Housing Report: San Jose
A Spotlight on the Heart of the Silicon Valley
As California’s third largest city by population and self-proclaimed capital of the Silicon Valley, San Jose’s days as a sleepy agricultural town are long over. Large companies and institutions are driving this growth, cementing the South Bay as a technology, labor, and culture hub. The construction of Levi’s Stadium- the new home of the 49ers- coupled with Apple’s recent bid to create a 300,000 square foot campus addition in San Jose is drawing more attention to the largest city in the Bay Area. Several factors including a hot job market, median family income exceeding $100,000, and a population growth rate above California’s average have driven demand and pushed home values to record highs.
These factors make Silicon Valley resistant to housing bubbles found elsewhere in the state and nationwide. Many Real Estate experts are advising potential home buyers to begin their search now as further price increases, housing shortages, increasing mortgage rates, and an influx of outside investment capital are likely to make buying a home in the Silicon Valley much more difficult in the near future. Last year, despite a population increase of more than 14,000 only 378 single family homes and 4,071 multifamily units were built. Additionally, the majority of new housing construction is aimed at the luxury market, further increasing average home prices.
Despite being a great time to purchase a home, a shortage of new listings in the Bay Area market is creating a bottleneck for would-be buyers. “Not enough people are willing to sell their homes. They want to see how high prices will go.” say David and Vicki Harris of Alain Pinel Realtors, a luxury real estate company. “If you are considering purchasing a home and have the means to do so, it may be time to start looking. Renting and buying are only going to get more expensive.” Home values have increased by more than 10% in the past year, and conservative economists estimate prices to rise more than 4% in the next year.
The Harris Team strongly recommends renters to consider purchasing a home in the near future. “Many people just don’t know the true costs associated with renting. Renters give up many tax benefits, and paying rent is essentially building someone else’s equity” says David Harris. Vicki reminds renters that even though property taxes and mortgage-interest costs are significant, they are also deductible. There are also many benefits available to first time home buyers. With home prices on the rise and no sign of stopping, the time to begin your home search is now.
Written by Gregory Lyons in Association with Harris Team Real Estate