I’m surprised anyone has heard of Forest Knolls! I grew up there.
It definitely used to be weird and relatively affordable for the middle class but not really any more.
Last year someone bought a house in the neighborhood for $1.3 m. It was worth $350k when my parents moved to the area about 25 years ago. The new owners have a pair of new Porsches in the driveway. Maybe that counts as middle class in the Bay Area these days but it’s still not obtainable for the vast majority of Americans.
$350k in 1997-dollars means that 25 years ago, it was worth $627k in today-dollars.
Adjusting for inflation, it's doubled in real value over 25 years, which works out to <3% APR. It's a decent return, but we've also ignored 25 years of property tax and maintenance. (on the other hand, we've also ignored 25 years of effective rent)
I guess the point I'm trying to make is that $1.3M isn't worth what it used to be but it sounds big in our head because we remember a time when a dollar went a lot further than it does today.
Just running some numbers into affordability calculators. Buying a house at $350k probably had your annual income between 70-80k which was about the top 1/3 of households 25 years ago. That was middle class. To afford $1.4M you're looking at an annual income around 350k. That's about the top 2%. Even if you stretch your budget more and have a hefty down payment you're still going to probably be in the top 5% of income to buy that house.
