Home Selling in San Jose>Question Details

Katie Willia…, Home Buyer in San Jose, CA

Easier to resell in East Foothills of Alum Rock or Morgan Hill after 5-7 years?

Asked by Katie Williams, San Jose, CA Sun Mar 3, 2013

New construction either in the East Foothills of Alum Rock or Morgan Hill. It's about a $60K price difference, with Alum Rock more expensive. If we resell after 5-7 years, would any realtors on here like to weigh an opinion? Do you think Alum Rock would see a better resale return because its "in the city" versus Morgan Hill, which is 30 minutes out, possibly 1 hr, with rush hour traffic? The two houses are comparables: same sq footage, same layout, same # of bdr/baths & the schools are actually comparable as well. The backyard in Morgan Hill will be smaller, though. I'm not from the US and my husband is from NYC, so we don't know this area & would like a consensus of opinions before we commit to anything. I thank you all for your help. I understand no one can predict the market at any time, I'm just asking based on market activity in the past 2 years or so. Basically, at which house would we stand a better chance of turning a profit when we go to resell?

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Answers

7
Thank you for your question:

You have presented two questions. Which will be easier to resell and which will appreciate in value more.

The first question: which will be easier to resell.

As long as the house is priced at fair market value the amount of the demand will be similar. A REALTOR will have no difficulty selling either of those homes as long as they are priced at Fair Market Value, and are not overpriced. Currently there is an enormous amount of demand for both of those locations.

The East Foothills have excellent views of the valley. There is a large market for homes with excellent views of the valley, and there are very few homes available in that location, when compared with the demand.

Also, as you mentioned, the East Foothills are closer to the Silicon Valley and the commute is shorter to jobs in the silicon valley.

Morgan Hill is a different market than the East Foothills. Morgan Hill is a more rural location, and the commute to silicon Valley is longer. the market for Morgan Hill is dominated by people who prefer a more rural location, and are willing to accept a longer commute in exchange for the more rural location. There is far more demand for houses in Morgan Hill than there are homes available. As long as a home in Morgan Hill is priced at Fair Market Value, a competent REALTOR will have no difficulty selling the house.

With respect to which house will appreciate more: Both locations are subject to similar market forces here in the Silicon Valley. The demand will be led by people who work here in the Silicon Valley. The amount of appreciation of either home will be heavily dependent upon the level of economic activity here in the Silicon Valley.

As long as you purchase either home at it's Fair Market Value, the rate of appreciation will be similar.

With respect to the fact that the back yard of the home in Morgan Hill is smaller, the back yard is essentially excess land that is desirable as a place for children to play, increased privacy, and a place for landscaping. The value of excess land is much less than the value of the land as a building site. A larger back yard certainly has value, but that value is not proportional to the value of the land that serves as the building site. The land is what appreciates in value. If the backyard is significantly larger in one property there is more land to appreciate and that can be an important factor to determine the amount of future appreciation.

However the shape of the lot can also be a significant factor. Generally a lot in the same location with more street frontage will have more value than a similar size lot that is narrower but deeper.

Essentially both locations whether the East Foothills will appreciate at a similar rate. Both locations have similar levels of demand from people who work here in the Silicon Valley. A competent REALTOR will have no difficulty selling either property as long as it is priced at Fair Market Value.

The larger back yard of the East Foothills might give it some advantage with respect to future appreciation, however the amount of that advantage is relatively small, unless the difference in the sizes of the back yards is very great.

As long as you are careful to make certain that you purchase the property it Fair Market Value, the rate of appreciation will be similar, and the amount of your profit will be similar.

You should keep in mind that the entire United States of America is coming out of one of the worst downturns in Real Estate Prices that we have had since the great depression of the 1930s. It is possible for that to happen again. However the fact that we have not had a downturn this bad since the great depression of the 1930s demonstrates that these severe downturns are rare. .

