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- CUPERTINO, Calif. - Silicon
Valley was mostly orchards when Ronald and Ruth Moore moved here in the
1950s. Their cozy three-bedroom ranch house, which they bought for $22,500
in 1962, was one of the first on a tract located not much of anywhere.
Now, Apple Computer is less than a mile away, the Moores live in tech central,
and their property is a gold mine.
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- In a real estate world so surreally hot that buyers bid
millions for small houses, the Moores no longer pick up the phone when
it rings. Most calls, after all, are from hungry real estate agents, asking
them, please, please, to sell.
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- "They say, 'If in the future or if now you're thinking
of selling, we'd like an opportunity to talk to you,' " said Ruth
Moore, 68. "Or they say, 'We have someone who is desperately looking
for a house just like yours.' "
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- Were the Moores to stop screening their calls and decide
to sell, chances are that they would get about $800,000 - in a matter of
days. Chances are, too, that the buyer would be 20- or 30-something, dressed
in jeans and unburdened by a mortgage.
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- Here, in the world of the overnight Internet millionaire,
it is common to pay cash. In fact, many people plunk down $1 million, or
more, in cashed-out stock options. End of story. No monthly payments. No
scrimping.
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- But $1 million no longer gets you much in this crowded
area, where job growth has in recent years far outpaced new housing. In
some communities, all $1 million will buy is the chance to bring in bulldozers.
Houses bought to be demolished are called "scrapers" here, as
in: Just scrape them away to make room for a mansion.
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- "In Atherton, Calif., you can't even get a scraper
for $1 million; it takes about $2 million to get a tear-down," said
Carole Rodoni, president of Alain Pinel Realtors, a Silicon Valley real
estate company based in the posh bedroom community of Saratoga.
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- The average sale price of an Atherton house in the first
half of this year was $2,094,000. It is one of the most elite towns in
the area, home to high-tech CEOs who want luxury.
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- "It's a lot about ego," said Rodoni, whose
company recently sold a house for $13 million. "They expect wine cellars
and gym rooms, helicopter pads, tennis courts, swimming pools, stables,
a lot of land, the latest high-tech home screening rooms, any kind of toy
you can think of, revolving closets, 13-car garages for collections."
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- In Los Gatos Hills, another haven for millionaires, Alain
Pinel is listing a not atypical 10,000-square-foot home for $5,288,000.
Among its features: eight bedrooms, a five-car garage, a cherry wood computer
center with limestone floor and four built-in workstations, a screening
room, one bedroom - listed as Bedroom 7 and suggested as a possible exercise
room - with a wet bar and built-in Sub Zero refrigerator, and a limestone
powder room with a "granite-topped platform [with spotlighting] ideal
for sculpture or display."
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- Atherton and Los Gatos Hills are extreme, even by Silicon
Valley standards. Still, true real estate bargains long ago ceased to exist
here.
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- Even for an industry in which many salary packages are
sky high, home prices are stunning. So is the lightning speed with which
houses appear and disappear from the listings - if they're listed at all.
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- In popular Los Gatos, where the old-fashioned-looking
downtown now boasts a Ferrari dealership, a French wine store, and a high-end
bicycle shop/espresso cafe, homes averaging $829,000 stay on the market
an average of just 35 days - from the moment they are listed until the
closing.
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- In Palo Alto, home not just to Stanford University but
also to many venture-capital companies, the average house - selling for
$794,000 - is snatched up in 21 days.
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- But speed of sale is not the only striking statistic.
Here, asking prices are more accurately defined as minimums. The average
Palo Alto house sells for 105 percent of its asking price.
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- Bidding wars are the norm. Houses are sold as is, with
no repair work - even if inspection reveals a leaking roof or termites.
Often, sellers demand to stay rent-free for 60 or 90 days, or even longer.
To be successful, a buyer can't argue.
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- Brenda Miller, an Alain Pinel real estate agent, describes
the typical scene:
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- "I'll literally be sitting in one conference room
with my seller, and five or six agents will be sitting in other conference
rooms, making offers. Their clients will be in the parking lot, ready to
OK higher offers. And they'll use any edge they can.
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- "To get a house now, sometimes what you really need
is a good story - something that makes people want to sell to you. People
bring in pictures of their dogs, pictures of their children, pictures of
their grandchildren, letters their children wrote, saying why they want
to live in the house.
