Housing market is hot in San Jose CA
Introduction
San Jose, CA (PRWEB) December 19, 2019 - The housing market in San Jose is hotter than ever. With so many people moving here to work and live, the housing prices has increased significantly over the past few years. According to a recent report by Zillow Group on home values across the country, San Jose is one of the top cities for real estate appreciation. In fact, it's expected that home values will continue to increase in 2020 as well.
There's a lack of housing in most major cities
The problem is that most cities don't have enough housing. If we're going to make sure that everyone has a place to live, we need to build more homes in places where people want to live. Cities like San Francisco and New York City have seen their rents skyrocket because demand for housing there far outstrips the supply of available units.
In those cities, there's an extremely vocal minority of residents who believe the answer is not building more housing but rather discouraging developers from building at all. They argue that if we restrict growth and density in our urban cores, prices will stabilize due to a lack of supply—but no matter how hard they try, they won't succeed in solving this problem without new development on vacant land elsewhere within their communities or beyond them into nearby suburbs (which would increase commute times).
The only way out of this problem is through increased density across metropolitan areas: increasing population densities while maintaining quality of life standards such as walkable access between transit stations and schools; reducing car dependency through density bonuses; allowing smaller lot sizes so more houses can fit on each block; preventing builders from raising heights over existing ones unless they provide additional open space (i.e., requiring setbacks); allowing duplexes/townhomes instead of single family homes where appropriate; preserving existing structures rather than tearing them down when redevelopment occurs (especially if they're historic); etcetera ad nauseam...
San Jose, CA has the highest average asking rents in the country.
The most expensive cities in America are San Francisco, San Jose, New York, Boston, Los Angeles and Washington D.C. These six cities account for about 30% of all households in the United States but take up more than 60% of the housing market's value.
San Jose is a hot spot for high-paying jobs and as a result has the highest average asking rents in the country at $3,612/month according to Zillow data (the lowest was Memphis TN at $945/month).
Demand is up
The demand for housing is high in San Jose, California. Many people are willing to pay more for housing than they used to. Some renters are willing to pay more for better amenities like air conditioning and on-site laundry, while others are happy with their current apartments but would be willing to move if they knew they could get a shorter commute or better schools.
Affordable housing is being built, but it's not enough.
There are several reasons why the housing market is so hot in San Jose. The cost of land and construction has made it more expensive to build new homes, which means that the demand for affordable housing will always be high. Permitting requirements often add months or years to the timeline of a project depending on what kind of building is being constructed, requiring appeal processes and environmental assessments before anything can begin. In addition, NIMBYs (Not In My Back Yard) fight tooth and nail against any development that might impact their property values or viewsheds—and if you don't have enough money for an attorney? Well then tough luck! Regulations vary from county to county within California, making it difficult for developers who need permits from multiple agencies within multiple jurisdictions just to get started on their projects. Lastly, COVID-19 has had a dramatic impact on construction costs as well...
The percentage of renters who are rent-burdened is up in San Jose.
If you're going to be a renter in San Jose, don't expect to save much money. The percentage of renters who are rent burdened has increased from 50% in 2016 to 56% in 2017. If you're not familiar with the term "rent burdened," it means that more than 30 percent of your income goes toward rent each month. It's no wonder why so many people are looking for new places to live; even though prices have gone up since 2016, so has wages and employment rates—meaning that now more people can afford homes than before.
Housing prices are at their highest since 2007.
In the San Jose metro area, the average single-family home price for the last quarter of 2017 was $1,086,000, which is up from $1,062,000 in Q1 2018. The median price did not increase much because there were more sales at lower prices than higher ones.
Housing prices and rents have increased more quickly over the past year than they did during the previous four years.
San Jose's rental market is heating up. The average asking rent has climbed 7% since this time last year, to $2,180 per month. That’s the highest it’s been since 2012 and nearly double what it was in 2009.
The housing market is hot as well: The average sale price of a house in San Jose surged 11% over the past year to $1.1 million—the highest level ever recorded by CoreLogic DataQuick. In fact, it’s almost twice what homes sold for back in 2009!
It should come as no surprise that all those increases have made homeownership difficult for many people in California's Silicon Valley region (and elsewhere). According to Zillow Research senior economist Aaron Terrazas: "The U.S., overall, has an undersupply of housing."
New construction is not keeping pace with demand, and prices are climbing to record levels
Demand is outpacing supply, so prices are climbing to record levels.
The problem is that there just aren't enough homes to meet the growing demand and rising population. San Jose's population grew by nearly 10 percent in the last six years alone—about twice as fast as national growth. And while new construction has been on the rise since 2011, it's not keeping pace with demand: In 2018 alone, there were only 2,900 housing starts while 9,000 units were built in 2017 and another 7,000 in 2016. That means you have to be careful about which neighborhoods you choose if you're looking for affordable housing. Unfortunately for those hoping for a quick fix from developers building more single-family homes or condos (including those proposed for downtown), their projects will take time before they start construction due to high costs associated with hiring labor and materials like steel beams necessary for new construction projects today
Conclusion
If you’re considering making a move, now's the time to act before prices rise even higher.