Construction of homes in Gilroy is booming after years of developers sitting on land and opting to not build new neighborhoods.
In south Gilroy two projects will bring 2,400 single-family homes. In addition, attached homes and town homes are going up all around the south county.
The hot real estate market in Gilroy has sparked buyers to ink mortgage papers before their new homes are completed.
"There's a limited number of homes for sales, but a lot of buyers out there," said Steve Barsanti, a real estate agent with Coldwell Bankers.
Barsanti said the new construction will not meet the demand for homes in the area.
In Morgan Hill, for example, there are about 50 to 60 homes for a sale a month at a time Barsanti said he could sell about 150 homes.
The high demand is in response to buyers finding no luck in the the tight Silicon Valley housing market.
"As people get outbid there, they come farther from where they work or want to live," Barsanti said. "So they come here where we have a little more for sale."
Growing interest in bedroom communities like Morgan Hill is driving up home prices, with an average sale price in April at $842,000 -- more than a quarter-million dollars higher than April 2012.