Morgan Hill home sales weren’t slowed by 18-month cooling
period, insiders say
Morgan Hill – Housing experts say the South Bay market is poised to take off after an 18-month cooling period that didn’t slow high-demand buying in Morgan Hill.
With the market looking bullish in 2007 and 2008, some think Morgan Hill’s home prices will soar higher above the million-dollar mark as buyers’ confidence is renewed in the Bay Area and beyond as the cyclical housing market gets ready to heat up after two below-average years.
In Morgan Hill, developers say desirable neighborhoods and a tight housing supply are driving the trend.
“I think Morgan Hill would appreciate with the market” if there’s a rise in Bay Area prices overall, said Jim Pedicini, CFO of Dividend Investments, a large developer based in Morgan Hill. “The city’s becoming more attractive with each passing year with the new (Sobrato High School) and plans for downtown development.”
While Morgan Hill may be relatively “undiscovered” in the Bay Area, Pedicini said lower prices are luring more and more buyers from communities such as San Jose’s Evergreen area.
“Morgan Hill has become more attractive in the Bay Area,” he said. “Highway 101 opened up and there’s robust industry opportunity in Silicon Valley.”
While real estate watchers can trace an 18-month cooling period in the Bay Area housing sales – mirroring the national trend – Morgan Hill’s market has showed little weakness because the city’s growth control law. Even as the demand end of the curve starts languishing, values hold in Morgan Hill because only 250 new homes can be built each year.
“With growth restrictions, there’s never that much housing supply,” said Paul Desmet, president of Ryness Company, a San Ramon-based data research company. “There’s very little likelihood that there will ever be an overbuild in the housing market in Morgan Hill.”
Which means, once prices are up, they’re likely to stay that way. But Desmet said that’s generally true in the Bay Area – if buyers can make a five-year investment in a home, they’re likely to see a good return no matter where they live.
In Morgan Hill, the number homes – including apartment units – under construction is 213. The biggest project, 57 units, is South County Housing’s Royal Court apartments on Monterey Road, which has 38 units for low-income buyers. Other low-income developments are the Jasper Park project at 530 E. Dunne Ave., with 34 units under construction, and the Villas of San Marcos subdivision, with 36 homes under construction.
Dividend Investments’ Mission Ranch, a development on Cochrane Road east of Highway 101 that will eventually hold 328 single family homes, is currently selling four to five bedroom homes at $1.2 million. Almost 30 homes are under construction and 100 are already built.
Pedicini said many homes get sold before they’re completed.
“We still have a number of potential buyers coming through,” he said.
Record home prices in the Bay Area in 2003 and 2004 caused the market to deflate in 2005 and 2006, Desmet said. But prices in the South Bay picked up in October as the nation’s economy showed signs of growth.
“Interest rates are low, energy costs are down and consumer confidence is up,” he said. “The only sectors that are off are the auto industry and housing. But they’re cyclical. We’ve seen less housing demand over the last 18 months but we’re starting to see signs of a turn-around … and 2008 could be bullish.”
Tony Burchyns covers Morgan Hill for The Times. Reach him at (408) 779-4106 ext. 201 or tb*******@*************es.com.
