Silicon Valley home-shopping: Can a $650,000 house be found?
Setting the GPS in his car, real estate agent Craig Gorman announces his outlandish intention: "What I am about to show you," he says, "is that there are still affordable areas where you can still find a deal in Santa Clara County."
True, he defines a "deal" as $650,000 or less for a three-bedroom, two-bath single-family home. That may not match everyone's bargain price. But in the current market, it's arguably a steal.
And by slicing and dicing the MLS listings, Gorman has culled 48 such properties in the county, where the median price for a home is close to $1 million and twice that in hot spots like Menlo Park and Palo Alto. These days, the search for affordability resembles the search for an endangered animal species; one must find those shrinking pockets of the county's 1,300 square miles where the rare breed still exists.
Gorman, the outgoing president of the Santa Clara County Association of Realtors, ticks off some of the pockets, mostly in San Jose: the North Valley-Berryessa district in the north, the Alum Rock and Santa Teresa areas in the south, as well as downtown in the middle. There's also Gilroy and Morgan Hill in South County, where properties tend to be somewhat newer and cleaner, he says.
And, in case you are wondering, his MLS search turned up a single "deal-ish" property in the tech-driven heart of Silicon Valley: a 614-square-foot cottage listing for $672,000 in Santa Clara.
"That's like a garage," he comments. "Maybe a garage and a half."
Still, Gorman actually is upbeat about his morning mission.
He patiently waits out the 10 a.m. gridlock on Interstate 280, drives past the strip malls on McKee Road and turns into a residential neighborhood ("nice and clean, no graffiti"), parking in front of a 42-year-old, ranch-style house on Fenton Street. It's on a cul-de-sac -- safe for children on bicycles. There are holiday stockings on the front door. Inside, Gorman sizes the place up: "The kitchen's been updated. You've got your granite counters, your new double oven."
Little else has been spiffed up in the 1,300-square-foot home, which lists for $618,000. The wall-to-wall carpeting needs to go. The cheesy acoustical tile ceiling needs to be scraped. And it wouldn't be a bad idea to mask the neighbor's storage shed -- it's threatening to spill into the backyard patio -- with an 18-inch trellis extension to the fence.
Still, real estate is about seeing the possibilities beyond the imperfections, and Gorman thinks this could be a comfortable family home.
It's been on the market for one week. He rates it a 7.5 on a scale of 10 and predicts "it's going to go quickly," even though a shopping center sits across from the front yard, smack on the other side of the cul-de-sac's boundary wall.
But that's part of the story in Santa Clara County. Limited inventory. High demand. Take what you can get, make the most of it, then move on up. The Fenton Street property is likely to appreciate, especially if Apple builds a new campus in North San Jose, as rumored.
Every day, Gorman hears from buyers hunting in the $650,000 range, and he is happy to tell them that such houses do exist. "If you're a first-time homebuyer, or you've just moved here from Ohio for a tech job and you're experiencing the sticker shock," he said, "you can still buy something nice in the 600s."
In this splashy age of real estate, Gorman is a nonflashy man. He signs off cellphone calls by saying, "Have a blessed day," and he speaks in all seriousness about "making people's dreams come true." Sales manager for Intero's Willow Glen office on Meridian Avenue, he doesn't boast out loud, though a flier on the wall above his desk proclaims, "I am a lean mean selling machine, and everybody is waiting in line to work with me. Life is good."
With fewer properties on the market, he thinks the holiday season is a good time to make a deal -- and an all-around busier season for real estate than most people realize. In the last week of November, 1,677 homes sold in the county, not a whole lot less than the 1,828 sold during the week of June 15, when buyers flooded open houses and multiple offers ruled.
Sellers are "a little more motivated" to negotiate and wrap things up before Christmas. Buyers are motivated, too: They aren't up against the grinding competition of springtime, and, right now, some are concerned that the Federal Reserve finally seems poised to raise interest rates. It's time to move.
Lots of agents go on vacation around the holidays. Not Gorman, who sold a house on Thanksgiving Day: "When all the other agents are gone, people have got to come to me. Life is a game, and it's knowing the rules and how to play it."
He again sets the GPS on his car, an Acura MDX.
He had planned to visit a 1,000-square-foot house in the Great Oaks neighborhood of South San Jose, a "good starter home" in move-in condition that listed for $499,000. But it's been snapped up after only three days on the market. He considers heading downtown to see a century-old home on Madera Street: four bedrooms and 1,800 square feet, tucked into an industrial area and listing for $650,000. It could be charming -- high ceilings, plenty of wainscoting -- but just as likely to be "a can of worms" for the buyer. Skip it.
For kicks, he heads to Santa Clara to visit the $672,000 cottage. It's on tree-lined Warburton Avenue, full of fall colors. Built in 1915 and remodeled last year, when it sold for $466,000, it has granite countertops and new cabinets in the kitchen. There are new laminate floors, but Gorman, who worked for a moving company as a young man, says he can feel some settling beneath his feet.
"I'd rather buy Fenton," he said. Why? "The size. They've put a little bit of money into this place, but -- it is what it is. Could be a bachelor pad, something for a commuter who wants to stay over a couple of nights a week."
For the last stop, he drives south on Highway 101 to Bernal Road, passes the Martin Murphy Middle School and turns toward a newly listed home on Avenida Espana in the Santa Teresa neighborhood: four bedrooms, two baths and nearly 1,500 square feet with ample backyard for $650,000.
Gorman has looked at it online and is pretty sure that "of the houses that we've seen, this is the best bet. You've got a nice, clean, safe neighborhood. Fifteen years ago, there was nothing here, but now you've got all the shopping. The only problem is if you've got a long commute."
He goes inside and admires the french doors leading to the back patio. But he can't help noticing that the place needs a coat of paint and some Spackle; the sellers left holes in a living room wall where they unbolted a bank of shelves. The kitchen could use new counters. The bathrooms need new vanities.
Fifteen years ago, when Gorman bought his own house in Willow Glen, he searched and searched. He must have looked at 50 houses before buying one for $450,000.
"I looked at what I could get for the money," he said. "And the house I bought, when I bought it -- was it my dream house? No, but it is now." He and his wife have invested in it, improved it, and it's now worth $1.2 million.
The same could happen here in Santa Teresa: "You put $10,000 into this house, this could be a dream house."