City of San José. Housing Market Update Q 3. Produced by City San José Department of Housing

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1 City of San José Produced by City San José Department of Housing Housing Market Update Q

2 Q San José Housing Market San José is the third most expensive rental market and the second most expensive homeownership market in the nation 1 To date San José has met 3% of its annual affordable housing RHNA goal and 81% of its market-rate RHNA goal 2 Rents continue to set records, growing 11% year over year (YoY) Renters must earn $54/hour ($112,520/year) to afford the average rent for a two bedroom, two-bath apartment 3 Median single-family home prices remain high, up 14% YoY 1 Based on NHC Report Paycheck to Paycheck San José s Regional Housing Needs Allocation (RHNA) January 2014 October 2022 is 35,080 units; annualized goal is 3,987 units assuming an 8.8 year RHNA cycle 3 Based on Q realanswers average rents, income calculation assumes rents are 30% of income, 40 hour work week,and a single income household 2

3 Number of Multifamily Residential Permits 2015 Multi-Family Permit Activity Trends Low Compared to ,500 4,000 3,500 3,000 2,500 2,000 1,500 1, To-Date Multifamily Market Rate Multifamily Affordable SOURCE: City of San José Housing Department, Q

4 Average Rent Up 3% Quarterly and 11% YoY $3,269 $2,813 $2,486 $2,257 $1,831 SOURCE: realanswers Q Data only includes rental projects with 50 apartments or more 4

5 SJ Vacancy Rate Rises From 4.7% in Q2 to 6.3% in Q3 2015, Above the Natural Rate 6.3% 5.3% 5 % SOURCE: realanswers Data Q3, 2015 Data only includes rental projects with 50 apartments or more 5

6 Rents in Some Areas Trend Higher than Average Citywide Rents Project 1BR 2BR Average Citywide Rents (Q realanswers) Crescent Village (North SJ) North Park (North SJ) One South Market (Downtown SJ) 101 San Fernando (Downtown SJ) Ascent Apartments (Edenvale SJ) $2,257 $2,813 $2,595 - $3,275 $3,010 - $4,070 $2,445 - $4,060 $2,890 - $3,635 $2,600 - $2,887 $3,213 - $8,831 $2,296 - $2,632 $3,044 - $4,291 $2,380 - $2,669 $2,788 - $3,813 SOURCE: Zillow.com, Nov 4,

7 Market Rents Significantly Out of Reach for Many San José Workers SOURCE: Employment Development Department (EDD) July 2015 Wages; Income to rent calculation assumes rent at 30% of income and a single income household 7

8 % of Homes Affordable to Families Earning Median Income San José Housing Affordability Remains Low Relative to the Nation (6 th least affordable) Less than 1 out of 5 families in San José can afford a median priced home % % 10 0 Q3 15 Q3 13 Q3 11 Q3 09 Q3 07 Q3 05 Q1 02 Q1 00 Q1 98 Q1 96 Q1 94 Q1 92 San Jose, Sunnyvale, Santa Clara Metropolitan Area HOI National HOI SOURCE: National Association of Home Builders, Housing Opportunity Index Q

9 Interest Rate Interest Rates Remain Low 8.00% 7.00% 6.00% 5.00% 4.00% 3.89% 3.00% 2.59 % 2.00% 1.00% 0.00% Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Fixed Rate Adjustable Rate Federal Funds Rate 0.14% SOURCE: Federal Reserve, Freddie Mac Primary Mortgage Market Survey, September

10 Median Single Family Home Price ($) Single-Family Median Home Prices Fall Slightly from Record Highs of Q2 2015, up 14% YoY $1,000,000 $900,000 $950,000 $850,000 $800,000 $700,000 $600,000 $500,000 $400,000 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Santa Clara County San José SOURCE: Santa Clara County Association of Realtors, September

11 Median Towhome Price ($) Townhome/Condo Median Prices Drop 5%(SCC) and 17%(SJ) from Q Record Highs $625,000 $575,000 $610,000 $525,000 $475,000 $425,000 $455,000 $375,000 $325,000 $275,000 $225,000 $175,000 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Santa Clara County San José SOURCE: Santa Clara County Association of Realtors, September

12 San José Data New Listings & Sales Down 12%, Total Listings Up 22% From Q Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 New Listings Sales Total Listings SOURCE: Santa Clara County Association of Realtors, MLS Listings September

13 Days on the Market in San José Days on Market Remains Low but Rises From Record Lows of Q Days 24 Days 0 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Single Family Condo/Townhomes SOURCE: Santa Clara County Association of Realtors September

14 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 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 Number of Filings in San José Foreclosure Filings Stay Low, at Pre-Recession Levels 1,400 1,200 1, Notice of Defaults Auctions Bank-owned SOURCE: San José PropertyRadar.com Septmeber