The health crisis had a significant impact on San Jose’s multifamily market, but some sense of recovery arose in the year’s first quarter. Rent movement exited negative territory and rose 0.6 percent on a trailing three-month basis through May, to an average of $2,604. Yet on a year-over-year basis, it posted the worst performance among major metros, down 9.0 percent. The occupancy rate in stabilized properties in the 12 months ending in April was also affected, recording a 210 basis-point drop to 92.2 percent.
The unemployment rate slid to 5.1 percent in April, leading the 6.1 percent national average, according to preliminary data from the BLS. The job market still has a lot of ground to cover, as it recorded an 8.2 percent contraction in the 12 months ending in March, below the -6.9 percent U.S. rate. The only sector that gained jobs during the period was information—which added 1,000 positions—while professional and business services (22.3 percent of the workforce) shrunk by just 1.2 percent. As large tech companies, such as Google and Apple, call employees back to the office this summer, it is likely they will create demand for jobs in the service industry, too.
Developers delivered 2,052 units to rental stock through May and had another 10,272 under construction. Meanwhile, investors remained cautious, with multifamily sales amounting to just $57 million, for an average per-unit price of $336,310.