Photograph by Kathy De La Torre
Vijay and Anita Ratnam and their daughter, Ashwini, 4, are happy to be in their new Saratoga home, even with its $2.35 million price tag.
Over the Top
Young families are bidding way over asking price to settle in the West Valley
By Kara Chalmers
This is the first of three front-page stories exploring the real estate boom in the West Valley. Next week: Long-time residents must decide if they can afford not to put their homes on the market.--Editor
The house on Braemar Drive in Saratoga is sparkling and modern, but empty. The hardwood floor is covered with blue tarp to protect it during remodeling. Large windows let the sunlight in and doors open off the master bedroom and one of the living areas to the pool and patio. There are no places to sit inside the home, so Vijay and Anita Ratnam sit on the fireplace hearth, with their 4-year-old daughter Ashwini.
Vijay Ratnam, 32, in a friendly and soft-spoken voice that still manages to echo off the walls, talks of how he and his wife, not to mention Ashwini, got sick of spending whole weekends going to open houses throughout the past year. The young couple had been outbid on four homes in Saratoga, the location they chose for their first home because of its beauty and its schools.
Success came finally in March, when they closed on the four-bedroom, two and a half bathroom one-story home for $2.35 million. The amount was $750,000 over the home's list price. They were scheduled to move their furniture from their two-bedroom apartment in Belmont on April 14.
"I think in the current housing market, it's not really a question of how much you want to pay, it's what you need to pay to get the house," said Ratnam. He said for this house, they were willing to give it their best shot.
The home is the first to sell for more than $2 million in the area known as the "golden triangle" between Cox, Saratoga Avenue and Saratoga-Sunnyvale Road, according to the Ratnams' real estate agents, Gary and Madeline Chiavetta of Fine Homes and Estates, Seville Contempo in Saratoga. The golden triangle became the "two million dollar triangle" almost overnight, they said.
It is no secret that here in the Silicon Valley, where high-tech start-up companies produce millionaires every day, 20- and 30-somethings are buying their first homes in high-end real estate towns like Saratoga and Los Gatos. They also are bidding a great deal over the asking price just to get them. According to the Chiavettas, Los Gatos and Saratoga were, at one time, only places that people aspired to "move up to" in the valley, where people in their 40s and 50s would buy their fifth or sixth homes.
Today, all that has changed. There's the 26-year-old who paid cash for a $2.1 million home in Saratoga without ever seeing the inside. He made his wealth through stock options and first bid unsuccessfully on four or five homes in Saratoga. And there's the young man in his early 20s who bought a home with his girlfriend, still in her teens, for $1.35 million in Saratoga and then another home in Los Gatos a few years later for $2.5 million.
And finally, there's the 30-something couple, who bought a Saratoga home in excess of $5 million--and paid cash. They plan to keep the outside as it is, but will spend several million more dollars gutting the inside of the home and completely redoing the property's landscaping. The whole project will cost only a fraction of their wealth, which they made from stock options in multiple start-ups, said estate specialist Russ Filice of Alain Pinel Realtors in Saratoga. Filice, 35, said that 75 percent of his clientele are in their 20s and 30s.
Photograph by Kathy De La Torre
Denise Silva shows the house they demolished when she and her husband bought property in Los Gatos. She designed their new home.
Filice notes that a Saratoga property just came on the market for $9 million. It is a two and a half-acre parcel with two homes on it. So far, it has had two showings, one to a couple in their 20s and one to a couple in their 30s.
There is also a clear trend in the increase of school-age children in the two cities. Owing to house resales to people with young children, the elementary school population in Los Gatos and Saratoga has steadily risen since the mid 1980s and is now at a peak, according to Jeanne Gobalet, a Saratoga-based demographer.
The new residents of the West Valley may be computer scientists, engineers or in sales, they may have been born and bred in this valley, or they may have been lured here from overseas by the promise of the new gold rush. What most of them have in common is stock options from high-tech start-up companies, that enable them to move here at a younger age than ever before.
People in the real estate business say that these buyers decide to purchase real estate because it is a safe and hard asset, and the market doesn't fluctuate overnight as does the stock market. According to Filice, these young buyers know from experience that they will have to pay at or above list price to buy homes in Saratoga or Los Gatos.
"They look at everything as a business decision," he said. "It's not worth their time to lose consistently. They don't want to waste their time on anything they do, and once they find a home they like, they do anything it takes to win. It's always about winning."
These young people may make bold business decisions but they are shy about sharing their identities. Couples like the Ratnams, who were willing to open up their home--and their lives to help tell the story of the changing face of our community--are more the exception than the rule.
