Two hillside estates, five million dollars apart. Only one has a view.

I spent this morning in a community most people in Santa Clara County have never heard of, and the afternoon confused about what I had seen.

The morning was The Highlands, up in the east Los Gatos hills off Shady Lane. Thirteen parcels. Almost all of the houses were built between 2014 and 2017, which in this county makes them practically new. The median lot up there is 1.85 acres. The one I toured — 15315 Santella Court, 6,194 square feet, built 2014, sitting on 1.72 acres with a view down the whole valley — is asking $6,995,000.

Then I drove over to Saratoga and looked at the hillside south of the village, around Villa Montalvo. Similar elevation. Similar view. Older houses, smaller houses, on lots that in most cases are smaller too.

They are asking close to double. One of them — a brand-new nine-bedroom on Hill Avenue, four tenths of a mile from Saratoga village — is asking $11,980,000 on a lot two thirds the size of Santella's, with no view to speak of.

That did not make sense to me standing in the street, so I went and pulled every large-home sale in both towns since 2020. It turns out something happened between these two markets, and almost nobody is talking about it.

The two markets swapped places

Median price per square foot for houses of 4,000+ square feet on lots of 20,000+ square feet — the actual luxury tier in both towns — by year of sale:

Sample sizes in parentheses. Read the two bold rows.

In 2022, Los Gatos was the more expensive of the two towns — $1,156 a foot against Saratoga's $898. Los Gatos commanded a 29% premium over its neighbor.

Four years later Los Gatos is at $1,115. That is not growth. That is flat — down slightly, in fact, from where it was in 2022. Four years of nothing.

Saratoga over those same four years went from $898 to $1,514. Up 69%.

The two towns did not just diverge. They traded positions. Saratoga now carries a 36% premium over Los Gatos on the same kind of house, and it got there while Los Gatos stood still.

The crossover is the story. Los Gatos led by 29% in 2022 and has gone nowhere since. Saratoga has run 69% in the same four years.

Two houses, five million apart

Medians are an argument. Two listings you can walk through this weekend are a demonstration.

$4,985,000 apart. Saratoga is 42% more per square foot of house and 154% more per square foot of land.

Now the fair side, because Hill Avenue is not overpriced for what it is. It is brand new — finished in 2025, where Santella is eleven years old. It is 1,300 square feet larger. It has nine bedrooms and eleven baths against five and seven. And it is four tenths of a mile from downtown Saratoga, which is a genuine walk, where Santella is a two mile drive down a hill. Every one of those is worth real money and I would not argue otherwise.

But stand in both and one difference does not show up in any table. The Saratoga house is beautifully finished and it looks at itself — a pool, a lawn, a gate, trees. The Los Gatos house looks at the entire Santa Clara Valley.

You are paying five million dollars more for eleven years of age, a shorter walk, a school district, and one fewer thing to look at.

15315 Santella Ct, Los Gatos. The terrace looks out. Asking $6,995,000.

20388 Hill Ave, Saratoga. The pool looks in. Asking $11,980,000.

What The Highlands has actually sold for

The Highlands is thirteen parcels and it does not trade often. Every recorded sale of a modern-built home up there:

The subject is asking essentially what the last one got. 15574 Shady Lane closed at $1,133 a foot in September 2023. Santella is asking $1,129.

And the neighbor on the same street is the tell. 15310 Santella Court — same street, one year newer, 700 square feet larger — sold in April 2021 for $5,400,000, or $783 a foot. The subject is asking 44% more per foot than the house next door got five years ago. Whether that is right depends on whether you think the 2023 print or the 2021 print is the better guide, and with six sales I cannot tell you.

What each town is actually building

Saratoga's new construction is mostly infill — 3,200 to 3,400 square foot houses on 10,000 square foot lots, down on the flat. Los Gatos's new construction at the top end is estate scale — 7,000+ square feet on one to two acres, up in the hills. Large houses on large lots always print a lower price per foot, because nobody pays the same rate for the seventh thousand square feet as for the first.

So part of this gap is not a discount at all. It is the arithmetic of size. But only part: Saratoga's 2026 median sits on 6,072 square foot houses, genuinely large, and those are the ones printing $1,514. Compare like with like and the gap survives.

So why does Saratoga cost more?

Three reasons, and only one is about the houses.

Schools. This is most of it. Saratoga's public school assignment is the single most reliable price premium in this county, and buyers with children under twelve treat it as a hard filter rather than a preference.

The village versus the town. Downtown Saratoga is small, quiet and residential in feel. Downtown Los Gatos is a genuine commercial district with real crowds on a Saturday. Some buyers pay to be near the first kind, some the second. That is taste, not value, and it cuts both ways.

Scarcity of the flat lot. Saratoga's most desirable inventory sits on relatively level ground. Los Gatos's newest luxury inventory is up a hill. If anyone in your household does not want to drive a winding road at night, the hillside discount is a fair price for a compromise, not a bargain.

And why would you choose Los Gatos?

Because of what $7 million buys.

From The Highlands you are about two miles from downtown Los Gatos — five to eight minutes down the hill, to a downtown with more restaurants, more retail and more of a night than Saratoga village. Minutes from Highway 17. Almost two acres, which at this price with a view is close to unbuyable in this county.

And a house built in the last twelve years. A 1957 Saratoga house at $1,754 a foot — one traded at exactly that this month — is a house where you buy the land and the schools and then write a second cheque for the renovation. The Highlands product is done.

Saratoga is buying schools and a village on an older house. The Los Gatos hills are buying land and new construction, with a better downtown, and no school premium.

If your children are grown, in private school, or you do not have any, one side of that trade is priced by a demand you are not competing for. That is the entire opportunity.

The honest limits

The Highlands is thirteen parcels and six modern sales, the most recent from September 2023. That is not a market, it is an anecdote with good documentation. The year-by-year table is what the argument rests on — 200+ sales across both towns — and I trust it far more than any single print on Shady Lane.

The 2026 rows are ten and twelve sales. Half a year in. One very large sale moves a median that thin.

Fire risk and insurance. Both hillsides sit where carriers have become difficult and expensive, and premiums have moved enough in three years to change what a buyer can afford. No price-per-foot table sees that. Get a quote before you fall in love with either hillside.

And the parcel data has holes. 15315 Santella Court is not in the county dataset I use, so its figures come from the listing rather than from records.

What I would actually do

If you are buying at this level: decide the school question first, honestly, then stop looking at the other town. Nearly everything else here is downstream of it. If schools are not a factor for your household, the Los Gatos hills are priced by a market competing for something you do not need.

If you own in the Los Gatos hills: four flat years is not a signal that your house is worth less. It is a signal that your buyer pool thinned while the neighboring pool got deeper. That is a distribution problem, not a value problem, and the kind that reverses.

If you own in Saratoga: you have had a 69% run in four years on a market that is now the most expensive per foot in the county. That is a good time to know your number precisely rather than approximately.

Standing on Santella Court this morning looking down at the whole valley, the thing I could not shake was that the same view, from the other side of the ridge, costs another two and a half million dollars. Some of that is schools. Some of it is a village. I do not think all of it is either.

Tim McMullen · McMullen Properties · Real Broker · CA DRE #02016832
[email protected] · 415-691-9272