Overpriced Real Estate: How Expensive Are Homes In The Bay Area?

by Silicon Valley Blogger on 2006-11-0417

In 2002, a friend sold an old house in the San Francisco Bay Area for way under a million (around $725,000). But that was then, this is now. As I mentioned, it is now valued at $1.23 million. In fact, I have never in my WILDEST dreams imagined it would ever sell for anything over $600,000. But prices can only be as crazy as the politics here.

It sure shows us just how lofty California real estate prices have been. Where does your house stand? We don’t know for sure how this market is going to fare over the next few years, but we should all be careful about sinking any of our savings into a market that continues to defy reason. Some of these values can be pretty steep, and my intuition tells me that any market correction we face will probably last for quite a while.

Overpriced House #1: Worth $1.23 Million During The Real Estate Peak

At any rate, here are some dated snaps and stats of this “fancy” home. As you can tell, this place is far from fancy and would probably fetch under half a million elsewhere.

old house 1 dining room 1
bathroom 1 master bedroom 1

Detached Single Family (Class 1)
Bed/Bath: 4/2½
SqFt: 2,120
Lot: 5,000 sq ft
Age: 28 years
List Price: $1,229,000

Property Features
Basic tract house with 1 Master Bedroom Suite, 1 Shower over Tub, 1 Stall Shower, Laundry Area – Inside, Wet Bar, Fireplace in Family Rm, Wall to Wall Carpeting, Granite Floors, Microwave Oven, Built-In Oven, Cooktop Range, Disposal, Dryer, 1 Dishwasher, 1 Refrigerator, Washer, 2 Car Garage, Attached Parking, Level Lot, Yards/Grounds, No Pool

As you can see, nothing remarkable at all.

Now this is what $1.23 million SHOULD buy you (as per CNN Money) and only a mere 1,260 miles away!

new house 2 dining room 3
bathroom 2 master bedroom 2

Boulder, Colorado
Price: $1.199 million
Bedrooms: 6
Baths: 4
Square feet: 6,387

Description: This lodge-style home, just 10 minutes from downtown Boulder, boasts big views from nearly every room. It’s in a gated community that has a 40-acre lake stocked with fish and a private beach. Owners can also swim in an infinity pool complete with waterfall. The pool is surrounded by a tile deck.

Inside, the rooms are exposed to daylight streaming through entire window walls. There’s a raised hearth fireplace in the living room, wood wainscoting and built-in china cabinets in the dining room and a wood-paneled ceiling in the kitchen.

Overpriced House #2: Sold For $650,000 During The Housing Bubble

Allow me to be facetious for a moment, for the purpose of this example. If you’re shopping around for new digs or looking for real estate opportunities, then this may come across as a sweet deal. If you’re looking to settle down somewhere in the Golden State right near a major metropolis rife with culture, jobs and mind boggling diversity, then perhaps a three bedroom, two and a half bath townhouse with the misty ambiance of a coastal fogbelt drifting through your neighborhood may be just the ticket! What about the ultimate convenience of not having to care for a yard? Think about how much you would save on utility bills! Great? Well a home like this can be all yours for only $650,000! All 1,610 square feet of it!

This lovely town home has a wonderful view, atop a bluff directly above the most attractive freeway our peninsula has to offer you. It’s also priced under market so you can be sure you can’t beat that for value. And it’s only 22 years old. That’s practically new, by Bay Area standards.

living room
living room dining room
bedroom bath


With a negligible association fee and property taxes at a reasonable 1%, that’s a total steal. So don’t wait. Don’t hesitate. It can’t last long at this price. It’s fabulous! Perfect for young families, retirees and everyone else in between. I should know because I’ve known this home for 17 years now.

Humor aside, this property ultimately received an offer for close to its list price. And even though I’m glad it changed hands while the market was still on steroids (yeah, it was in our family for a while), its price back then boggled my mind.

Final Thoughts On The Real Estate Mania

I am hoping that the real estate reality check of recent years will drill some sense into California’s stubborn homeowners out there who still believe that there are chumps around who will be willing to release them from their overvalued shacks at unreasonably stratospheric valuations. I’ve heard from brokers that there are way too many homeowners still being obstinate about pricing. Let this market come back to earth please — wouldn’t it be healthier if that happens? Or am I just sour graping?

