A house that suffered major fire damage two years ago is on the market for $800,000 in San Jose, California.
The listing, which has already attracted criticism online, would appear to be a clear example of Silicon Valley’s overheated housing market.
But the realtor behind the sale has defended the asking price, telling local media that the area and the land itself warrants it. The dilapidated and boarded-up house sits on a 5,800 square foot lot in San Francisco’s Bay Area, home to some of the country’s largest tech firms and start-ups.
“If you are in the market, you know real estate, you know that this is what it’s worth and the buyers set the price,” realtor Holly Barr told KTVU-TV, who posted the listing on Facebook page Willow Glen Charm, named after the neighborhood where the home is located.
The advertisement drew some angry comments, with one Facebook user writing “This is a joke, right?” and another asking “Who in their right mind would buy this?”
Another commenter bet that the house would end up selling for more than a million, while yet another simply wrote, “Why people are leaving California.”
Area real estate data reveals this is not, in fact, out of the ordinary.
“I’m not surprised at all,” Rick Smith, a board member of the Santa Clara County Realtors Association, told the TV station. He explained that houses in the immediate area are going for more than $1.5 million. Barr added that buying the severely damaged property and renovating it actually offers a cheaper option than purchasing a new home.
According to real estate company Zillow, the median home value in San Jose is $1,078,300. That’s up 23.9 percent over the past year, and is predicted to rise 8.4 percent over 2018. The fact that severe fire damage only bumped that average down to $800,000 says a lot about the area’s market, where available housing is sparse and residents prioritize proximity to their employment. Barr said she has already been contacted by 10 interested would-be buyers.
Skyrocketing home prices, growing at double the national average
Median house prices in the Bay Area have gone up for a record 70 straight months, according to CoreLogic Home Price Index. Home price appreciation in San Francisco between 2012 and 2017 was 84 percent, nearly double the national U.S. average of 45.4 percent.
In neighboring Alameda and Solano counties, where price appreciation in that time was 93.8 percent and 95.6 percent respectively, you would’ve received better returns from real estate than even the Dow Jones’ bull run of 87 percent during the same five-year period.
NBC News reported that residential properties in San Jose gain nearly $571 in value every day, thanks to a shortage in houses for sale. Young people and those with families are finding themselves outpriced, even with well-paying tech sector jobs.
CNBC reported in March that more California residents are moving out of the state than are moving in, due primarily to the high cost of living, including housing, and steep state taxes.
The squeeze is so untenable for some that a rising number of people in the tech community are moving way out to find cheaper living setups — including to Bend, Oregon, recently named the most popular remote employee area in the state.