San Jose Prices Out Many Residents
The metro’s lack of housing affordability continues to hinder population growth, as Silicon Valley’s multifamily market commands some of the highest rents in the nation, while the area’s median home price is approaching the $1 million mark.
San Jose’s multifamily market continues to be strong, driven by a technology-dominant economy. Developers are focusing on upscale assets in the vicinity of corporate campuses, further increasing the need for housing, especially for low- and median-income residents. The metro’s affordability issues continue to be a major headwind for population growth, as Silicon Valley’s residential market has some of the highest rents in the nation, as well as median home prices just under the $1 million mark.
The information sector led employment growth in the metro, having added 9,700 jobs in the 12 months ending in April, up 11.9 percent year-over-year. The construction sector also continued gaining momentum, with major commercial projects taking shape in the metro, including Moffett Towers II, a 1.8 million-square-foot office building that’s already fully pre-leased to tech giants Facebook and Amazon.
Development activity remains robust, with 9,800 units under construction as of June and another 46,000 in the planning and permitting stages. The overall high business and living costs, in addition to the prohibitive cost of homeownership, will continue to keep would-be homebuyers in the rental market. As a result, Yardi Matrix expects that metro rents will rise 3.1 percent in 2018. See the Spring San Jose Report.