Understanding the San Jose real estate market trends is crucial, but it's also confusing. In fact, the housing markets here are infamously expensive. There are fewer homes for sale, which pushes prices up, and potential buyers now have to deal with an affordability crunch.
Overall, single-family homes and inventory remain low at about two months. Likewise, home prices have declined because of the high mortgage rates and the housing demand. Compared to January of last year, the median home sold price is down by about 14.4 percent. Likewise, the median price for a two-bedroom house is about $865,000. Putting down 20 percent makes the monthly payment right at $5,266.
Let's dive in and see what San Jose, CA, has to offer.
San Jose Housing Market Trends
Santa Clara County, which houses San Jose, is considered a seller's market right now. The CAR (California Association of Realtors) just released the recent monthly report on the housing market.
A month's supply for San Francisco detached houses is 2.5 months, which increased from 1.6 months last year. This refers to how many months are required to sell the inventory of homes at the current sales pace. Six months is often associated with a moderate price appreciation, so we're sure to see price increases.
Here are a few points to consider:
- Existing home sales were down by 39.9 percent.
- The median price for existing homes was $1.5 million, which is down by 35.4 percent.
- The unsold inventory is sitting at 2.5 months.
- Median days on market is 23, which is higher than in previous years.
- The sales-to-list price was at 98.4 percent.
Factors Affecting the San Jose Housing Market
Here are the factors that push the housing demand in San Jose, CA, and Santa Clara County:
1. More Demand for Fewer Homes in San Jose, CA
San Jose real estate is competitive right now for buyers. Homes here receive about four offers on average, selling in about 28.5 days.
Overall, the average sales price of a San Jose home was about $1.13 million last month, which is down 6.3 percent. Likewise, the average sales price per square foot is $731, which is down 7.4 percent.
San Jose home prices went down by 6.3 percent in January 2023 compared to last year, so they sold for a median price of about $1.1 million. Likewise, it takes about 35 days on the market to sell San Jose real estate.
2. Its Location
San Jose, CA, is a huge city surrounded by Silicon Valley with its rolling hills. This is a huge technology hub in the California Bay Area. Likewise, it's in the heart of Santa Clara County, which is highly affluent.
The San Jose home prices were about $1.4 million, which is up about 7.8 percent.
San Jose is a great place to call home, but it's expensive. The job market and economy thrive here. In fact, the region saw the fastest employment growth rate in the nation. Since San Jose is found in Silicon Valley, the employees are often well-compensated. You've got Google and Apple, along with other startups that have been prosperous.
4. Higher Average Rental Rates
San Jose real estate comes with a median rent amount of $2,370. If you can find a property, it's possible to recoup your money spent in a few years.
Overall, rent in San Jose is flat month-to-month and up about 4.8 percent year over year. However, the median rent fell by 0.4 percent by January 2023 and has increased by about 4.8 percent in the last 12 months.
Will the Housing Market Crash in San Jose?
While the mortgage rates were at 6.27 percent in 2023, which is higher than January 2022, the supply is tight. With the other factors considered, such as the expense for San Jose real estate and a significantly higher median listing home price, you can expect the housing market to stay pretty steady. There shouldn't be price declines.
Overall, single-family homes in San Jose go for about $1.33 million. Though that's a high average price, it's down 14.4 percent from last year.
San Jose Housing Market Statistics
San Jose recently released its latest market report, showing quarterly data for the ownership housing market and rental market. William Chea is the president of the SCCAR (Santa Clara County Association of Realtors) and says that the housing market is shifting because fewer people are buying homes because there aren't as many options, and they don't want high interest rates.
Here are a few statistics to consider:
- One in eight families can afford the median sale prices in San Jose. Therefore, homeownership is out of reach for about 87.5 percent of all city residents.
- Buyers require at least $333,494 per year to buy San Jose homes at an average price. To put things in perspective, a condo or townhome costs $203,557, and renting a two-bedroom apartment will cost $120,640 annually.
Housing Market Predictions
Here are some generalized market predictions:
Lower Home Prices
Experts feel that there's a limited supply of homes available, but that won't cause the prices to decrease. However, some people think that higher interest rates will drop prices overall.
Though home prices are likely to fall steadily, that won't produce a dramatic decrease or offset higher interest rates. Therefore, homes seem less affordable with higher mortgage payments.
High Mortgage Rates
Professionals think that the mortgage rates will continue increasing because of inflation, the potential for a recession, and geopolitical tensions.
Lower Home Sales
High interest rates and mortgages will likely result in the number of houses sold. Therefore, the median days to sell will increase.
Downtown San Jose Housing Market Predictions
San Jose real estate is likely to be priced out of reach for most people. Therefore, they will need to save more money, go into debt, or be forced to continue renting. Investors with plenty of capital shouldn't have a problem, but they must consider the use of a real estate agent.
Overall, working with a Realtor can be ideal when trying to get into the best neighborhoods. However, it's important to note that home-buying in San Jose was greater than in Los Angeles, Riverside, San Diego, and San Francisco.
Since houses tend to stay on the market longer, this could be beneficial for investors. They can offer a lower price and are likely to get it because sellers want to be done. Still, real estate is a confusing and fickle thing. The list price might not come down just because you offer something lower.
While job growth is soaring in San Jose, CA, that hasn't made it easier for real estate investors. List prices aren't planning to go lower any time soon, and there's a high demand for the available inventory.
However, about one in eight families can't afford the median home prices listed. Therefore, investors might be able to get in where a traditional home buyer can't. Plus, investors must think about tech layoffs and how that might affect rent payments in the future.
What's the Average Sale Price for San Jose Real Estate?
Those selling real estate say that $1.13 million is the average price, but per square foot, it's $731 in San Jose.
Should I Invest in San Jose Real Estate?
People often hear that real estate investments can help them become wealthy, but you have to ask yourself if San Jose is the right place. Focus on the local trends to determine what this market holds now and in the future.
Since San José is in Silicon Valley, it stands to reason that it would be a good investment. You have excessively high salaries from all the tech firms, which drives up the cost for real estate. However, it also features the highest cost of living, so you'll have to check each person carefully before renting to them.