California homes are making price gains

When Laura and Patrick Melendy bought their turn-of-the-century cottage in Point Richmond, Calif., last year, they hoped it would hold its value if the market cooled.

So far, so good.

Even as recent, rising interest rates and an increasing supply of homes for sale has dampened price growth for the overall Bay Area market, values in certain areas are still surging.

Not surprisingly some of the biggest jumps around the region in the last year have come in desirable spots such as Burlingame and Danville, where posh homes and strong schools abound. But others are in sections of Oakland and San Jose better known for rundown properties, slack test scores and, in some cases, higher crime rates.

What’s the attraction? In a phrase, affordable prices.

As the broader housing market moderates, the greatest appreciation is coming in places where buyers — many first-timers — can get in.

“A lot of the higher-priced submarkets are further along in the cycle, and their medians aren’t going up as much as in affordable areas,” said analyst Andre LePage of DataQuick, a real estate information firm. “Entry-level markets tend to have the largest appreciation at the moment.”

That could change if mortgage rates climb further or the job market falters.

For now, however, homeowners in certain neighborhoods stretching from San Jose to Santa Rosa are enjoying outsized gains.

Of the top 15 ZIP codes with the highest rates of appreciation for existing homes and condos between March-April of 2005 and March-April 2006, six were below the Bay Area median and four more were not much higher, according to figures compiled for The Chronicle by DataQuick. Only three ZIP codes had median prices higher than $1 million, and several were in the $400,000s.

Overall, the number of homes sold across virtually the entire region has slowed. And prices in some submarkets can be tugged higher or lower by the mix of homes selling.

But in several areas — including where the Melendys live — price increases remain well above the regional norm, according to DataQuick.

The 94801 ZIP code covers picturesque downtown Point Richmond, with its summer sidewalk sales and the stately natatorium — a historic indoor swimming pool known as the Plunge, which locals are working to restore.

Local real estate agent Luther Martin said a fixer-upper on Washington Street with a “small glimpse of the water” recently went on the market for $395,000. It received nine offers.

“Here you have properties that are still attainable to the average family,” Martin said.

The Melendys were living on a sailboat in the Richmond Marina before they decided to come ashore. Originally they hoped to buy a three-bedroom, two-bathroom home to accommodate their two elementary-school-age children. But those homes were too pricey. They settled on a spiffy 1,100-square-foot Victorian with leaded-glass windows and wood built-ins.

“The people who are moving in here are like us; they’re buying small homes and fixing them up,” said Laura Melendy, 36, a UC Berkeley engineer. “We could have spent $500,000 in Benicia, but we would have had a terrible commute and I don’t think it would have held its value if the market were to give.”

Nevertheless, Melendy notes that Point Richmond carries a stigma because of its proximity to the high-crime neighborhood known as the Iron Triangle; and she has friends who are leery of driving on certain nearby roads. During one night late last month, a string of six separate shootings in Richmond left three people dead and one seriously wounded.

Elizabeth Cisneros, a real estate agent, has lived in the northeast section of Richmond for five years. Though the crime wave hasn’t fazed her, she said many clients from San Francisco and Daly City view Richmond as the real estate equivalent of a stepping-stone. That is, first-time buyers move in for two years before they cash out and upgrade to Hercules or Pinole.

Another area with rising home prices despite a rough reputation is the section of Oakland east of the airport and north of San Leandro. In that ZIP code, prices jumped by nearly 23 percent between last spring and this spring, DataQuick found. The median for a house or condo stands at just under $418,000 — nearly $200,000 more than the national average, but among the lowest in the region.

On a recent weekday morning, a couple of homeless people slept on benches near a low-end shopping center near International Boulevard. A man was selling watermelons and cherries from the back of a dilapidated Ford truck, and groups of youths stood in the middle of side streets watching cars driving by.

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The schools in this area do not have stellar test scores. But these home price increases come at a time when Oakland is opening more schools and trying to boost student performance.

Zee Orviss, a real estate agent in the area, said the neighborhood is changing as more people from outside seek to gain a foothold in the housing market. According to Redlands (San Bernardino County) demographics firm ESRI, the percentage of households in the 94621 ZIP code earning from $50,000 and $99,999 rose from 20 percent in 2000 to nearly 26 percent this year. And the share of households earning $100,000 or more edged up from 4.3 percent to 7.6 percent.

Orviss recently listed a home on Bromley Avenue for $695,000 — a steep price for that neighborhood. But Orviss said the property boasts a double lot and plans for four 1,800-square-foot townhouses.

“Whenever a property goes up for sale on that block, it doesn’t last,” Orviss said. “It’s a quiet block with a couple of churches and there’s a child care center across the street. There are good parts of East Oakland and other parts that aren’t so desirable.”