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Produced by City of San José Department of HousingCity of San JoséHousing Market Update
First Quarter 2018
• 812 residential permits issued - 83 were for affordable housing
• Accessory Dwelling Unit permits climbed significantly since 2016
• Average rent growth was 4% Year-over-Year (YoY); vacancy ratewas 5% 1
• Average effective monthly rent for a 2-bedroom apartment was$2,626; Renters must earn $51/hour ($105,040/year) to afford thisrent 2
• Median single-family home price was $1,251,000, up 28% YoY;Residents must earn $122/hour ($253,500/year) to afford a home 3
• Condos/Townhomes sold twice as fast as single-family homes 4
1. Costar April 9, 2018.
2. Based on April 9, 2018 Costar average rents; income calculation assumes rents are 30% of income, 40-hour work week and a single income household.
3. Based on Santa Clara County Association of Realtors, March 2018 median prices; income calculation assumes monthly payments are 30% of income, 20% down, 4.4%interest rate, 1.25% property tax, 40-hour work week and a single income household.
4. Santa Clara County Association of Realtors, March 2018.
San José Housing Market Update : Q1 20182
Q1 2018 San José Housing Market
San José Housing Market Update : Q1 20183
Q1 2018 San José Residential Permit Activity
SOURCE: City of San José Housing Department, March 2018
Q1 2018 Total Permits – 812
Quarterly RHNA Goal is 997 total units permitted
16474 70 83
4
565
438 599 696
256
1,009
694
37 31
17
122
107
61
41
24
35
0
200
400
600
800
1000
Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018
Uni
ts P
erm
itted
Multifamily Affordable Multifamily Market Single‐family/Second Units/Other 2014‐23 RHNA ‐ Quarterly Goal
San José Housing Market Update : Q1 20184
2017 Second Unit Permits Up 140% YoY
Zoning code updated in December 2016 to conform with new State Legislation.
SOURCE: City of San José Monthly Permit Reports as of April 2018.
3
10 1013 14
2117
38
92
54
0
10
20
30
40
50
60
70
80
90
100
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018To‐Date
SOURCE: Costar April 9, 2018.
$1,858$2,126
$2,626
$3,257
$2,376
San José Housing Market Update : Q1 20185
Average Rent Up 4% Quarter-over-Quarter (QoQ) & 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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Ave
rage
Effe
ctiv
e M
arke
t Ren
ts fo
r SJ
Studio 1Bdrm 2 Bdrm 3 Bdrm Average
SOURCE: Costar, April 9, 2018, National Rate – US Census Bureau Current Population Survey/ Housing Vacancy Survey 4/26/18
San José Housing Market Update : Q1 20186
Average Vacancy at 5%
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Qua
rterly
Vac
ancy
Rat
e %
for S
J
Studio 1 Bdrm 2 Bdrm 3 Bdrm Average 5% Healthy Vacancy Rate National Rate 4% 3%
Q1 2018 Vacancy RatesStudio – 5.3%1 Bdrm – 5.4%2 Bdrm – 4.9%3 Bdrm – 4.4%Average – 5%
SOURCE: Employment Development Department (EDD) – First Quarter 2017 Wages; Costar April 9, 2018. Average Rents; Income to rent calculation assumes rent at 30% of income and a single income household; Santa Clara County Association of Realtors Q1 2018 median prices; Income to mortgage calculations assume payments at 30% of income, 20% down, 4.44% interest, 1.25% Property Tax, $375 HOA dues for condos and a single-income household/
San José Housing Market Update : Q1 20187
Housing is Out of Reach for Many San JoséWorkers
SOURCE: Zillow Rental Affordability Index Q4 2017– One Quarter Lag.
San José Housing Market Update : Q1 20188
San José’s Renters Spend Higher % of Income on Rent
36%
29%
0%
10%
20%
30%
40%
50%
2000Q4
2001Q4
2002Q4
2003Q4
2004Q4
2005Q4
2006Q4
2007Q4
2008Q4
2009Q4
2010Q4
2011Q4
2012Q4
2013Q4
2014Q4
2015Q4
2016Q4
2017Q4
Med
ian
Ren
t as
a %
of M
edia
n In
com
e
San Jose Metro United States
SOURCE: Santa Clara County Association of Realtors, March 2018.
