Tour the obscure California city that's suddenly the hottest housing market in America

vallejo california hottest housing market 6017Melia Robinson/Business Insider

Vallejo, California, a small city across the bay from San Francisco, was named the hottest housing market in America by Realtor.com in June.

It's the last place that many Bay Area locals might expect to take the title. Vallejo, which briefly hosted the state capital between 1852 and 1853, became the largest city in California to declare bankruptcy in 2008. Its reputation for crime and squalor has previously landed the "Up Bay" city on Forbes' list of most miserable cities and Newsweek's list of dying cities.

But Vallejo is making a comeback as young professionals get priced out of San Francisco and Oakland and search for affordable housing in the far reaches of the Bay Area.

I recently spent the day in Vallejo to see how a downtrodden city became a top real-estate destination in less than 10 years.

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"Everyone wants something different for Vallejo," Fortner said, referring to the ongoing efforts to revitalize the downtown. "But everyone can agree, beer is good for the island."

"Everyone wants something different for Vallejo," Fortner said, referring to the ongoing efforts to revitalize the downtown. "But everyone can agree, beer is good for the island."

The next year, Fortner and his business partner, Ryan Gibbons, started brewing beer out of an old shed on the naval base that once stored coal for steam ships.

The next year, Fortner and his business partner, Ryan Gibbons, started brewing beer out of an old shed on the naval base that once stored coal for steam ships.

Mare Island Brewing Co. set out to distribute craft beer across the Bay Area. But the small-batch brewery quickly learned there was plenty of demand just in its hometown. Vallejoans came in droves to the waterfront taproom overlooking Mare Island.

Fortner expected locals to balk at the $6 pints, since some local dive bars still sell draft beers at the same prices they offered when the naval shipyard was in operation. But no one has complained to him. A pair of regulars explained that they're proud to have such a fine brewery in Vallejo.

Brewer Kent Fortner's company, Mare Island Brewing Co., is considered the crown jewel of Vallejo's rebirth. Fortner moved his family to Vallejo when they outgrew their house in Napa.

Brewer Kent Fortner's company, Mare Island Brewing Co., is considered the crown jewel of Vallejo's rebirth. Fortner moved his family to Vallejo when they outgrew their house in Napa.

In 2007, the winemaker-by-training couldn't afford a bigger property in the Napa area, so he started looking south. Fortner and his wife discovered they could buy the old Naval officer's quarters on the Mare Island peninsula in Vallejo. It was a steal at less than $1 million.

"If I won the lottery, I wouldn't move," Fortner said over a beer at his taproom.

I ended my day in Vallejo on a high note — with beer.

I ended my day in Vallejo on a high note — with beer.

Even tech companies can't resist the low prices. Factory OS, a modular-home startup that builds units like LEGO structures, moved into a warehouse formerly owned by the Navy.

Even tech companies can't resist the low prices. Factory OS, a modular-home startup that builds units like LEGO structures, moved into a warehouse formerly owned by the Navy.

A sign that reads "Mare Island Naval Shipyard" still hangs outside of the warehouse.

Factory OS is best known for landing a $30 million deal with Google parent company Alphabet to build 300 pre-fabricated apartment units for employees.

In 2016, electric-car startup Faraday Futures set out to build a manufacturing facility on Mare Island as well, but scrapped the plan in March amid ongoing financial woes.

Those days are over — the median home sale price reached $376,000 in July, according to Trulia.com. Vallejo remains one of the most affordable markets in the Bay Area, however.

Those days are over — the median home sale price reached $376,000 in July, according to Trulia.com. Vallejo remains one of the most affordable markets in the Bay Area, however.

By comparison, the median price in San Francisco topped $1.5 million last spring.

Prospective homebuyers in Vallejo can expect to compete with multiple offers and bids well over asking price, despite the fact that crime rates remain high.

While the revitalization of Vallejo remains a work in progress, real estate prices are already climbing. Ten years ago, people could buy a modest home in Vallejo for $100,000.

While the revitalization of Vallejo remains a work in progress, real estate prices are already climbing. Ten years ago, people could buy a modest home in Vallejo for $100,000.

Source: Realtor.com

A stroll down Vallejo's Georgia Street might also yield a B-list celebrity sighting these days — Netflix series "13 Reasons Why" returned there to film its second season along the main drag.

A stroll down Vallejo's Georgia Street might also yield a B-list celebrity sighting these days — Netflix series "13 Reasons Why" returned there to film its second season along the main drag.

The sign for Baker's Drug Store (behind the black tarp) is a prop for the show.

When I stopped to admire some empty storefronts on the fringes of downtown Vallejo, I noticed that the windows feature work from local artists. The Vallejo Art Windows project is a community-driven effort to increase foot traffic and approve the aesthetic appeal of the retail corridor.

When I stopped to admire some empty storefronts on the fringes of downtown Vallejo, I noticed that the windows feature work from local artists. The Vallejo Art Windows project is a community-driven effort to increase foot traffic and approve the aesthetic appeal of the retail corridor.

A few blocks away, the Empress Theater hosts a variety of live music and theater events. The 400-seat house wants to become a cultural center of Vallejo, according to the theater's assistant manager, David Constantino, but it doesn't have the budget for big-name acts.

A few blocks away, the Empress Theater hosts a variety of live music and theater events. The 400-seat house wants to become a cultural center of Vallejo, according to the theater's assistant manager, David Constantino, but it doesn't have the budget for big-name acts.

