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Is San Jose The Hottest Real Estate Market For Investors In 2019?

San Jose Real Estate Market Predictions 2019

California keeps hitting the news as a figuratively toxic market spiraling down. If it wasn’t for legal and illegal immigration, the population would decline because so many natives are leaving. The business exodus is propping up Seattle’s real estate market. The state hits the news for bleeding edge political mandates while the public debates their cost. Why on Earth would anyone want to buy a home here? Quite a few, actually, despite housing prices in the state of California. Let’s look at the state of the San Jose real estate market before discussing why you’d want to invest in the San Jose real estate market over the alternatives.

San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing tech firms has driven up the cost of real estate. But what about the San Jose housing market itself? San Jose is the third largest city in California, home to roughly a million people. It has the highest cost of living of any area in the U.S., and it is one of the most expensive housing markets in the country.

San Jose Real Estate Market

Pic Credits: Pixabay.com | Photographer – Egor Shitikov

San Jose Real Estate Market Forecast 2019

On Zillow.com we can see, the median home value in San Jose is $1,093,200. San Jose home values have gone up 17.4% over the past year and Zillow predicts they will rise 15.4% within the next year. The median list price per square foot in San Jose is $645, which is lower than the San Jose-Sunnyvale-Santa Clara Metro average of $685. The median price of homes currently listed in San Jose is $968,944 while the median price of homes that sold is $1,016,700. The median rent price in San Jose is $3,400, which is lower than the San Jose-Sunnyvale-Santa Clara Metro median of $3,550.

San Jose Real Estate Market Forecast 2019

Graph Credits – Zillow.com

San Jose Real Estate Market Trends 2018

As per Trulia.com, San Jose real estate market trends indicate an increase of $140,000 (16%) in median home sales and a -1% drop in median rent per month over the past year. The average price per square foot for this same period rose to $697, up from $600. Trulia has 1,488 resale and new homes in San Jose lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sales price for homes in San Jose for Jul 18 to Oct 17 was $1,010,000 based on 1,885 home sales. Average price per square foot for San Jose was $697, an increase of 16% compared to the same period last year. The median rent per month for apartments in San Jose for Sep 22 to Oct 22 was $3,450.

San Jose Real Estate Market Trend 2018

Graph Credits – Trulia.com

San Jose Real Estate Market Trends – Summary

As per Neighborhoodscout.com, Single-family detached homes are the single most common housing type in San Jose, accounting for 53.43% of the city’s housing units. Other types of housing that are prevalent in San Jose include large apartment complexes or high rise apartments ( 25.20%), row houses and other attached homes ( 10.92%), and a few duplexes, homes converted to apartments or other small apartment buildings ( 7.02%).

  • Median Sales Price: $1,010,000 (On Trulia)
  • Price Per Sqft: $697
  • Homes For Sale on Trulia: 1,488
  • Median Rent Per Month: $3,450
  • Median Household Income: $83,113
  • Home Owners: 68%
  • Single Residents: 22%
  • Median Age: 36
  • College Educated: 44%

As per Movoto.com, The median list price in San Jose is $968,868. The median list price in San Jose was less than 1% change from October to November. San Jose’s home resale inventories is 1,063, which increased 2 percent since October 2018. The median list price per square foot in San Jose is $637. October 2018 was $637. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in November.

san jose housing market trends 2018

Graph Credits – Movoto.com

San Jose Real Estate Market Trends – Home Prices And Appreciation Rates

According to the stats from Neigborhoodscout.com, San Jose real estate appreciated 50.54% over the last ten years, which is an average annual home appreciation rate of 4.18%, putting San Jose in the top 10% nationally for real estate appreciation. If you are a home buyer or real estate investor, San Jose definitely has a track record of being one of the best long term real estate investments in America through the last ten years.

Appreciation rates are so strong in San Jose that despite a nationwide downturn in the housing market, San Jose real estate has continued to appreciate in value faster than most communities. Looking at just the latest twelve months, San Jose appreciation rates continue to be some of the highest in America, at 11.27%, which is higher than appreciation rates in 97.50% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in San Jose. San Jose appreciation rates in the latest quarter were at 4.09%, which equates to an annual appreciation rate of 17.40%.

10 Highest Appreciating San Jose Neighborhoods Since 2000: By Neigborhoodscout.com

  1. Mccoy Ave / Quito Rd
  2. Bismarck Dr / Phoenix Dr
  3. W Campbell Ave / Hamilton Ave
  4. Cambrian Park
  5. Carlton Ave / Union Ave
  6. Maitland Dr / Michon Dr
  7. Union Ave / Woodard Rd
  8. Kirk Rd / Hillsdale Ave
  9. Meridian
  10. Leigh Ave / Dry Creek Rd

San Jose Real Estate Market Trends – Foreclosures And Shortsales

Foreclosures will be a factor impacting home values in the next several years. In San Jose 0.1 homes are foreclosed (per 10,000). This is the same as the San Jose-Sunnyvale-Santa Clara Metro value of 0.1. The percent of delinquent mortgages in San Jose is 0.3%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of San Jose homeowners underwater on their mortgage is 1.6%, which is higher than San Jose-Sunnyvale-Santa Clara Metro at 1.5%.

