Average MH Home Price About to Hit $1 Million

Single family homes in city just as expensive as dwellings to
the north
Morgan Hill – Got a million dollars to spend on a house here? How does it feel to be average?

The average price of a detached single-family home within Morgan Hill city limits hit $973,512 in March, a record high, and real estate experts agree that it’s just a matter of time before the meter ticks past $1 million.

“June,” said John Gormley, an Alain Pinel Realtor. “People want to move over the summer and get their kids in school by September. Because of the rush that naturally happens, you’re going to get prices over what you’re asking.”

The South County housing market has been moving in confusing directions over the last few months. Prices are going up, but not as quickly as in the last few years, and some Realtors are reporting episodes of houses closing below their asking price. The median home in price in Morgan Hill has actually plateaued since autumn 2005, and multi-million homes sales have dropped.

But with all that, the average price is still about to reach the daunting seven-figure mark, while the average price in Gilroy lingers around $830,000. The reasons, Realtors say, are many, starting with the slightly better commute into Silicon Valley and ending with the city’s more stringent growth control measures. In between is the relative income demographics of the two towns, a measure of happenstance and the odd dynamics of California real estate.

“People spend $800,000 on a house and invest it,” Gormley said. “With the improvements, it’s worth $950,00, and competition pushes it up to $975,000. It’s a vicious circle that doesn’t apply to other parts of the country, only here in our little bubble.”

Summer is the historically hot time of year in real estate. There are more homes on the market than there were a year ago, but there will be more people looking to buy than there were between October and March, when the average sale price jumped about $80,000. Adding to the price pressure is an influx of new homes in northwest Morgan Hill that will sell for a minimum of $875,000, said Tony Lupina, of Re/Max Valley Properties.

“Homes are more expensive because they’re newer and bigger,” Lupina said, predicting September as the month prices hit $1 million. “The average prices are higher, but you still get more bang for your buck.”

So, home buyers in Morgan Hill get 2,000 to 3,000 square feet for their $1 million, instead of 1,500 as in some other cities. But who can afford those prices? The income needed to afford a mortgage on a $1 million house is well into six figures. 

And that $300,000 down payment? No wonder some old timers say the city is losing its rustic charm.

“I’d have to get married and we’d need two incomes,” said Lydia Wells, who’s lived here most of her life. “When I was a kid, we lived in the country. The houses have emerged around us so we don’t really live in the country anymore.”

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Wells said she doesn’t mind if well-off people settle in her hometown, as long as they’re friendly, but many people worry that their children won’t be able to buy a house here, such as City Councilman Steve Tate, who moved to Morgan Hill in 1977. 

Tate has helped guide efforts to build affordable housing through the city’s redevelopment agency, but he’s also seen the impossibility of keeping the lid on home prices.

“I think there’s definitely a role, but you can’t manipulate the market,” he said. “You can’t take that kind of a role and I’m not sure you could do it if you tried.”

And, Tate said, high housing prices don’t equal a populace that doesn’t rely on city services. Not with a town full of “house poor” residents.

“It has an impact on who can afford to live here,” he said, “but people stretch to live here and then want things that are not upscale because they’ve stretched so far to buy their house.”