Good question - coming from out of area, it is difficult to understand why property values can vary so much from neighborhood to nieghborhood.
Rod is correct in that in terms of market value, location is the biggest determinant BY FAR.
Most major employements centers are either in the Silicon Valley (Sunnyvale, Santa Clara, San Jose, and Cupertino) or in San Francisco. Living on the Peninsula, you do not have to fight commute traffic every day back and cross the Bay on one of the bridges.
San Carlos is an easy 20 to 30 minute drive to either the Silicon Valley or San Francisco.
If you live in Fremont at rush hour, it will take you 20 to 30 minutes just to cross the San Mateo or Dumbarton Bridges.
So commute time to major employement centers is a major factor.
The Peninsula is older and more "established", more "charming", more "appealing" than Fremont let's say.
This is a difficult factor to quantify as it is based on subjective factors.
Fremont is going to be more tract type development where most of the Peninsula is custom development.
Each person will perceive these issues differently.
The truth is the "movers and shakers" - the "hi-tech leaders" live on the Peninsula.
As the old expression goes, beauty is in the eye of the beholder and a picture is worth a thousand words.
If you have not been out to the SF Bay Area, come on out, take a loook at all these areas, and then you can decide for yourself.
I have lived in San Carlos since 1986 and have raised my two sons here.
It is a small town (25,000 people) where there is a strong sense of community through the schools, through youth sports, and through a thriving downtown.
I have never locked my doors - the city is so safe.
You could buy a very nice 3/2 1500sf in San Carlos for $1M to $1.1M.
I do not know the Fremont market bvut my sense is you could buy the same house for say $700,000.
Assuming you could afford either price, it is only you who can decide whether the extra money is worth it.
Please let me know if I can provide you further information about the SF Peninsula areas. I was born and raised in Los Altos, have lived in San Carlos for 22 years, and have been in the real estate business here since 1978.
Either way the SF Bay area is a great place to live.