Tri-Valley Real Estate in Demand | Home + Design | – Diablo Magazine

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Throughout much of the area known as the Tri-Valley–in particular, San Ramon, Dublin, Pleasanton, and Livermore–houses are sprawled over hillsides once dotted with cattle. Longtime residents who remember the landscape in the 1980s are still stunned when they drive down what was once a country road and there are houses as far as the eye can see.

But despite that growth and increasing demand, there’s one big problem facing Tri-Valley real estate: not much is for sale.

“There are more people than houses,” says Kylene Grippi, sales and marketing manager for local developer Ponderosa Homes. “There’s been underbuilding for the past 10 years.”

That lack of new construction has now brought prospective buyers face-to-face with the most immutable law of economics, that of supply and demand.

According to Compass, one of the largest real estate companies in the country, listings in the Tri-Valley area in 2023 were “far below historical norms.” And there’s no reason to think that will change in 2024.

“Inventory is still very low,” says Joujou Chawla, a broker/associate with Compass. Low inventory creates an environment where sellers keep the upper hand.

Chawla cautions, however, that even though the Tri-Valley is a classic seller’s market, it’s not as if just any property will sell for far over the asking price.

“Well-priced homes that are move-in ready will get multiple offers,” she says. “Fundamentally, a buyer prefers a home that is move-in ready.”

And though some say the rising interest rates limit demand, Chawla feels that concern is overblown—and unduly impacted by recent history. “I think the buyer has accepted that 7 percent interest is the norm,” she says. That 7 percent only seems like a big number because of the abnormally low interest rates in the past few years. “When I bought my first house here in 1985, the interest rate was 18 percent,” she adds.

“There are more people than houses. There’s been underbuilding for the past 10 years.”

—Kylene Grippi, Ponderosa Homes

So if people aren’t scared off by high interest rates, and there are plenty of folks looking to own, why isn’t more housing under construction? Why aren’t builders bulldozing hills today as they did 40 years ago? Why aren’t new houses springing up like weeds north of Interstate 580?

The answer goes back to an Alameda County ballot initiative called Measure D. Passed in 2000 with 57 percent of the vote, one of Measure D’s primary provisions was to preserve agricultural and open space in the unincorporated areas of Alameda County, even if that land was later annexed by nearby cities.

The unintended consequence is that once those cities were built out, the housing supply in the Tri-Valley was essentially frozen. And now, nearly a quarter century after Measure D’s passage, the cities are thriving and demand for housing significantly exceeds the supply.

City Snapshots

Homes do go up for sale, but buyers need to be ready to pounce when that happens–and since each of the aforementioned cities has something slightly different to offer, prospective buyers should zero in on the locale that best fits their needs.

For example, the presence of the Bishop Ranch business center in San Ramon, with its tens of thousands of workers, is a draw for homeowners—but it does increase competition for other buyers who don’t work at Bishop Ranch.

For those looking to avoid freeway traffic while commuting to San Francisco, Dublin might be the ticket. “The proximity to a BART station makes it easy from a commute perspective,” says Chawla.

Quality public education is another plus for many families, and “Pleasanton has excellent schools,” says Chawla. “People move here for schools. It’s a very hot market.”

Last fall, she saw 8 to 12 offers on Pleasanton homes in the $2 million range.

While Livermore promises lower home prices, its distance from major city hubs is a downside for some. Even though the ACE train can take commuters to Silicon Valley, the drive along I-580 can be a slog through trucks and traffic, which can hurt the real estate market. Still, “If you have money to spend,” says Chawla, “Livermore would get you the best house.”

Looking Ahead

So are we stuck with limited supply in the Tri-Valley, or will housing open up in the future?

Mark Shorett, a principal planner for the Metropolitan Transportation Commission and the Association of Bay Area Governments, thinks so, and finds hope in an unlikely space.

“There’s a lot of opportunity for infill as commercial properties age,” he says, and he thinks one of the biggest opportunities for additional housing is in—wait for it—parking lots.

“It’s a potential sea change,” he says. Those massive shopping center parking lots were built before Amazon started making daily trips to your door and are now often just vast expanses of asphalt baking in the sun. “They were built for the heaviest-use days, for Christmas shopping,” Shorett says. But now they could be sites for new housing.

In addition, many of those parking lots are near freeways and, in Dublin and Pleasanton, close to BART. “That’s a good place for cities to start,” he says.

Even after the space is found, however, there are other constraints.

Despite plenty of rain in 2023, the long-term outlook for water supplies in California is not particularly bright. “Where do you find the water [for new residents]?” asks Chawla. The cost of construction has skyrocketed as well, with lumber prices rising and supply chain issues still impacting the ability to build new homes. Finally, low-income housing requirements cut profit margins, making it even less attractive to developers to take on new projects.

Which means that country roads and empty parking lots are likely to remain country roads and empty parking lots for the foreseeable future—no matter how much developers and prospective homebuyers would like to see them filled with housing.

And it also means that happy sellers should retain the upper hand in the Tri-Valley real estate market for years to come.

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