When people talk about real estate affordability and gentrification often the focus is on housing for the poor. Myself, I don’t think this is the issue. People with means wouldn’t move into poor neighborhoods if there was housing they could afford elsewhere.
Most of the “multi-million dollar” houses in Palo Alto are not mansions. Many are not really worth that much because of the house; it’s just the land. These are modest homes which really are appropriate for middle class buyers. In fact they were often built with middle class buyers in mind.
But in places like Palo Alto they are now for two types of people: long-term residents (who also likely don’t pay much property tax), and those with very high incomes and/or wealth due to selling companies.
From an article published last year:
The average price of the Palo Alto homes that went on the market today is just over $3 million. With a 20 percent down payment and the state’s average 30-year fixed mortgage rate of 3.77 percent, the average monthly payment on those homes would be a little over $14,000, two-thirds of the monthly income for a quarter-million dollar household.
It’s hard to imagine that two married Google engineers in their twenties could afford a house in Palo Alto. It’s beyond their means. But these homes are not luxurious in and of themselves. They’re all that the upper upper middle class have access to nearby.
In Silicon Valley they love to reimagine stuff. But only some people like the demi-god Elon Musk are focusing on concrete things, like cars and rockets. They need to re-imagine housing. There’s no reason the people coding the future should live in post-war ranch homes.