Route246
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For many here not on the left coast the NorCal real estate market is probably unfamiliar in terms of pricing. We just closed on a 2100-ish sq ft original condition ranch-style home in one of the elite zip codes in what is referred to as Silicon Valley. It will need considerable facelifting and remodeling to bring it up to the neighborhood spec. The elite zip codes mostly coincide with high school test scores although the truly elite (Atherton, Hillsborough, Woodside, Portola Valley) don't matter so much as those have always been high-end enclaves for the higher income crowd. For those who know the area this is mostly referring to (south to north) Los Gatos, Saratoga, Cupertino, Los Altos Hills, Los Altos, Palo Alto, Atherton, Portola Valley, Woodside and Hillsborough. There are high-end enclaves in other cities (ex. Mountain View, Redwood City, Menlo Park, etc.) but those cities also have lower-income areas which bring the average household income down considerably. The cities named do not have much in terms of low-income residential areas.
This article on Los Altos and Palo Alto refers to recent sales in the area. The article failed to mention a home listed here on Zillow and here on Redfin that we looked at very seriously although we eventually deemed it out of our budgetary limits that was originally listed at $3,998,000 on 11/4/2024 and closed on 12/19/2024 for $5,850,000, more than $1.8M over listing price. We didn't know it was going to go that high. This is 2825 sq ft 3BR ranch style with a few things wrong with it that would need some serious facelifting on .47 acres of which much of the backyard is unusable because of drainage culvert right of way in the middle of the backyard. That nixed my wife's idea to build an ADU on the land and eventually put us out of contention (we didn't know at the time it would go for $1.8M over).
I grew up relatively modest in this area, attended the same high school as people who lived here and actually inherited 1/2 of the proceeds of a very nicely inflated home that my parents left to us so the home values were not too much of a surprise, it is just that recently the prices have been increasing at an increasing rate.
Los Altos has always been an upscale city with large average lot size (10000 sq ft). Palo Alto, on the other hand has a much smaller average lot size (6000 sq ft) and many modest neighborhoods with bungalow style homes (many 2BR 1BA), since remodeled and upgraded. Palo Alto came into prominence in the 1970s with the following timeline:
Pre-1970s: Palo Alto was a pleasant college town but relatively affordable.
• Late 1970s–1980s: Prices began rising rapidly due to tech job growth and increased immigration.
• 1990s–2000s: Dot-com boom and global wealth funneled into Bay Area real estate.
• 2010s–present: Tech billionaires, venture capital, and international cash further pushed prices to extreme levels.
In short, immigration has really fueled this boom in high-end real estate prices. The area is a magnet for engineers and technology leaders and probably will continue to be as no other area seems primed to unseat it.
Steve Jobs and Mark Zuckerberg have homes in Palo Alto. If you were to drive through Palo Alto you might be surprised at how ordinary it looks as you can see this on Google street view easily.
That said, real estate in elite zip codes with large lot sizes tend to be the last properties that experience severe price decreases during corrections and downturns. Most sales are cash or mostly cash and not dependent on debt financing.
For many here not on the left coast the NorCal real estate market is probably unfamiliar in terms of pricing. We just closed on a 2100-ish sq ft original condition ranch-style home in one of the elite zip codes in what is referred to as Silicon Valley. It will need considerable facelifting and remodeling to bring it up to the neighborhood spec. The elite zip codes mostly coincide with high school test scores although the truly elite (Atherton, Hillsborough, Woodside, Portola Valley) don't matter so much as those have always been high-end enclaves for the higher income crowd. For those who know the area this is mostly referring to (south to north) Los Gatos, Saratoga, Cupertino, Los Altos Hills, Los Altos, Palo Alto, Atherton, Portola Valley, Woodside and Hillsborough. There are high-end enclaves in other cities (ex. Mountain View, Redwood City, Menlo Park, etc.) but those cities also have lower-income areas which bring the average household income down considerably. The cities named do not have much in terms of low-income residential areas.
This article on Los Altos and Palo Alto refers to recent sales in the area. The article failed to mention a home listed here on Zillow and here on Redfin that we looked at very seriously although we eventually deemed it out of our budgetary limits that was originally listed at $3,998,000 on 11/4/2024 and closed on 12/19/2024 for $5,850,000, more than $1.8M over listing price. We didn't know it was going to go that high. This is 2825 sq ft 3BR ranch style with a few things wrong with it that would need some serious facelifting on .47 acres of which much of the backyard is unusable because of drainage culvert right of way in the middle of the backyard. That nixed my wife's idea to build an ADU on the land and eventually put us out of contention (we didn't know at the time it would go for $1.8M over).
I grew up relatively modest in this area, attended the same high school as people who lived here and actually inherited 1/2 of the proceeds of a very nicely inflated home that my parents left to us so the home values were not too much of a surprise, it is just that recently the prices have been increasing at an increasing rate.
Los Altos has always been an upscale city with large average lot size (10000 sq ft). Palo Alto, on the other hand has a much smaller average lot size (6000 sq ft) and many modest neighborhoods with bungalow style homes (many 2BR 1BA), since remodeled and upgraded. Palo Alto came into prominence in the 1970s with the following timeline:
Pre-1970s: Palo Alto was a pleasant college town but relatively affordable.
• Late 1970s–1980s: Prices began rising rapidly due to tech job growth and increased immigration.
• 1990s–2000s: Dot-com boom and global wealth funneled into Bay Area real estate.
• 2010s–present: Tech billionaires, venture capital, and international cash further pushed prices to extreme levels.
In short, immigration has really fueled this boom in high-end real estate prices. The area is a magnet for engineers and technology leaders and probably will continue to be as no other area seems primed to unseat it.
Steve Jobs and Mark Zuckerberg have homes in Palo Alto. If you were to drive through Palo Alto you might be surprised at how ordinary it looks as you can see this on Google street view easily.
That said, real estate in elite zip codes with large lot sizes tend to be the last properties that experience severe price decreases during corrections and downturns. Most sales are cash or mostly cash and not dependent on debt financing.
But YMMV.