According to some in the real estate industry, the younger and richer these buyers are, the more private or modest they seem (some realtors have even used the word "embarrassed") about the wealth they have made in high tech. Others in the business say it is the Silicon Valley that is the private place, much more than Beverly Hills, for example. Whatever the reasons, many are publicity-shy.
According to Filice, one reason the new young millionaires are so private is that since their money comes from stock options, any move they make might directly affect their companies' images.
"Their private lives could have financial consequences to their companies," he said.
Photograph by Kathy De La Torre
Anita and Vijay Ratnam paid $750,000 over the asking price of their new home.
Exodus Gold
Vijay Ratnam struck gold with Exodus stock, the technology web-posting company he has worked for since 1997 as a senior manager in development. He came to the United States from Hyderabad, in the Southern part of India, in 1990 to earn his master's degree in computer engineering at Louisiana State University in Baton Rouge.
He came to the Bay Area in 1992, worked at a small company and then at Oracle, a database company in Redwood City, for four years. He joined Exodus when it was still private. He was given what he says is the usual amount of stock options with the job, but the company has grown and done very well since it went public in March 1998.
Anita Ratnam earned a Ph.D. in genetics while in India, but switched to high tech after she lived in the Bay Area for a while because of all the opportunity here. She now is in technology support at Oracle. She has stock options, too, but not as many as her husband, because she joined Oracle after it went public.
In March 1999, Vijay and Anita decided to buy their first house. Besides having friends in Saratoga and Los Gatos, Ratnam said the climate here is similar to his home in India. There were good schools and nearby Indian restaurants, as well.
"When we started looking at houses last March, we were definitely not looking at this range," Ratnam said of the price he paid. But he said their real estate agents told them that if they wanted to live in Saratoga, they should expect to pay 30 percent higher than the asking price of the home.
They paid cash for part of the down payment on their house by selling stock, and they have a mortgage, as well. They are expecting their second child and are relieved to have found a home in time. They do not plan on any additions or big changes, just some remodeling. The price was more than they had expected to pay, but they liked the house better than any of the others they had seen.
"I guess we'd be at some open house now," Anita Ratnam said when asked what they would have done if their bid had not been accepted.
Both Vijay and Anita work. He regularly puts in 10-hour days while Anita works eight or nine hours. Vijay says it used to be much worse, when his company was still a startup and he typically worked 12-hour days. But he still says they'll have time to use their new pool.
'Wow' Homes
Jim and Lynn O'Brien, 41 and 39, respectively, recently bought an 1890s Victorian home on several acres in Monte Sereno, which is now in escrow. The listing price was $3 million, and they made a cash offer.
"There's no advantage except your offer is taken," she said about paying in cash. "It puts you ahead of the pack when they're looking at offers, because if you have a contingency for financing, you're pretty much out of the running."
According to Lynn O'Brien, the house is in poor shape structurally, and they have not yet decided whether they will try to save it or demolish it. She says she has admired the Monte Sereno property for years, and even went to parties at the home when she was a student at Los Gatos High School.
O'Brien worked in high tech until a year ago when she gave birth to her daughter. She worked for Bay Networks and Synopsis, and was part of the start-up team for AccessLand, along with her husband. Jim O'Brien now works for the high-tech firm SSL, and hopes to retire in the next couple of years.
O'Brien also develops high-end dream homes for Stonehenge Properties, one at a time. She has bought and sold real estate since she was 19, a talent she says was encouraged by her father. Today, she and her husband own five properties in the West Valley.
"My dad always said you cannot overextend yourself as far as real estate goes; put your last dime in it," she said. "I've been buying, selling and trading houses since I was 19. I couldn't go out with friends sometimes because I was making house payments."
She started with one condominium in Fremont, and has slowly moved, bought and sold property, back to this side of the valley.
According to Lynn O'Brien, overbidding is common today, because the extremely wealthy don't care if the home they want costs $6, $8 or $12 million.
"People with money want certain things in their home and they have the money to create it," she said. "They want a certain type of home. They want 'wow'."
According to her, this valley is just beginning to see dotcom money now because many in the high-tech industry haven't had the time to spend it. Others are vested and won't see the money for another few years.
"I believe the dotcom money hasn't even begun to be spent," she said. "These people are working night and day, slaving to make their product or company successful, so they haven't even had a chance to get out there and spend their money."
Photograph by Kathy De La Torre
After 10 unsuccessful bids on West Valley homes, Shelly and James Markwith felt lucky to get a two-bedroom bungalow on La Paloma Avenue in Saratoga a year ago for about $700,000. They remodeled and added a bedroom but will hold off on decorating for a while. With them are their children, Quinn, 6, Sara, 9, and Jimmy, 10 months.