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- "It can get very stressful."
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- Miller sells property in Saratoga, where programming
whizzes have long since pushed out the last of the once-plentiful prune
orchards. She herself lives in a spacious Saratoga home that she bought
less than two years ago for $1.7 million. Now, she says, she could sell
it in next to a minute for $3.2 million.
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- As for folks arriving on the scene with $1.7 million
today, they should expect very little, Miller says as she hops into her
smoky-blue Mercedes-Benz convertible on her way to illustrate her point.
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- In the nearby bedroom community of Monte Sereno, she
pulls into the driveway of a small house on a busy road. Inside, the sound
of traffic is constant. There are two small bedrooms, two fireplaces, a
tub with Jacuzzi jets, a small kitchen (fridge not included).
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- The asking price: $1.4 million.
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- Even empty, the place is undeniably unspacious.
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- "If I brought people from the East Coast who were
thinking of relocating here, they would have a heart attack and get on
a plane and leave," she said. "I've stopped doing relocations
at all, because that's what happens: People just run."
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- Next, she pulls up to the curb at a row of small, nearly
completed bungalows. They will sell for more than $1.5 million each - a
price that includes a claustrophobic living room and dining room, two very
small bedrooms, a neighbor just about two feet away, and no backyard.
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- All this makes Carolyn Bing count her blessings - even
though the 37-year-old owner of a small communications company just spent
$1,510,000 on a Monte Sereno house. She and her husband, Jim Joye, 39,
a doctor, got the 2,600-square-foot four-bedroom home only through luck:
They have a 9-month-old baby, and the sellers liked the idea that a young
family was moving in.
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- The sellers turned down five higher offers, including
one for $100,000 more. Even so, they made a huge profit.
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- As did Bing, on a townhouse she bought three years ago
for $425,000 in Los Gatos. She sold it for $649,000 to help buy the Monte
Sereno house.
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- But that appreciation helped Bing the seller, not Bing
the buyer.
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- "We started out looking at $1 million houses, saying,
'Let's see what we can get,' and all we saw was junk, literally junk,"
she said.
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- Bing and Joye, who closed on their house this week, are
not high-tech millionaires. To afford the down payment, they sold the townhouse
and liquidated all their stock investments, money they had been hoping
to save. They're terrified at the prospect of a monthly mortgage that will
be about $6,500.
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- The buyer of Bing's townhouse had no such worry.
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- "The guy who bought my townhouse, he's 26 years
old, his company was just bought by Yahoo, and he's a millionaire,"
she said. "He was going to buy cash. Then he decided he needed a write-off,
so he got a loan.
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- "In the Silicon Valley, $1 million is such a small
amount of money. And it's so sad, because, in relation to the rest of the
world.. . . well, there is no relation. It's all by itself in the stratosphere."
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- With so much easy money to be made in real estate here,
it might seem a wonder that the Moores of Cupertino have not succumbed
to the selling fever. Many in their neighborhood have, only to see their
houses razed and replaced by swollen stucco monstrosities.
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- To explain why they stay, the Moores tell a story - about
the first computer boom, 20 years ago, when their neighbors sold their
house for a tidy $50,000 profit.
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- The couple moved to South Carolina, where one of their
grown children was living. They didn't like it and moved back a year later.
By then, prices had gone up even more, and they couldn't afford the old
neighborhood.
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- Instead, they bought a small condo apartment in a neighboring
town, Sunnyvale. Often, they would return to their old house.
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- "They would just sit outside of it in their car
and stare," said Ron Moore, 69. "It was buyer's remorse. I think
they were lost after they sold that house."
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- With the hundreds of thousands in profit that the Moores
could pocket by selling, they could buy five homes in Modesto, Calif.,
or a nice home in Florida, they said. But in their hometown of Cupertino,
they would be priced out.
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- "We'd have to start from scratch again, make new
friends, learn a new place," Ruth Moore said. "We couldn't afford
anything like this little house. We couldn't afford much of anything."
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- In their small, book-lined living room, where photos
of their four grown children are everywhere, Ron Moore nodded in agreement.
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- "This house is still worth $22,500 to us,"
he said, "because we're staying."
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