Yahoo Finance A $1.8 Million Tiny Home And A $755,000 Condemned House? Yes, Bay Area Real Estate Is That Expensive
Meta-Description: The recent sales of a 384-square-foot tiny home for $1.8 million and a condemned property for $700,000 illustrate the insane cost of Bay Area Real Estate.
Real estate in prime Northern California cities has always been uber-expensive in relation to what the "average" Californian can afford. However, a recent transaction where a 384-square-foot tiny home in Cupertino listed for $1.7 million shines a million-candlepower spotlight on the affordability and inventory issues creating a housing crisis in Northern California, as per Newsweek. If that wasn't crazy enough, imagine a condemned property selling for $700,000 despite the need to tear it down.
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Amazingly, the Cupertino home sold for more than its original asking price. Listing agent Faviola Perez would not disclose the final price, but she did confirm that the property was sold for more than the listing price. That likely means there was even a bidding war on the property, which Zillow estimates is worth around $1.8 million. Several different factors are driving that valuation.
First, it sits on a generous 7,800-square-foot lot. Perhaps more importantly, the house is in Cupertino. Even by Northern California standards, Cupertino is reputed for its high standard of living and luxurious atmosphere. It is among the most sought-after cities in the entire region and boasts a highly-rated school district.
Cupertino was one of the area's most expensive enclaves before Bay Area real estate values shot through the roof during the recent tech boom. Cupertino real estate has been prohibitively expensive since the 1980s when nearby Silicon Valley emerged as an economic powerhouse. Ever since Cupertino real estate has just been getting more expensive. Zillow estimates the median home value in Cupertino is just over $3,000,000, an increase of nearly 15% since last year.
By that standard, it's not hard to understand why eight prospective buyers jumped at the chance to get a 384-square-foot tiny home for "only" $1.7 million. The new owners will likely tear down the tiny home and build a dream house more fitting with the surrounding properties. That is well and good for the buyer, but prices like that make one wonder where Cupertino's schoolteachers, first responders, and local government employees live.
Cupertino is not alone in the Bay Area regarding insane property values. According to a San Francisco Chronicle report, a condemned home in San Jose that Santa Clara County housing authorities classified as "unfit for human occupancy" recently sold for over $755,000.
The final sale price was $55,000 over the initial asking price of $699,000, and there were multiple offers. There was a time when San Jose property prices lagged behind those of its more heralded neighbors to the North, like San Francisco and Cupertino.
San Jose home prices may not have hit Cupertino levels, but they have been appreciating rapidly due to the prevalence of tech sector employees with deep pockets and freshly exercised stock options. Zillow says the median home price in San Jose is just a hair under $1.5 million.
The property is also in a desirable part of town with flexible zoning. That helps to explain why a condemned house sold for significantly more than its asking price. In an interview with the New York Post, listing agent Robert Gosalvez said, "Due to its prime location and zoning, this property not only attracted attention from DIYers, builders, and investors but also from those seeking mixed-use properties all eager to capitalize on the opportunity."
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He continued to expand on the sales process by saying, "The level of interest while on the market was substantial, leading to the distribution of dozens of disclosure packages and resulting in seven offers, all of which were either cash or had access to hard money loans. I believe in a couple of years or less, we will see a modern, attached, multiunit property on this lot."
Paying $755,000 for a condemned house that needs to be rebuilt makes sense when seen through that lens. The upside potential is obvious; the new owner can build the home they want. However, there is something very revealing about Gosalvez's comments. The profile of the interested buyers is a combination of investors, flippers, and people with deep reservoirs of cash.
Where does that leave first-time buyers looking for a starter home in San Jose, or anywhere in the Metro Area of a Northern California population center? Increasingly, the Bay Area housing market appears to have locked out anyone earning less than $400,000/year. One thing is for certain; $1.8 million, 384-square-foot tiny homes and condemned $755,000 fixer-uppers go a long way toward explaining the exodus of Californians to the Sun Belt.
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This article A $1.8 Million Tiny Home And A $755,000 Condemned House? Yes, Bay Area Real Estate Is That Expensive originally appeared on Benzinga.com
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