The theater currently hosts mostly unknown comedians and tribute bands for musical greats including Bruce Springsteen, Tina Turner, Rob Stewart, and Journey. But Constantino said it draws a rising number of San Franciscans who make the hour-long-trek from the city to catch a show.

On the second Friday of every month, the Hub stays open late for the citywide "Art Walk," which invites the public to grab food and shop pop-up galleries on the sidewalks.

On the second Friday of every month, the Hub stays open late for the citywide "Art Walk," which invites the public to grab food and shop pop-up galleries on the sidewalks.

I walked up and down the city's downtown for signs that Vallejo has become a destination in its own right. One fairly new fixture is an art gallery and event space called The Hub.

I walked up and down the city's downtown for signs that Vallejo has become a destination in its own right. One fairly new fixture is an art gallery and event space called The Hub.

Jody Lane, a co-curator at the space, said the non-profit organization was founded in 2013. Art enthusiasts can take classes in theater, music, dance, sculpture, and painting there.

The Hub celebrated its one-year anniversary of becoming a non-profit in April. Funding is scarce — it relies on donations, which come through sales of art supplies and gallery work. A Saturday farmers' market also pays $200 for use of the Hub's bathrooms.

That is, stuff to do beyond Six Flags Discovery Kingdom. The city's northern end is home to a popular 135-acre theme park complete with roller coasters and a marine-life exhibit.

That is, stuff to do beyond Six Flags Discovery Kingdom. The city's northern end is home to a popular 135-acre theme park complete with roller coasters and a marine-life exhibit.

Overall, Prather said he likes the changes he sees in Vallejo. As young professionals working in San Francisco migrate to the outer reaches of the Bay Area, new shops, restaurants, and art galleries move in alongside them. That means there's new stuff to do in Vallejo.

Overall, Prather said he likes the changes he sees in Vallejo. As young professionals working in San Francisco migrate to the outer reaches of the Bay Area, new shops, restaurants, and art galleries move in alongside them. That means there's new stuff to do in Vallejo.

Across the street from Gracie's, a military surplus store buzzed with customers shopping for Carhartt apparel, Levi's jeans, and flame-resistant, two-piece overalls.

Across the street from Gracie's, a military surplus store buzzed with customers shopping for Carhartt apparel, Levi's jeans, and flame-resistant, two-piece overalls.

Victory Stores has weathered the economic turmoil in Vallejo for over 70 years. "Work clothing never goes out of style," said owner Raymond Prather, who grew up in his grandfather's store.

When Prather opens shop in the mornings, he passes men wheeling roller briefcases on their way to the San Francisco ferry. They park their cars on his street because it's cheaper than the designated lots.

But the people of Vallejo have refused to give up on their city, according to several community organizers and small-business owners who I spoke with.

But the people of Vallejo have refused to give up on their city, according to several community organizers and small-business owners who I spoke with.

"If I had a dollar for every time I heard 'Vallejo has so much potential ...'" Ken Ingersoll, a Vallejo native and the owner of local fixture Gracie's Family Barbecue, said.

When the restaurant bordered a soup kitchen and a methadone clinic years ago, Gracie's drew mostly workmen who braved the crime-ridden area for baby back ribs and fried chicken.

Those establishments have since moved amid the revitalization of downtown Vallejo, and Gracie's now welcomes its regulars as well as prospective homebuyers touring the city.

Vallejo has long been a stronghold for the middle- and working-class.

Vallejo has long been a stronghold for the middle- and working-class.

The community was turned upside down in 1996 when the area's largest employer, the naval shipyard, closed. It left thousands of workers unemployed. Many sold their homes and left.

The worst financial crisis since the Great Depression arrived a little more than a decade later. Foreclosure signs went up on many blocks. The city no longer raked in the property taxes it needed to fund its workers' pensions. In 2008, Vallejo filed for bankruptcy.

That same year, violent crime and property crime rates in Vallejo reached more than double the national averages. Some of the foreclosed properties became drug dens and homeless encampments, Realtor.com's Clare Trapasso reported in a piece on Vallejo's comeback.

The main drag on Georgia Street gave off kind of a ghost-town vibe. I passed abandoned storefronts, homeless people, and a handful of police officers on their morning patrol.

The main drag on Georgia Street gave off kind of a ghost-town vibe. I passed abandoned storefronts, homeless people, and a handful of police officers on their morning patrol.

When I walked down the streets of Vallejo, I found it wasn't the gentrified urban playground for tech workers that I expected.

When I walked down the streets of Vallejo, I found it wasn't the gentrified urban playground for tech workers that I expected.

Vallejo is 30 miles north of San Francisco, but for many city residents, it might as well be a world away.

Vallejo is 30 miles north of San Francisco, but for many city residents, it might as well be a world away.

Vallejo residents who commute to San Francisco have the option of driving up to two hours in rush-hour traffic or taking a 30-minute ferry to the Embarcadero in the city.

A round-trip ticket on the San Francisco Bay Ferry costs $28, but commuters can purchase a monthly pass for $345, which saves riders $200 if they make the trip five days a week.

When I boarded a Vallejo-bound ferry, I expected to find a hipster enclave complete with artisanal coffee roasters and yoga studios on the other side.

When I boarded a Vallejo-bound ferry, I expected to find a hipster enclave complete with artisanal coffee roasters and yoga studios on the other side.
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