housing market update - sanjoseca.gov

Housing Market UpdateSecond Quarter 2021

Leigh Avenue Seniors Apartment is a transit-oriented infi ll project located at 1690 Southwest Expressway, at the intersection of Leigh Avenue and Southeast Expressway. Built by First Community Housing, the project provides 64 units of affordable senior apartments over 6,750 square

feet of commercial space. All units are reserved for chronically homeless seniors. (Image Courtesy Apartments.com)

Renters must earn $52/hour ($108,960/year) to afford the average effective monthly rent for a 2-bedroom apartment1

Buyers must earn $122/hour ($253,428/year) to afford a median-priced single-family home2

933 residential building permits issued in Q2 2021, 25% of which were for affordable apartments

141 secondary unit / ADU (Accessory Dwelling Units) permits issued in Q2 2021

Average effective rent is $2,4463, up 5.7% QoQ4; overall residential vacancy rate is 6.6%, down 2 pts QoQ

Median single family home price is $1,480,0005, up 4% QoQ

Q2 2021 San José Housing Market

1. Based on Q2 2021 Costar average effective rents; income calculation assumes rents are 30% of income, 40-hour work week and a single-income household; "effective" rents include rent concessions such as free months' rent.2. Based on SCCAOR June 2021 median prices; income calculation assumes monthly payments are 30% of income, 20% down, 2.98% interest rate, 1.1% property tax, 40-hour work week, and a single-income household.3. Based on Costar Average Effective Rents, July 12, 2021.4. QoQ – Quarter over Quarter5. Based on Santa Clara County Association of Realtors (SCCAOR), June 2021.

2San José Housing Market Update: 2021 Quarter 2

SOURCE: Employment Development Department (EDD) – First Quarter 2021 Wages; Costar Q2 2021 Average Effective Rents; Income to rent calculation assumes rent at 30% of income and a single-income household; SCCOAR June 2021 median home sales prices; Income to mortgage calculations assume payments at 30% of income, 20% down, 2.98% interest, 1.1% Property Tax, $300 HOA dues for condos and a single-income household.

3

Many Essential Workers Cannot Afford San José Housing Costs

San José Housing Market Update: 2021 Quarter 2

$39,7

26

$41,7

36

$4

5,6

08

$58,6

86

$92,3

16

$130,1

90

$135,7

94

$10,000

$40,000

$70,000

$100,000

$130,000

$160,000

$190,000

$220,000

$250,000

$280,000

Healthcare Support

Occupations

Janitor Retail Salesperson Construction Laborer Elementary School

Teacher

Fire Fighter Police Officer

Annua

l In

co

me

Annual Income to Afford Average Rent for a Two-bedroom Apartment ($108,960)

Annual Income to Afford Average Rent for a One-bedroom Apartment ($87,720)

Annual Income to Afford Average Rent for a Three-bedroom Apartment ($136,720)

Annual Income to Own a Median Priced Townhome/Condo ($153,269)

Annual Income to Own a Median Priced Single-Family Home ($253,428)

SOURCE: City of San José Housing Department. MF Affordable Includes some market-rate units counted as moderate-income units, without deed restrictions, per HCD guidelines for RHNA reporting.

Quarterly RHNA Goal is 997 total units permitted


Q2 2021 Residential Permit Activity – 25% Affordable

234

399

94 8130

361

144 106

231

15

5

933

311

1,287

124

233

180

231

197

24

531

16

17

63

54

135

42

54

45

84

171

49

171

265

22

1,395

459

1,422

166

368

255

676

512

179

933

0

200

400

600

800

1000

1200

1400

1600

Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021

Uni

ts P

erm

itte

d

MF Affordable MF Market 1-4 Units /Second Units 2014-23 RHNA - Quarterly Goal TOTAL

5

Robust ADU Permit Activity

Zoning code updated in Nov 2016 and in June 2018 to conform with new State Legislation and to facilitate construction of ADUs

SOURCE: City of San José Permit Activity Reports as of June 2021.


22

51

176

301

602

553

479

1738

92

190

416

331

250

1543

116

257

479

683

836

0

100

200

300

400

500

600

700

800

900

0

100

200

300

400

500

600

700

2015 2016 2017 2018 2019 2020 2021

Cu

mu

lati

ve C

om

ple

ted

Un

its

An

nu

al P

erm

its

Applications Issued Cumulative Completed

SOURCE: Costar July 12, 2021.

* QoQ = Quarter-over-Quarter; YoY = Year-over-Year.

$1,905

$2,193

$2,724

$3,418

$2,446

6

Rising Rents – Avg Up 5.7% QoQ, Down 0.2% YoY


$800

$1,100

$1,400

$1,700

$2,000

$2,300

$2,600

$2,900

$3,200

$3,500

$3,800

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Eff

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Mar

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Re

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for

SJ

Studio 1Bdrm 2 Bdrm 3 Bdrm Average

SOURCE: Costar July 12, 2021.

.

$1,387

$1,949

$2,595

$2,924

7

Average Rents By Class – Class A Rents Fluctuate the Most


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2000Q2

2001Q2

2002Q2

2003Q2

2004Q2

2005Q2

2006Q2

2007Q2

2008Q2

2009Q2

2010Q2

2011Q2

2012Q2

2013Q2

2014Q2

2015Q2

2016Q2

2017Q2

2018Q2

2019Q2

2020Q2

2021Q2

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Class A Class B Class C Class F

SOURCE: Costar, July 12, 2021; National Rate – US Census Bureau Current Population Survey/ Housing Vacancy Survey Q2, 2021.

