or tour while there?
First: know which part of Silicon Valley where the possible employer is located
Silicon Valley covers a lot of ground – most of 2 counties (Santa Clara County and San Mateo County) and snippets of a couple more, which the Silicon Valley sprawl now inching north toward San Francisco. The first thing to know is where the potential job is located. There’s a huge difference between Oracle in Redwood Shores, Apple in Cupertino or Cisco in North San Jose, let alone some of the more far reaching Silicon Valley areas like Scotts Valley, South San Jose (at the intersection of Hwy 85 and 101), over in Los Gatos (Netflix) or inching up the east Bay in Fremont or Hayward.
Second: know your commute tolerance and have your priorities organized
Everyone would like to live close to work (under a half hour commute) but if you are juggling multiple priorities such as having a house & yard for kids, needing good public schools, and bringing it in at less than $2 million, you may have to sort out which of the important priorities is the very most important and go from there. For many, the commute gets longer in order to provide the other things (a house not a condo or apartment, better schools, lower price). Most people say that they would like a commute of 30 minutes or less. Often they end up with a longer one after seeing a few areas and properties. Continue reading
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).