On RealtyTrac, there are currently 464 properties in San Jose, CA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 637. In September, the number of properties that received a foreclosure filing in San Jose, CA was 12% lower than the previous month and 3% lower than the same time last year. Home sales for August 2018 were down 75% compared with the previous month, and down 20% compared with a year ago. The median sales price of a non-distressed home was $1,075,000. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

  • San Jose CA Foreclosures  = 464
  • Homes for Sale in San Jose CA = 637
  • Recently Sold Homes in San Jose CA = 3,785

10 Reasons For Investing In San Jose Real Estate Investment Properties

1. The Job Market

Wherever there are jobs, there will be people going there to seek work. As of this writing, San Jose has an unemployment rate of less than 2.5%, while California’s hovers around 4%. The very high average pay rate for any job in San Jose is simply another reason for people to move here. Note that the average salary is $84,000 a year. You can make twice that or more if you have the right technical expertise. This is the biggest factor driving the San Jose real estate market.

2. Big Tech Isn’t Going Anywhere

San Jose may have seen housing prices soften somewhat in 2018, but the high paying jobs that led to the incredible San Jose real estate market valuations haven’t gone anywhere. Businesses like Samsung, Qualcomm, Netgear, Cisco, Paypal and others are still located here. In fact, Samsung opened a new campus here in 2015. Apple’s new San Jose campus is under construction. People who want to work for these firms will either move to San Jose or try to find a cheaper market and commute in.

3. The Student Market

Any housing market will see a large and generally well-funded population of renters if there is a university in town. San Jose has several that attract students from around the world. Investors in the San Jose real estate market could buy up properties to rent out to the thousands of engineering and computer graduate majors attending the University of California Berkley campus, UC Santa Cruz, Stanford University, Santa Clara University and California State University. The students are coming to these schools in the hope of working for Big Tech, so they’re not going to leave if they have a choice.

4. Prices Have Softened but Demand Really Hasn’t

In January, 2018, Redfin ranked the ten hottest neighborhoods in the United States. Nine of the ten were in San Jose. When single home prices fall from 1.2 million to 1 million, homes now sit on the market for several days instead of being snapped up immediately. The median price for a new home or condo was $750,000 in 2018, down from a record of nearly $800,000 a few months prior. If you want to invest in the San Jose housing market, you should do it now while things are – relatively speaking – affordable.

5. San Francisco Is Still Relatively Expensive

We mentioned San Francisco tech firms moving jobs to Seattle to reduce labor costs or pay the same rate while giving workers a higher standard of living. However, the less often mentioned trend is San Francisco and Palo Alto firms moving to the South Bay because it isn’t as much of an inconvenience. After all, many of their own workers are moving to the South Bay to be able to afford a home. Smaller firms are starting up in San Jose instead of Mountain View because it is what they can afford.

6. Group Living/Working Arrangements Are the New Hot Housing Option

Co-working space allow small businesses and individuals to share work space at a lower overall cost per head. Co-living spaces bring the same economies of scale to individuals. You may have a bedroom to yourself or share it, but amenities like the laundry room, kitchen and entertainment are shared. It is hard to think of a more profitable opportunity for investing in the San Jose real estate market. Buy a building and convert it into a co-living space, charging several hundred dollars a month per bed for students starting up their own company or working for a Big Tech firm. If the dorm-like residence is next to co-working spaces, it is a marriage made in heaven.

7. Micro-housing Is Making a Comeback

Co-living spaces maximize personal space and quality of life by minimizing the size of bedrooms while having people share living rooms, bathrooms and gyms. However, not everyone wants to live in one of these “dorms for grownups”, but they can’t afford the $2500-3500 a month rent for a conventional apartment. San Jose is meeting demand by authorizing construction of new micro-apartments and renovation of existing structures to create micro-apartments.

San Francisco is considering amending their building code to reduce apartments from a minimum of 290 square feet of livable space to 150. San Jose is ahead of the curve with the 150 square foot minimum. If you want to buy and renovate single family homes or apartment buildings to carve up into many smaller and profitable units, now is the best time to invest in the San Jose real estate market. In fact, hotels are being converted to micro-apartments already to meet this newly affordable option in the San Jose housing market.

8. The Incredible ROI of RV Parks

RV parks have always been a potentially profitable venture for real estate investors. The tenant owns the home. The main requirements are land, zoning permission, and utility hookups for each trailer or RV parking spot. Laundry facilities and a small “store” can become profit centers. This is true of RV parks in moderately busy areas, but the return on the investment is incredible in San Jose. A “cheap” RV spot in the city costs $1500 a month, a price you pay elsewhere for a three bedroom single family home. If you buy one, you’ll receive significant cash flow. If you can create legal RV parking spots, you’ll cater to the hundreds of people living in illegally parked RVs throughout town and be helping provide safe, affordable housing.

