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ortola Valley, a Northern California town with a population of 4,397 and an average per capita income of $250,000, is facing financial difficulties despite being home to billionaires such as the co-founder of LinkedIn and the former CEO of Nike. The town's cash drains include a $2.1 million sheriff's contract that has more than doubled in three years and mandates to build 253 low-income housing units.

    Housing prices in Portola Valley remain high, with a median list price of $5.82 million in September, but the area has historically restricted multifamily housing construction. Real estate agent Sam Fitz-Simon notes that if low-income housing is built, it could deter buyers and lead to an increase in housing supply as people seek to leave the area.

    Despite reports of impending bankruptcy, Portola Valley home prices appear to be holding steady, with a 29.9% year-over-year increase in median list price in September compared to 0.2% for California and 1.5% nationally. However, inventory has increased, with 28 homes listed for sale, up 75% from last year.

    Realtor.com senior economist Joel Berner notes that the impending bankruptcy may not have had its full effect on the housing market yet, but the increase in homes for sale could be a preliminary indicator of a downturn to come. There have been some price cuts, including a $35 million sale of a mansion that was initially listed for $100 million.

    Detroit's experience with bankruptcy provides an example of how cities can recover. After filing for bankruptcy in 2013, Detroit saw its median home price increase by 113% over the next decade, attracting buyers and investors who took advantage of low prices. Today, Detroit is considered a real-estate boomtown, with a rising population and increasing property values.

    Similarly, Portola Valley may experience a turnaround if it can attract new investment and development. As one investor notes, "Investors come to Detroit from all corners of the country because the market is like no other." Perhaps the same could happen in Portola Valley.