$1,454,500
$1,251,000
San José Housing Market Update : Q1 20189
San José’s Single-Family Median Home Price Keeps Climbing - Up 10% QoQ and 28%YoY
$400,000
$510,000
$620,000
$730,000
$840,000
$950,000
$1,060,000
$1,170,000
$1,280,000
$1,390,000
Med
ian
Sin
gle
Fam
ily H
ome
Pric
e ($
)
San José Santa Clara County
SOURCE: Zillow Price to Income Index Q4 2017– One Quarter Lag
San José Housing Market Update : Q1 2018
San José Metro Area Median Home Prices 10x Median Income - Nearly Triple the National Average
10
10.1
3.5
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2000Q4
2001Q4
2002Q4
2003Q4
2004Q4
2005Q4
2006Q4
2007Q4
2008Q4
2009Q4
2010Q4
2011Q4
2012Q4
2013Q4
2014Q4
2015Q4
2016Q4
2017Q4
Rat
io o
f Med
ian
Hom
e P
rice
to M
edia
n In
com
e
San Jose Metro United States
SOURCE: Zillow Mortgage Affordability Index Q4 2017– One Quarter Lag
San José Housing Market Update : Q1 2018
San José’s Mortgage to Income Ratio is 2.9x National Average
11
46%
16%
0%
10%
20%
30%
40%
50%
60%
2000Q4
2001Q4
2002Q4
2003Q4
2004Q4
2005Q4
2006Q4
2007Q4
2008Q4
2009Q4
2010Q4
2011Q4
2012Q4
2013Q4
2014Q4
2015Q4
2016Q4
2017Q4
Mor
tgag
e P
aym
ents
as
a %
of M
edia
n In
com
e
San Jose Metro United States
SOURCE: National Association of Home Builders, Housing Opportunity Index Q1 2018
San José Housing Market Update : Q1 2018
San Jose’s Housing Affordability Remains Low Relative to the Nation (8th least affordable)
12
1 in 6 families in San José can afford to own a median priced home
17
62
0
10
20
30
40
50
60
70
80
90
2000 Q1
2001 Q3
2004 Q3
2006 Q1
2007 Q3
2009 Q1
2010 Q3
2012 Q1
2013 Q3
2015 Q1
2016 Q3
2018 Q1
% o
f Hom
es A
fford
able
to F
amilie
s E
arni
ng M
edia
n In
com
e
San Jose, Sunnyvale, Santa Clara Metropolitan Area HOI National HOI
SOURCE: Santa Clara County Association of Realtors March 2018
$895,350
$765,000
San José Housing Market Update : Q1 201813
San José’s Condo/Townhome Median Prices Up 11% QoQ and 20% YoY
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Med
ian
Tow
nnho
me
Pric
e ($
)
San José Santa Clara County
SOURCE: Santa Clara County Association of Realtors, March 2018
San José Housing Market Update : Q1 201814
Single-Family Inventory Up 70% QoQ, Down 45% YoY; Sales Up 30% QoQ & 4% YoY
453259
595
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Mar‐05
Jul‐0
5Nov
‐05
Mar‐06
Jul‐0
6Nov
‐06
Mar‐07
Jul‐0
7Nov
‐07
Mar‐08
Jul‐0
8Nov
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San
José
Sin
gle-
Fam
ily D
ata
New Listings Total Listings Sales
SOURCE: Santa Clara County Association of Realtors March 2018
9 Days
San José Housing Market Update : Q1 201815
17 Days
Condos/Townhomes Selling Twice as Fast as Single-Family homes
0
20
40
60
80
100
120
140
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Day
s on
Mar
ket i
n Sa
n Jo
se
Single Family Condo/Townhomes
SOURCE: Federal Reserve, Freddie Mac Primary Mortgage Market Survey, Q1 2018
4.33%
1.51%
3.65%
San José Housing Market Update : Q1 201816
Interest Rates Continue Upward March
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Inte
rest
Rat
e
30 Year Fixed Rate 5/1 Hybrid Adjustable Rate Federal Funds Rate
Data Sources and Definitions• The City of San José selected Costar to supply rental housing statistics as of July 1,
2017. The City’s previous vendor, RealAnswers, went out of business in Q4 2016 • The City has restated rents and vacancy data beginning January 2000, using Costar. The
revised data will be posted in the Housing Market Updates beginning in Q2 2017• The source of the quarterly rents and vacancy data will be 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)
• The rents reported are average market rate rents charged by existing market-rate apartments; Costar updates rents data once a month for apartments with more than 30 units and once a quarter for apartments with less than 30 units
• For questions, please call the Housing Department at 408-535-3860
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