9. Demographic Momentum

Silicon Valley is dominated by young professionals, many of whom want to start families. If you can invest in housing that caters to their needs and fits their budget, they’ll pay a premium for it. And as long as Silicon Valley continues to generate so many high paying jobs, it will continue to attract people who will eventually start families. If families continue to be priced out of the San Jose housing market, you can still rent the property out to young tech workers willing to pay $2000 a month to rent a bedroom in a single family dwelling.

10. Company Provided Housing Is on the Rise

If you want to invest in the San Jose real estate, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, you could buy now and hold until it sells. If that doesn’t happen, you could still turn it into coworking space.

Investing In San Jose Housing Market: The Conclusion

San Jose Housing Market

Pic Credits – Pixabay.com | Photographer Javier Alamo

If you are a beginner in the business of real estate investment, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the hottest US real estate markets. The strong US real estate market shows no signs of slowing, and is slated to remain among the world’s top performers in 2019. Big Tech makes San Jose one of the hottest real estate markets in the country. While the intense pressure is driving some companies and people out, the strong financial numbers continue to make the San Jose housing market a good place to invest. The unique redevelopment opportunities should not be overlooked.

Another hot market for investors in 2019 is going to be the Seattle real estate market. The latest Seattle real estate market trend 2018 shows that the average Seattle home sold for 6.3% above its listing price. These days, it’s averaging 6.6% below that price. And that comes as listing prices themselves are falling, dropping 7% since the spring. The Seattle’s real estate market has long been second to Silicon Valley, but its strong economy, diverse population, and better regulatory climate are bringing refugees from California and migrants from around the country and world to live here. Regardless of the area’s weather, the Seattle housing market’s outlook can only be described as sunny. Seattle has repeatedly hit lists as being among the top cities for real estate sellers to get the highest return on their investment. Property values have gone up consistently for years. Rental rates are high and continue to rise, guaranteeing ROI for those who buy and hold properties. We’ve already addressed the fact that you can raise rents as necessary to match the market. This means you will certainly be able to profit from the large rental market in Seattle whether you buy and hold or buy and flip.

Similarly, the Phoenix real estate market forecast 2019 is that it is going to be a hot investment destination for new real estate investors. Phoenix real estate market trends indicate an increase of $16,000 (7%) in median home sales and a -3% drop in median rent per month over the past year. As per Trulia, the average price per square foot for this same period rose to $162, up from $148. Phoenix deals with a large retiree population, both permanent and seasonal. To accommodate aging in place, they’ve loosened the rules on building “accessory dwelling units”, commonly known as mother-in-law suites. The city also recognizes the need for affordable housing, and they allow people to build and rent out ADUs as affordable housing, especially if the property is within walking distance of public transit. Buy a house, rehab it and build a granny flat, and you have two rental properties for not much more than the price of one. And the city is almost certain to approve it, because they want denser development.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you can fill up the form given here. One of our investment specialists will get in touch with you. Norada Real Estate Investments helps take the guesswork out of real estate investing. We can help you succeed by minimizing risk and maximizing profitability of your real estate investments.


References:

San Jose demographics and universities
https://en.wikipedia.org/wiki/San_Jose,_California

Big Tech isn’t going anywhere
https://appleinsider.com/articles/18/03/20/photos-apples-secretive-race-for-new-silicon-valley-office-space

Prices
https://www.sfgate.com/realestate/article/San-Jose-real-estate-hottest-market-Bucknall-12541044.php

Relative Deal
https://www.sfchronicle.com/business/networth/article/San-Jose-could-be-this-year-s-most-insane-12541492.php

San Francisco firms moving to San Jose
https://www.bizjournals.com/sanjose/news/2017/09/27/san-jose-tech-real-estate-boom-patterson-sheridan.html
https://www.sfgate.com/realestate/article/San-Jose-real-estate-hottest-market-Bucknall-12541044.php

Coliving / coworking
https://www.bisnow.com/san-francisco/news/multifamily/starcity-plans-massive-new-bay-area-co-living-projects-94057
https://www.sfchronicle.com/business/article/WeWork-s-Bay-Area-boom-extends-in-San-Jose-13038193.php

Microapartments
https://qcostarica.com/downtown-san-jose-hotel-encouraging-people-to-return-to-live-in-the-city/

RV parks
https://www.sfchronicle.com/business/article/Battle-over-RVs-in-Mountain-View-is-latest-sign-9961268.php
https://www.ozy.com/fast-forward/the-trailer-parks-of-silicon-valley/40612

Overall job market
https://bluewatercredit.com/a-look-at-san-jose-cas-remarkably-low-unemployment-rate/
https://www.payscale.com/research/US/Location=San-Jose-CA/Salary

Company provided housing
https://www.cnbc.com/2017/06/14/google-spending-30-million-on-housing-for-silicon-valley-employees.html

Market Trends And Forecast                                                                                                  https://www.zillow.com/san-jose-ca/home-values                                      https://www.trulia.com/real_estate/San_Jose-California/market-trends    https://www.neighborhoodscout.com/ca/san-jose/real-estate      https://www.realtytrac.com/statsandtrends/ca/santa-clara-county/san-jose


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