Sparse, but Elegant
James and Shelly Markwith moved with their three children into their first house, in Saratoga, in December. They bought the home a year ago with the price in the low $700,000 range, after about 10 unsuccessful bids on homes in Saratoga and Los Gatos. They feel they got a great deal on the two-bedroom, one-story bungalow that they expanded and remodeled into a three-bedroom, 2,200-square-foot home.
James Markwith, 35, said his family is putting decorating on hold, since they want to do it right and they can't afford to do too much right now. "We put all of our money into purchasing the home, so we're furnishing it slowly for the time being," he said.
The Markwith's family room, with white walls, a polished hardwood floor and a huge picture window, is the first room one sees, when stepping through their front French doors. But it is empty, save for a piano, a bureau, some lamps and built-in bookshelves filled with framed photographs and books.
Markwith is a corporate attorney for Adobe Systems, in the software division of the San Jose high-tech firm. He is also an intellectual property law and economics professor at Santa Clara University's business school. He said he started aggressively investing in high- tech companies such as Cisco Systems in the early 1990s. According to him, the money he made from investments helped him buy the home.
Photograph by Kathy De La Torre
Denise Silva takes a stroll through her home under construction in Los Gatos.
The Old-Fashioned Way
Because of the overheated real estate market, one doesn't have to fit the above profile of the high-tech whiz to own a million dollar home in Saratoga, Los Gatos or Monte Sereno.
Denise Silva, 38, and her husband Michael, 40, of Los Gatos, did not make a fortune working in high tech; however, they are reaping the rewards of the real-estate market here.
"You don't have to be a dotcommer to do it," Silva said. "We did it the old-fashioned way. We invested in property and traded up."
Michael is an estimator for a pipeline company in Campbell. Denise was a manager in the electronics industry before she stopped working to take care of her children full time.
They bought their first home in Los Gatos for $120,000 when she was 23. They sold it for $219,000, two and a half years later, and bought their second Los Gatos home for $350,000. Three years ago, they started seriously looking for a "tear-down," a property they could purchase with the intent of tearing down the existing house to build a brand new one.
According to Denise, rather than trying to build a dream house, her family was looking for a way to save money. They sold their home for $737,000 and purchased a $611,000 lot in Los Gatos last April. They plan to build a new home designed by Denise on the lot.
When they bought the lot, it was overgrown with weeds up to her hips, Silva said. There were holes in the floor of the decrepit 900-square-foot home. The Silvas will end up with a two-story, 3,500- square-foot, four-bedroom home that she says will be a lot less expensive to build than buying a third Los Gatos home.
According to their real estate agent, Tim O'Halloran from the Property Network in Campbell, the home will be worth $1.6 to $1.8 million when it is finally built, about $500,000 to $700,000 more than what it will ultimately cost the Silvas to own and build. In the past year, O'Halloran says the land they paid for is now worth more, as well.
Silva said that a year ago, when she and her husband bought the property, some of her friends thought she paid too much. Today, her friends wonder how she got such a great deal.
"In most states, if you sell your house for some of the money you bought it for, you're doing pretty good," Silva said.
Photograph by Kathy De La Torre
Decor is still sparse in the expanded home of Shelly and James Markwith.
Interestingly, the Markwith's property has doubled in value since they bought it a year ago, according to Bill Gorman, their real estate agent from Coldwell Banker in Saratoga. While the Markwiths did expand their home by 1,000 square feet and remodeled it, the market in Saratoga has appreciated dramatically in the past year, Gorman said, which contributes to the increased value of the home.
As of March 2000, the median sales price for a house in Los Gatos was $865,000; the average sales price was $1,252,558 and there was an inventory of 94 homes. A year ago, in March 1999, the inventory was 138 homes; the median price of a home was $740,000 and the average sales price was $994,456. These statistics are from the local multiple listing service, RE Infolink, which provides statistics in the area.
In Saratoga, in March 2000, there were 70 homes in inventory; the median price was $1,710,000 and the average sales price was $2,031,536. A year ago, the number of homes in inventory was 116; the median price was $880,000 and the average sales price was $1,082,678.
These figures are averages. Filice says he has heard of homes selling in excess of $17 million in Saratoga and in excess of $12 million in Los Gatos.
"There's too much money chasing too few homes in a booming economy," said Gary Chiavetta, who has been in the real estate business for 25 years. "You have to change all the old rules. Nobody's buying homes anymore, it's an auction."
He said that in a normal market, there would be about 3,500-4,500 homes available in Santa Clara County. Today there are less than 1,000, he said.
Los Gatos Weekly-Times reporter Nate Huff contributed to this story.
Saratoga, California Since 1955
