How Much Does a Home in Silicon Valley Cost?

How Much Does a Home in Silicon Valley Cost?

 The Graph shows the Median Sale Price of Single Family Residences sold in Santa Clara County cities in July, 2013.  Santa Clara County includes roughly 80% of Silicon Valley.  

The number of sales is shown next to the city name. Cities with fewer than 15 sales are excluded from the graph.

A common question is why Silicon Valley homes are so expensive.  Fundamentally, it's a function of supply and demand.  The supply of homes is limited because buildable land is scare.  Silicon Valley is squeezed between the San Francisco Bay on the east and the coastal Santa Cruz mountains on the west.   Most new home developments in Silicon Valley are small townhouse complexes built on land where some other kind of improvement--often a school--were razed.  The supply of potentially buildable land is more plentiful in the south Santa Clara County where lower-priced homes (see the graph) in Morgan Hill and Gilroy are located.  Those cities are farther from major high technology companies and commute times are long, and there's a building moratorium.

In addition to the limited supply of land, demand is high.  Irrespective of current employment opportunities, it's a nice place to live with an excellent climate, close proximity to recreation and natural beauty.  Home prices were considered high even before Silicon Valley's birth.   

The vast majority of employees in Silicon Valley's cutting edge companies such as Google, Apple, Facebook, Cisco, E-Bay are young and in their so-called "household formation" years, and they're well-paid.  Many want to put down roots and raise their families and that creates demand for housing.

Another, less well-documented influence is money from Asian, especially Chinese, investors with a preference for trans-Pacific west coast locations.  I've been told these wealthy investors prefer the safety of U.S. real estate compared to the Renminbi, the Chinese currency.

Finally, irrespective of foreign investment, there is a lot of homegrown wealth in Silicon Valley spun-off from successful companies and service providers to those companies.  For every major, well-known high tech company there are scores, maybe hundreds, of small and mid-sized successful companies.

As the cost of housing continues to rise and becomes unaffordable, companies can't afford to pay salaries high enough to attract the young employees the companies need to grow.  They expand or move to lower-cost areas of the country.  That has happened in the past and will continue to happen.

Lloyd Binen

Realtor/Broker/BRE 572654

Certified Realty Services

19200 Shubert Drive

Saratoga, CA 95070

Certified Residential Specialist (CRS); Graduate Realtors Institute (GRI)

408-373-4411; e-mail