In Silicon Valley, US$800k buys you a burned shell of a house

Washington

A SUM of US$800,000 is certainly not an unheard of price in the world of residential real estate, as prices shoot up in hot markets such as New York, Washington and the San Francisco Bay area.

But what that amount buys in San Jose - a main node of Silicon Valley and its soaring estate prices - drew a second look: a debilitated, burned shell of a home on an overgrown lot of the type your parents might have warned you to stay away from.

The listing has drawn heaps of attention since it was first posted to Willow Glen Charm's Facebook page by a local real estate agent, Holly Barr, drawing jeers, laughs and comparisons to other real-estate markets around the country.

It served as a sort of visual metaphor for the sky-high real estate prices afflicting the Bay Area and other regions. If this is what an US$800,000 home looks like, how much is one that is habitable?

"I know you aren't setting the price, but really? US$800k for a burned out husk?" wrote Paul Sawyer, who identified himself as a teacher at the neighbourhood's public high school.

He lamented that "a neighbourhood house that was burned out three years ago is still impossible for me to buy on my district salary".

He wrote: "Maybe I should commute 2+ hours ... and know nothing about and not be involved at all in my students' community, just so I can own a home. This is unconscionable."

One commenter from Texas shared a picture of a large home he said only cost him US$250,000. Some residents reminisced to local news outlets about when the area was home to orchards.

In a telephone interview, Ms Barr said that she considered the price an accurate reflection of the market in the neighbourhood, Willow Glen, saying that two other homes on the block sold for US$1.6 million recently.

"If you're a builder, you could build a house for US$600,000," she said, noting it would bring the total price to US$1.4 million.

She said she already had one offer for the property, with the deadline just days away.

The median home sales price for the home's zip code, 95125, is US$1,228,000, according to online real estate site Trulia. Median home values in Santa Clara County are in the top five for counties nationwide, according to recent statistics from the National Association of Realtors.

Google is planning to open a large complex in San Jose's downtown, just a short drive away from the home, which city planners expect to bring thousands of jobs to the area.

"People like to live in a beautiful neighbourhood and walk to the grocery story, and tree-lined streets, and people out with their strollers and dogs," Ms Barr said.

"It's possible that they're paying too much, but that's what they're doing. I assume people with that kind of money know what they're doing with their money."

Santa Clara County Realtor Association vice-president Doug Goss said he did not believe the property would stay on the market for long.

"A home like this would typically go for US$1.1 or US$1.3 million," Mr Goss said. "In this area, we have contractors and investors looking for places like this to just tear down and rebuild."

Mr Goss said low inventory in the county, high demand, and a good economy had created the perfect storm for housing prices. "Location, location, location," he said. WP