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Silicon Valley Boom Creates Shortage of High End Homes

While the rest of the country may be having problems selling high-priced real estate, this is definitely not the case here in Silicon Valley. According to Realtytrac, one million dollar-plus homes have more than doubled in many valley communities. This trend now surpasses both Beverly Hills and Miami in number of homes selling for $1 million dollars or more.There are a few forces behind this new trend. First of all, there are Chinese buyers flocking into Silicon Valley. They are concerned about the government and the economy back home so they are searching for the perfect safe-haven for their investments here.Some of the Chinese investors are renting but the majority of buyers are paying cash and buying properties for their families. One example of the buying frenzy was the sale of a $1.495 million dollar home in Palo Alto. Seven out of the eight contracts that came in were from Chinese buyers. With the bidding war that ensued, the home sold for more than $1.7 million dollars. The Chinese buyers not only consider the Valley as a safe place for their money, but also a great place for the children. The quality of the schools here is superior.The main force behind this new trend in high price sales is the tech growth in the area. This comes from the executives at Apple, Google, and other top companies, while more growth is ahead from the new social media moguls.With this robust demand, the homes are selling so quickly that in areas like Palo Alto or Los Altos, there are only a few weeks of high priced inventory. The supply has dwindled in half from what it was a year ago.How much does $1 million dollars buy you in these communities? In Saratoga, for $1.1 million dollars you can get 1.2 acres of land with no house. A 1,700 square foot home in Los Altos that needs some updating is priced at $1.3 million.With all of this movement, houses in this price range are not lasting long. Topping the list of $1 + million dollar sales is Saratoga, California, which had 225 homes sell in this price range in the past year. Second was Burlingame with 211 sales, and Cupertino and Los Altos followed close behind with 175 and 170 home sales.This shortage of homes in Silicon Valley at this price range is forcing the prices higher and bidding wars more prevalent while many are waiting for the Facebook effect to add to the sales of high-priced real estate. There is definitely no economic dilemma here in the valley. If anything, we need more high-priced homes to sell.

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