VALLEJO (KPIX 5) — From Vallejo to San Jose, $500,000 won’t get you very far in the Bay Area real estate market.
A new report shows sales of Bay Area homes under $500,000 plunged 17 percent over the past year while home sales over $500,000 grew nine percent during that time.
In Vallejo, one of the few areas where you can still find a home listed for under $500,000, the market is heating up as well.
Linda Darashkavich, president of the Solano Association Of Realtors said, “There aren’t a lot of houses for sale. There aren’t a lot being built, so it’s naturally pushing prices up.”
Darashkavich was showing a 2-bed 1-bath, 837 square feet house on Lassen Street that is listed for $315,000. It has been on the market for 11 days and already has two offers.
Darashkavich said, “There will be five to 10 offers and it will sell for over asking.”
She says the market in Vallejo has been this way for the past 18 months.
Two things have historically held Vallejo back from development in the past decade, a struggling school district and a loss of property taxes from the housing market crash.
Foreclosed homes are partially responsible for Vallejo’s decision to file bankruptcy in 2008.
Andrea Ouse, Vallejo’s Community and Economic Development Director, said, “I do think the bankruptcy did put a dark cloud over the city in general and defining what it is.”
The home Darashkavich was showing was foreclosed and resold for just $80,000 in 2013. Now it’s worth more than triple that.
Ouse said, “I’m not surprised, I’m hopeful that that we will see housing and housing opportunities rise to this occasion.”
Across the Bay, in downtown San Jose, the high cost of housing may be hurting the Bay Area economy.
Omar Tahboub is a software engineer and an R & D manager at a large consulting firm. He has pretty much given up on buying a 7-figure home, with his six-figure salary.
Tahboub said he’s seeing home for a million and above. He says he can’t afford that on his salary.
Carl Guardino with the Silicon Valley Leadership Group, said, “And the troubling news, especially for innovation economy employees, like engineers, they have choices. And those choices are compelling.
Every year, the Silicon Valley Leadership Group issues its Competitiveness and Innovation Project Report. It found the median price of a home in the Bay Area is $935,000, but in other tech hubs around the country, the median price was far less: $380,000 in Seattle and $249,000 in Austin.
Guardino said, “And when you’re talking about hiring bright young engineers right out of college, and they can buy a home that is half the cost and twice as big in another top technology region, we are losing our own seed corn, and our economic future.”
To attract and retain talent, the leadership group has found tech companies here have been boosting salaries on average 30 to 40 percent, but it’s not enough.
“But when your housing costs are 100, 150, 200 percent more than the other locations, even that is not competitive in the short or long term,” Guardino said.