I recommend that you base your decision on which property will be best for you. For example you mention the issue of the commute and that is significant. The East Foothills location is better with respect to the commute issue. Is there something about Morgan Hill that is sufficient to overcome the longer commute for you? For example do you prefer the more rural location of Morgan Hill enough to justify the longer commute? some people do.
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For more information you may reach me at my cell phone: (408)509-6218

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
DRE#00901872
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2 votes Thank Flag Link Mon Mar 4, 2013
It is a question of preference. Alum Rock is in the city. It offers a partial view of the Bay but you also have to drive through streets that are not the best part of South Bay.

Morgan Hill is an affluent neighborhood being 3rd highest income per household. Rec, water sports in a safe friendly town. It was ~50% more expensive than similar homes in South SJ. The Coyote Valley development was delayed. Steve Jobs decided to keep Apple in CU, Google's MV creation shifted a more expensive housing demand in west
San Jose.

Keep in mind, Coyote Valley is the last undeveloped park. In a few years more corporations may have to move there. As for schools, Norstrom, Charter, Paradise are all more advanced academically (API>900) so I am confused why Alum Rock schools are the same.

Another factor is safety difference. Do you know any city neighborhood folks do not lock their doors during the day?
1 vote Thank Flag Link Thu Mar 7, 2013
waitiekatiewills:

I think Mr. Butterfield's answer pretty much sums up the economics questions you have. In essence, both areas will appreciate about the same and a competent realtor can sell either quickly.

So I think, given that answer, it is time to turn to which area best serves your needs. Which is more important, being close into the city, driving through Alum Rock to work, enjoying beautiful views at night, and having to deal with an awful school district or private schools for your children; or a longer commute, more rural feeling, and much better schools? Also, closer in to San Jose does produce more opportunities that are only available in the city, such as foreign language classes and lots of Asian centric food and culture while being in Morgan Hill opens opportunities really only available in a more rural area such as the 4H, future farmers of America, and an opportunity to garden/raise some vegetables in the back yard.
1 vote Thank Flag Link Mon Mar 4, 2013
I agree with Terri and Tina they are both VERY good agents. I would go with the Morgan Hill area also.
Here is the thing Morgan Hill is a longer commute, so if you or your husband work in San Jose or the northern areas it can be hard on whoever has the longest drive. You would do best with one of us agents going over this with you the pro's and con's of each.
As always feel free to contact me with any questions.
At your service,
Allyson
408-705-6578
allyson@homesbyallyson.com
Certified Distressed Property Expert
1 vote Thank Flag Link Mon Mar 4, 2013
Based on where my clients are open to looking for homes, I would lean to Morgan Hill. It has a downtown area, and less congested. Even thought getting down there is a bit longer, it's easier due to the freeway vs all the lights.
Web Reference: http://www.terrivellios.com
1 vote Thank Flag Link Mon Mar 4, 2013
Having lived in this area for 15 years, I would bet on Morgan Hill. Prices there have more room to climb and Porter Lane is in one of the less desirable neighborhoods in San Jose. But, if you're looking to work in San Jose, there are other options available.
Web Reference: http://www.archershomes.com
1 vote Thank Flag Link Mon Mar 4, 2013
If you have children I would go with the area that has the better schools. Nobody can predict resale value but we can look at (historically) what is the best bet for resale and that is better schools. Bookmark this link where you can look up a school by property address:
http://www.greatschools.org/find-schools/
Always check with the school directly before completing your home purchase as sometimes the school that is closer to the property is not the one where your child will attend. If you and husband both work in Silicon Valley but commute from Morgan Hill (and have children in school there) do you want to be that far away from them during the day in case of emergency or simple convenience to be close and pick them up after school. If you do not have children, then it may not matter to you and therefore might choose a property based solely on commuter advantage. You will need to weigh the options that are more important to you and your family situation.
Kind regards ~ Andrea Wince ~ RE eBroker Inc. ~ Lic. 01439761
0 votes Thank Flag Link Wed Mar 13, 2013
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