Q2 2021 Vacancy Rates

Studio – 5.7%1 BR – 7.3%2 BR – 6.6%3 BR – 4.6%

Average – 6.6 %

U.S. Average = 6.2%

8

Falling Vacancy - Avg Falls 2 pts QoQ, Still Above “Healthy” Rate of 5%

San José Average = 6.6%


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%2n

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Vac

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Studio 1 Bdrm 2 Bdrm 3 Bdrm Average 5% Healthy Vacancy Rate National Rate

SOURCE: Costar July 12, 2021

* Note: Older buildings refer to Class B, C and F properties; Class A buildings are usually newly-constructed properties.

9

Vacancies by Class – Class A Vacancy is 11% - Still High, but Down 4.5 pts QoQ


0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2000Q2

2001Q2

2002Q2

2003Q2

2004Q2

2005Q2

2006Q2

2007Q2

2008Q2

2009Q2

2010Q2

2011Q2

2012Q2

2013Q2

2014Q2

2015Q2

2016Q2

2017Q2

2018Q2

2019Q2

2020Q2

2021Q2

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art

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acan

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Class A Class B Class C Class F 5% Healthy Vacancy Rate

SOURCE: Santa Clara County Association of Realtors June 2021.

$1,735,000

$1,480,000

10

San José Single Family Median Home Prices Continue to Climb - Up 4% QoQ and 24% YoY


$400,000

$510,000

$620,000

$730,000

$840,000

$950,000

$1,060,000

$1,170,000

$1,280,000

$1,390,000

$1,500,000

$1,610,000

$1,720,000

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Jun

-10

Jun

-11

Jun

-12

Jun

-13

Jun

-14

Jun

-15

Jun

-16

Jun

-17

Jun

-18

Jun

-19

Jun

-20

Jun

-21

Me

dia

n S

ing

le F

am

ily

Ho

me

Pri

ce

($)

San José Santa Clara County


$825,000

$916,000

San José Condo/Townhome Median PricesUp 9% QoQ and 17% YoY


$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Jun

-10

Jun

-11

Jun

-12

Jun

-13

Jun

-14

Jun

-15

Jun

-16

Jun

-17

Jun

-18

Jun

-19

Jun

-20

Jun

-21

Me

dia

n T

ow

nn

ho

me

P

rice

($)

San José Santa Clara County

SOURCE: National Association of Home Builders, Housing Opportunity Index (HOI) Q2 2021.

San José Metro Area Affordability is Less than Half the National Average

San José Housing Market Update: 2021 Quarter 2 12

Less than 1 in 4 families can afford to buy a median-priced home in San José

57%

23%

0

10

20

30

40

50

60

70

80

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

2018

Q1

2018

Q2

2018

Q3

2018

Q4

2019

Q1

2019

Q2

2019

Q3

2019

Q4

2020

Q1

2020

Q2

2020

Q3

2020

Q4

2021

Q1

2021

Q2

% o

f H

om

es A

fford

able

to

Fam

ilies E

arn

ing M

edia

n I

ncom

e

San Jose, Sunnyvale, Santa Clara Metropolitan Area HOI National HOI


18 Days

11 Days

SJ Homes Sell Quickly


0

20

40

60

80

100

120

140

Jun-0

8

Jun-0

9

Jun-1

0

Jun-1

1

Jun-1

2

Jun-1

3

Jun-1

4

Jun-1

5

Jun-1

6

Jun-1

7

Jun-1

8

Jun-1

9

Jun-2

0

Jun-2

1

Day

s o

n M

arke

t in

San

Jose

Single Family Condo/TH

SOURCE: Santa Clara County Association of Realtors June 2021

S = 671

TL = 480

NL = 746

Single Family Inventory Increases 28% & Sales Increase 49% QoQ


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

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Dec

-16

Mar

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Jun

-17

Sep

-17

Dec

-17

Mar

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Jun

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Sep

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Dec

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Mar

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Sep

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Dec

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Mar

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Jun

-21

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é S

ing

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am

ily

Ho

me

s

New Listings Total Listings Sales

SOURCE: Federal Reserve, Freddie Mac Primary Mortgage Market Survey, Q2 2021.

2.98%

0.08%

2.56%

30-Year Fixed Rate Below 3%


0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21

Inte

rest R

ate

30 Year Fixed Rate 5/1 Hybrid Adjustable Rate Federal Funds Rate

Quarterly rents and vacancy data reflect average, effective, market-rate apartment rents for the geography encompassing the City of San José, as reported in Costar’s proprietary database

Effective rent is the average rent paid over the term by a tenant adjusted downward for concessions paid for by the landlord (such as free rent, moving expenses, or other allowances), and upward for costs that are the responsibility of the tenant (such as operating expense pass-throughs)

Costar updates rents data once a month for apartments with more than 30 units and once a quarter for apartments with fewer than 30 units

QoQ refers to Quarter-over-Quarter; YoY refers to Year-over-Year

For historical consistency, the City restated its rents and vacancy data back to January 2000 using Costar. The revised data has been posted in Housing Market Update reports since Q2 2017

Analysis based on Zillow Indices has been removed from the report, as Zillow ceased publication of the following Indices as of Q1 2020 – Rent Affordability Index, Mortgage Affordability Index, Price to Income Index

The City of San José selected Costar to supply rental housing statistics as of July 1, 2017, as the City’s previous vendor, RealAnswers, went out of business in Q4 2016

For questions, please call the Housing Department at 408-535-3860

Data Sources and Definitions


housing market update - sanjoseca.gov

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