Maria Lopez-Okano grew up in East Palo Alto and started selling real estate in her home town in 1987.
For the last 31 years, the ReMax Realtor has seen many market cycles, including boom times that sent property values in neighboring cities skyrocketing. Though East Palo Alto seemed immune to market growth, she always thought there would come a time when her town would be the place to buy. And now it is, she said, only about two years after she thought it would happen.
This summer, for the first time ever, the average price of a home sold in East Palo Alto topped $1 million.
Lopez-Okano described this once-ignored working-class community as "a 2 1/2-mile-radius city amongst million-dollar properties" that's suddenly on everyone's radar because it is relatively affordable in a sought-after part of the Midpeninsula. In September, East Palo Alto had 16 homes on the market listed under $1.5 million, and Menlo Park had about three or four in the same price range.
According to the Silicon Valley Association of Realtors, which collects its data from the Multiple Listing Service, East Palo Alto's median home value -- the price of the home at the midpoint of all homes sold in the city each year -- has jumped $580,000 over the past six years, from $400,000 in 2013 to $980,000 in 2018. The market showed the largest gains between 2014 and 2016 when the annual median value rose $150,000 and $125,000 respectively.
So far this year, the highest sale recorded was $1.9 million for a 1,660-square-foot home with three bedrooms. The lowest recorded sale was $415,000 for a 1,050-square foot home.
The market is expected to rise another 10.3 percent within the next year, pushing the median home value to $1.06 million, according to the online real-estate database company Zillow.
"The only bad thing is we're going through major gentrification," Lopez-Okano said.
She said people used to carefully assess what street or part of the city they bought in because some were cleaner or safer than others. With the city bisected by U.S. Highway 101, homes on the west side were considered more desirable because of their proximity to ultra-wealthy Palo Alto and Menlo Park, and there was a perception that crime was not as frequent there as on the "east side."
But that is not as much the case today.
The violent crime, homicides, drugs and gang activity, which reached a pinnacle in 1992, are significantly reduced. Until this fall, the city hadn't seen a single homicide for more than two years.
Are buyers deterred by the lingering perceptions of crime or the city's current issues with trash-strewn streets? Not really, she said. What about the struggling public schools? Lopez-Okano said she often refers clients to the voluntary transfer program that allows East Palo Alto students in the Ravenswood City School District to transfer to other surrounding districts.
"We have a lot of really nice charter schools," she added.
Her buyers are often young couples without children, so the school decision can be made later on down the road. She said that some of her clients are Stanford University graduates who are teaching in schools in East Palo Alto.
What's changed among her buyers?
"It used to be (I sold to) African Americans, (Pacific) Islanders or Hispanics," she said, but now, "in the last six years, I haven't sold to any of those. "What I'm seeing come in is young professionals who are racially mixed," Lopez-Okano said.
She personally doesn't sell to investors or those who probably won't live in the community.
"I want to see the community get better," she said.
She encourages her clients to do "due diligence" and come to town at the end of the day and on weekends to get a sense for what it would be like to live there and gauge things like safety, what it's like to walk there, what it's like to live on a certain street.
Unlike Lopez-Okano, Realtor Paymon Ghafouri feels like there are certain neighborhoods that might be more sought-after than others. He said the most popular part of East Palo Alto is the southern side of University Avenue and the west side of Bay Road, which are closer to schools, Baylands open space and the Ravenswood 101 shopping center.
He agrees with Lopez-Okano that it is important to have clients experience the city for themselves.
"I encourage (potential buyers) to come one morning. ... They see that people of all skin colors are jogging, walking children to school, riding their bicycles."
He sees lots of executives from Google, Facebook and Tesla, as well as Stanford University employees, buying homes. The majority view it as a place to live that's closer to work or to the Dumbarton Bridge, which connects to Fremont.
Ghafouri, who has his own real-estate firm in Redwood City, said East Palo Alto is one of the hottest real-estate cities in the Bay Area and the No. 1 hottest city on this side of the bay.
He personally owns five properties in East Palo Alto and lives in one in the Gardens neighborhood. Most of his buyers renovate their homes, rather than tearing them down, he said.
About half of his buyers live in the homes; the other half buy them as an investment. One client he works with has 11 properties, eight of which Ghafouri sold him.
His buyers are often young couples without children.
"It's a stepping stone" where many couples are choosing to live now before buying later in a nearby city when they have children, he said.
Intero Realtor James Shin mostly sells in neighboring east Menlo Park, which shares similar demographics to East Palo Alto. He said the trends he sees in east Menlo Park and the eastern neighborhoods in Redwood City can easily apply to East Palo Alto.
"Eastern Redwood City, east Menlo Park and East Palo Alto are still continuing to gentrify," he said.
Facebook "has (had) a huge impact."
Many of his clients are investors, who are willing to take more financial risks since the city's track record for property appreciation is still relatively short. Others are "aggressively exploring" east Menlo Park acquisitions as a result of Facebook.
While he was showing an east Menlo Park home recently, a majority of the visitors to the house were interested in it "because of its close proximity to Facebook," he said. They "see (Facebook) as a factor in continuous gentrification of the area."
He doesn't have a firm statistic but said that in his experience, 80 percent of the buyers he deals with are local investors and 20 percent are out-of-town buyers who are relocating to the area. Three of his recent sales (two in East Palo Alto, one in east Menlo Park) were to local investors.
The addition of new housing is on the city of East Palo Alto's radar, as its general plan envisions adding 2,500 new residential units by 2040.
City leaders have the power to decide what their vision should be and how they want their city to look, but market forces don't necessarily pay attention to that. Longtime East Palo Alto resident Maureen Larsson, who had a career at a technology company, has very mixed feelings about the changes the escalating real estate market is causing.
"I mostly only see the high real estate prices as a good thing as far as city revenue is concerned," Larsson said. "I'd be more inclined to see it as a good thing if banks weren't currently refusing so many housing loans to African Americans and Latinos," she said.
She said it's important for East Palo Alto, as it is in most communities, to maintain "cultural identifiers" amid gentrification. She said the key is likely for newcomers to make the effort to understand the city's history.
"Don't try to affect change without buy-in from long-term residents," she said.
On the flip side, long-term residents need to "build relationships with newcomers who want to preserve the unique aspects of this community," she added.