Silicon Valley’s Last Affordable City?

For years the tech boom largely bypassed one part of Silicon Valley: East Palo Alto. It's just across Highway 101 from Stanford University and all the venture capital firms on Sand Hill Road. But until recently, East Palo Alto was a relatively affordable enclave for working-class Latinos and African-Americans. But that's quickly changing.

Jane Jones knows all about it. She was born and raised in East Palo Alto and now works as a Coldwell Banker real estate agent. After a freshly painted "For Sale" sign was pounded into the front lawn of her latest offering, Jones walked me around.

2881 Drew Court in East Palo Alto is a modest, three-bedroom house on a quiet little cul de-sac. At 1,200 square feet, it's certainly not big for Silicon Valley. But it comes with a 12,700-square-foot lot where a larger home could be built. Asking price: $985,000.

As they say in real estate -- location, location, location.

"You can get all the way to Google if you want," Jones says while standing in the backyard. "Or you can bike all the way up to Stanford if you need to. And definitely you can just jog up to Facebook if that's what you need to do. So yeah, this is a great location."

Jones says these days houses listed in EPA don't stay on the market too long and they attract multiple offers, often from out-of-town or even international investors.

"The Silicon Valley, the economy, I think, of Silicon Valley is going to swallow this place," Robert Hoover tells me. "And you can see the changes taking place."

Hoover moved here as a young man to attend Stanford, one of the very few African-Americans studying there then. He graduated in 1961.

"My wife and I got married and we tried to buy a house in Palo Alto," Hoover remembers. "We couldn't buy a house. They wouldn't sell us one. And so we ended up buying here."

Standing in front of the house he owned until a year ago, I asked him what he paid for it back then.

"$13,500," he says, laughing. "And it seemed like a lot of money then." Hoover sold it recently for $368,000.

Hoover was born in North Carolina 83 years ago, but to meet him you'd swear he was no more than 65 or 70.

When he arrived in East Palo Alto, it was about half African-American. It wasn't officially a city then. And Hoover got involved in a two-year political battle that led to it finally becoming a chartered city in 1982.

Over the years, East Palo Alto went through some very tough times. Failing schools. Crime and drugs. In 1992 it was called the "murder capital of the United States." Hoover helped organize neighbors to confront the drug dealers and take back their streets.

Through it all, says Hoover, East Palo Alto was a tight-knit kind of place.

"We knew every kid, every family on this block. And all the kids played together, and our house was one of the gathering places where the kids came and played."

As we're standing in the driveway of his old house, a woman living there comes out to say hi. "How are you?" she asks.

"She was my tenant until I sold my house last year," Hoover says.

Angela Brown says that if it weren't for Hoover, she couldn't afford to still rent this place.

"That was one of the things he made sure about," Brown says. "He made sure that I was able to stay in the house, whoever bought the house. And I've been able to stay here."

"That was one of the conditions of sale," Hoover confirms.

Today, East Palo Alto is about 65 percent Latino. Hoover still lives here. But he says a lot of his black friends cashed out years ago and moved to places like Tracy, Stockton and Fresno. Many of them, he says, wish they had never left. But they can't afford to come back now.

"Most of this population that lives here does not have the kind of income that will allow them to stay here," Hoover says. "Almost every house that's been on the market in the last 2½ years has been bought by someone outside the community."

In many ways, East Palo Alto has left behind its troubled past. Like any city, it has crime -- but nothing like it used to. Big-box stores like Ikea moved in. There's even an upscale Four Seasons Hotel here now.

"You can see a lot more white people in the community now," Hoover says. "And for the first time in -- God, I don't know, 15 years -- we had a white who ran for the City Council.  They didn't win, but they were close. They were close."

In this his ninth decade of life, Bob Hoover is still really active. He teaches golf to underprivileged kids. And he helps former prisoners get work. He seems to identify with the underdog.

"People who are not in the mainstream of the American economy, they need to have a place to live."

And he wants that place to be East Palo Alto. Bob Hoover is not the kind of guy who thinks all change is bad. He sees the upside of it every day. He did, after all, sell his house for more than 27 times what he paid for it. But he worries about what will become of the folks who live here now.

"Unfortunately, the people who are going to probably occupy East Palo Alto could live other places. They don't have to live here," Hoover reasons.

"And since this is really the only place people who are living here (now) can live, it's just a disruption of people's lives and their families. It's like so many other things in this country: If you're not part of the economically well-to-do, you just get the short end of everything."

Curious about the boom/bust cycle that is reshaping the Bay Area? Check out our Boomtown series.