The way it works is the closer to the big city the faster the homes price will rise in a growth phase.
In 2012, San Jose City price appreciated +20%, South SJ was +17.1%, South SC County was +17.6%, using Q4-2011 average price and cost per sf as baseline.
I went to MLS Fri to pull data from 1959 and on. MH appreciated 13%(2012). Gy moved up the first 6 months bet. 11-12% by as much. Hollister appreciated over 11.1% this past summer (Jan-Jul, 2012). Both GY & Hollister have momentarily stabilized. This price fluctuation may be seasonal.
In 2013 we will expect good appreciation in all neighborhoods. Again, the closer it is to job centers the faster they appreciate since home buyers will have to pay more to beat the competition. As we get close to the end of growth cycle the remote towns get their turn. Gy price went up to 30% per year before the price correction. Economists are predicting another 3-4 years of steam.
Keller Williams Realty
Typically Gilroy has had higher property values due to having a closer proximity to San Jose, jobs, and alot of the everyday things that most people want closer to their lives. I lived in Hollister for many years and loved it but when the economy took a nose dive, so did property values and other things especially in Hollister. If you have any questions concerning buying or selling property then feel free to call any time. (831)801-0789.
Jim Smith/Realtor, Intero
As Don Teper correctly noted, any guess will be, just that, a guess. However, the smart money would say that homes in both Gilroy and Hollister may continue to be depressed for a while as jobs migrate from California to other, less expensive areas of the State and country, and, as gas prices and traffic continue to put pressure on workers to find housing closer to work.
If this were a horse race with Silicon Valley being the "hub of employment", the winning cities would continue to be those along the Peninsula, the South Bay, the East Bay, Morgan Hill, Santa Cruz/Scotts Valley, Gilroy and then Hollister. The only reason that Hollister might grow less rapidly than Gilroy is that Gilroy is on the main freeway (101), while Hollister is bit more inland and slightly less accessible than Gilroy. Although both towns are lovely, most of my buyers will take a smaller, older house located in, say, West San Jose to a lovely larger newer home in the Southern end of Santa Clara because of the commute and the cost of gasoline.
So if I were casting a vote, I'd say Gilroy wins by a very slight margin, but I think all buyers need to be realistic that the last areas for any recovery will the areas furthest away from centers of employment, and at present, for Santa Clara County, those would be the areas farthest south from San Jose.
Area Pro Realty-Peoples Choice
The answer all depends on the local economy of each, as well as the surrounding economy, as both areas tend to feed Silicon Valley. Both had seen rapid appreciation in the both years. With the foreclosures disappearing more and more as homes purchased and refinanced with "toxic" loans tending to disappear, I would say Gilroy will have greater appreciation just due to the fact it is closer to the job centers of Silicon Valley, and less of a commute. Plus, Gilroy was just picked by a major company which will be bringing in a lot of jobs for biofuel aircraft production. That will be interesting.
And two other quick thoughts: If you're considering buying, buy the house the works for you at a good price. Let's say, for instance, that there's a house in Gilroy listed for $300,000. The comps say it's worth $300,000. There's a house in Hollister listed for $290,000. The comps say it's worth $350,000. The one in Gilroy is a fair value, but the one in Hollister is a real bargain. It's likely that in 3 years the one in Hollister (fair market value) will be worth more than the one in Gilroy.
Second quick thought: In today's market, don't even consider buying if you think you're going to be selling in 3 years. It might work out OK. But even in a reasonably good market, 3 years is a very short time frame in which to buy and then sell. In today's market, it could be disastrous.
Hope that helps.