Defining the Silicon Valley
We bought our home in a neighborhood minutes away from downtown San Jose late last year and, so far, we’ve been happy with it.
In this post, we’re going to discuss what home one could afford at different price points in the Silicon Valley/South Bay Area/northern Santa Clara County. This includes:
- San Jose
- Santa Clara
- Mountain View
- Palo Alto
- Morgan Hill
- Los Gatos
- Los Altos
- Los Altos Hills
- Monte Sereno
What Drives the Cost of Silicon Valley Real Estate?
Here are the drivers of home prices:
- School – the ranking of schools in your home’s district drives up home prices. Be sure to check which school your children will attend if you choose to live in a certain home, it’s not always the closest school.
- Commute – position your home so that you travel South in the mornings and North at night after work (opposite of the flow of rush hour traffic). Gilroy and Morgan Hill are on the southern outskirts and, therefore, are less valuable.
Some things that cost tens of thousands of dollars to fix, but have no impact on the value of the home are lot size, HVAC, updated electrical, foundation issues.
However, buying a home that needs minor, aesthetic adjustments is an area where you can create value. For example, a home that needs to re-carpeted, re-painted, etc. can be easily fixed and can add up to five times the cost of what it took you to make the fixes to the value of your home.
What Can You Buy For $250k in the Silicon Valley?
Empty land – you can buy something under an acre furthest South (Gilroy, Morgan Hill). In addition to saving up to build a house on your land, your commute to work will be horrible unless you have a flexible work arrangement. The catch here is if you did, you’d probably be able to afford a house in a more desirable location in the first place.
Condos in SOME areas of San Jose – the unique thing about San Jose is that good and bad neighborhoods are interspersed amongst one another. You’ll likely be able to buy a 1 bedroom/1 bathroom condo in a schooling district for a lower ranked public school.
Manufactured homes and mobile homes – if considering this option, you may as well rent in a prime area.
What Can You Buy for $500k in the Silicon Valley?
During the period immediately after the Great Recession, you’d be able to find a fully-renovated house in a decent neighborhood in San Jose, Milpitas, Fremont – the gateway to the mecca of Silicon Valley (Cupertino, Sunnyvale, Palo Alto, etc.). Nowadays, the prices of these homes have jumped up to the next tier ($750k).
The competition over these homes is fierce, so be warned.
Single Family Homes in San Jose – because of competition, expect prices to jump up closer to $600k+. It’ll be tough to close on one of these homes as they are the most desirable homes the average population can afford.
Single Family Homes further South than San Jose – think Gilroy. Your dollar will go further in terms of how big of a home you can buy and the quality of schools are slightly better. However, the commute is not the greatest.
Condos and Townhomes – You’re more likely to find condos and townhomes on the market for this price range.
What Can You Buy for $750k in the Silicon Valley?
This is basically the homes you could get in the “old days” for $500k+. Our home falls under this category. We actually managed to find a single-family home slightly on the lower end of this category.
Your pick of areas includes up-and-coming neighborhoods in San Jose or Milpitas. Technology companies, such as Google and Adobe, are doubling down on building offices in San Jose. Millennials are looking to live in an actual downtown culture and infrastructure, such as BART (Bay Area Rapid Transit) stations are being built.
What Can You Buy for $1M in the Silicon Valley?
At the $1M price range, your options only increase slightly. The best schools are in Cupertino and living in some zip codes of San Jose gives you access to these schools. You might be able to snag a unicorn in Sunnyvale, but don’t count on it.
If you can afford a home in an up-and-coming San Jose area, go for it. Otherwise, your best bet is to rent in a prime location, especially once you have kids, so as to gain access to the best schools.