Copyright © 2006 The Digerati Life. All Rights Reserved.

{ 15 comments… read them below or add one }

Divya Uttam November 5, 2006 at 6:27 am

Well these are nice homes. Hope I could have had one like the one below. But, my problem is I don’t have that amount of cash with me.;-)

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LivingAlmostLarge November 5, 2006 at 12:10 pm

I love your town house. I’d buy it if we were moving back but unfortunately not.

Knox November 6, 2006 at 7:57 am

Nice. I guess the old adage “location, location, location” is still true.

What I would be truly interested in is the price of these two homes in 5 years, or 10, or 20. My guess is that the one I would rather live in wouldn’t be the one which sells higher in the future.

Ravi November 7, 2006 at 9:17 am

I am of the group of folks that are kicking themselves for not buying 5 years ago. I am still a happy renter. Sitting in my condo within earshot of Seattle’s SpaceNeedle, I am loving where I am at…but just can’t imagine paying the $600K it would take to buy my 1 bedroom, 880 sqft apartment!

I have a good friend who lives in Boulder, and totally loves it.

Ed December 7, 2006 at 2:58 am

You have got to be kidding. I actually thought the promo was a spoof. No wonder the country is in such a financial crisis. Some of the houses in the Bay Area aren’t worth $100,000. You should be ashamed of yourself.

Silicon Valley Blogger December 8, 2006 at 11:27 am

@ LivingAlmostLarge, thank you! House #2 was once my house but ownership eventually transferred to another relative. They had put it up for sale.

@Ed, thank you for your comment. However, this house *did* sell for asking and it only took a month. You can blame the market for how much it got sold and how quickly it moved. What a market!

Lisa Knight April 18, 2007 at 9:09 am

I get that the housing prices are way off just by watching HGTV & TLC…It’s enough to make you fall off the couch! My house is HUGE (3800+ sqft, 2-3 apartments, we are using 1 as our space now, 3 1/2 stories, hardwood floors, original wood work including oak pass through cabinetry) compared to that 2100 sq ft tract house & I have 1.5 acres & subsidized electric for way under 1.23M. If you don’t like it there, then move here. I will sell my house for the right offer, a bargain $500K would get my attention!

Landflip April 15, 2008 at 6:23 pm

Wow! These are very nice houses! For one of those houses, I love the view of the large bay window looking out over the pool. In such a crazy real estate market, the seller really made a good move! Love the house…wish I had that kind of view. It looks as though it might need some updating…hard to believe it sold for this much.

Audrey February 12, 2009 at 10:18 pm

Wow. Fantastic houses — it’s worth it to buy. Just my opinion, of course. How I wish I have that big amount so that I can buy my dream house. Thanks anyway for posting this interesting topic. Great entry.


Property Consultant September 29, 2009 at 7:06 am

Your description of House #2 — the view is atop a bluff directly above the most attractive freeway??? That must be the oddest USP I’ve ever heard of…

Silicon Valley Blogger September 29, 2009 at 11:22 pm

@Property Consultant,
Well, I actually meant for that description to be made in jest — you know, tongue-in-cheek. 😉

Mike Johnson - Calgary Mortgage Broker July 5, 2010 at 12:38 pm

Haha. There were similar “unreasonably stratospheric valuations” going around in Calgary at around this time. Kind of like a virus. I think the madness has slowly declined. Good for everyone who got their money while the getting was good, though, eh?

Abner July 28, 2010 at 7:20 am

I wonder what the house look like now. It looks like it was an interesting deal. Good to know you can sell this kind of house fast!

Walt November 16, 2010 at 11:05 am

Even funnier is the fact that Boulder is one of the more expensive places to live in Colorado. A beautiful home like the one shown can be had for a lot less in other parts of the state. Lots of nice places to live in Colorado!

Pelletier Realty Group May 4, 2011 at 10:17 am

The price on that simplified home in 2006 was very high and wondering what the value would be at this time in 2011. A home such as that in New Hampshire depending on the area would be in the 200’s. The gorgeous Boulder, CO home priced at $1.199 million, now that’s an eye catching property!

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