To its neighbors in the San Francisco Bay Area, the city of Vallejo, CA, has long been known for several things. There was the notorious bankruptcy in 2008. There was the ignominious honor of ranking No. 9 on the Forbes list of Most Miserable Cities and No. 2 on Newsweek’s of Dying Cities in the same year (2011). There was the abandoned Mare Island Naval Shipyard, the violent crime, the squalor, the shuttered homes, the hopelessness.
One thing Vallejo was not known as: the next trendy place for Northern Californians to buy a house and raise a family.
But, remarkably enough, all that has changed. For the past two months, the metropolis has topped realtor.com®‘s rankings of the nation’s hottest real estate markets. As in No. 1.
Call it the latest beneficiary of the Bay Area’s brutal (and brutally expensive) supply-and-demand housing market. As more and more buyers and renters are priced out of San Francisco and the surrounding towns, they’ve become increasingly open to new frontiers. It’s led to a resurgence and gentrification in long-downtrodden Oakland. And now it’s hitting Vallejo big-time.
A little more than a decade later, the world economy tanked, the U.S. housing market cratered, and a wave of foreclosures swept through Vallejo. Without those property taxes to pay for the city’s public worker pension costs, the city declared bankruptcy.
At the height of the foreclosure crisis, homes were selling for about $100,000, says Vallejo real estate agent Debbie Raynor of Re/Max Gold. She used to list foreclosed properties for the banks that repossessed them.
“Still, nobody wanted to be in Vallejo,” says Raynor, adding that some of those empty homes became drug dens and havens for squatters. “It was blighted. There was a ton of crime.”
Violent crime is still a problem in the city, where it is more than double the national average. There were 18 murders, 63 rapes, 363 robberies, and 1,040 auto thefts in 2014, according to the most recent information available from city-data.com.
The city’s public school district is also struggling—receiving just a 4 out of 10 rating on GreatSchools.org.
So with high crime and lousy schools, how did Vallejo, with a population of about 121,000, become the nation’s hottest market? Sorry to trade in clichés, but as the real estate pros like to say (and say again), it’s all about one thing: location, location, location.
Vallejo’s comeback
Across the board, things in Vallejo are definitely looking up.
The city is just over 30 miles from San Francisco and about 60 miles from Sacramento along the Interstate 80 corridor. And when the workweek is over, it’s home to Six Flags Discovery Kingdom and a mere 16 miles from Napa and its surrounding wine country. In recent years, a “vibrant” artist community has moved into the city’s downtown, heralding the opening of several small galleries, says Rich Curtola, CEO of the Vallejo Chamber of Commerce.
And prices are only expected to continue shooting up. There are plans for hundreds of waterfront condominiums, some high-end rentals, and retail development along the Napa River, says Andrea Ouse, community and economic development director for the city of Vallejo. There are also schemes to put up hotels, a sports field, and a 3,000-seat amphitheater on the site of the Solano County Fairgrounds. There is no set date for construction yet.
“Land values are going to increase particularly over the next three to five years due to the level of investment that we are seeing now and the level of interest in potential development,” Ouse says.
Mare Island’s resurgence
And there are plans to put up a new ferry terminal, whiskey distillery, and 1,400 single-family houses, townhouses, condos, and rentals on the island as well, Moser says.
The Mare Island Brewing Co., which opened in 2013, is doing so well that it plans to break ground on a larger facility on the island this fall.
“Our taproom is so busy that we can’t keep up,” says Kent Fortner, the microbrewery’s founder/owner and a proud Vallejo resident. He’s seeing an influx of refugees from other, pricier Silicon Valley hubs.
“It’s headed upward. You can feel it,” says Fortner. “Everybody I know is relandscaping their lawns, doing a small remodel … or they’re actually thinking of buying a second home on the island as an investment to rent out.”
The biggest challenge to the burgeoning community remains the substandard public schools, a warship-size obstacle for many professionals with children. His own two kids attend a charter school in Napa.
However, he remains optimistic about the future of Vallejo.
“It’s a renaissance that has no limits,” Fortner says.
