As Marcy mentioned, prices for homes in Sunnyvale are typically in that range. If you can take an old home, you might be able to save $100K. Then again, if you moved up further on the peninsula, you can also pay $200-400K more for the same home.
Real estate is all about the location.
790K is not overpriced in this market. The fact that they need to have a lottery to sell the homes because so many more buyers want them than there are home to sell tells you something about this market.
Resale town homes are selling over $800,000 in Sunnyvale, and there are very few other options for new homes in Mountain View or Sunnyvale. There are some new developments in the works including one in Mountain View at the intersection of Middlefield and Old Middlefield, but prices have not been released yet. There will be a new release of Taylor Morrison Homes in Willow Glen in mid march. The first release prices are from the mid 600K to mis 700K range I believe. There are some new homes in Evergreen in the high 600K range, but they are being sold by lottery as well. At the lottery last Sat there were 4 homes and 30 buyers. There was also a lottery for new town homes in Milpitas in the mid to high 600K range, but in that case there were many more buyers than 30 for the first release, but I do not know the exact number.
You may have better luck finding a home for less than 790K if you go further south, and a resale, not a new home.
Keller Williams Realty