City of San José. Produced by of San Jose Department of Housing. Housing Market Update Q2 2014

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1 City of San José Produced by of San Jose Department of Housing Housing Market Update Q2 2014

2 San José Housing Market 1,280+ multi-family residential permits issued in Q2 2014, thrice the number of permits issued in Q Working class unable to afford average rents; renters must earn at least $31.70 an hour to afford a market-rate two bedroom apartment - 3 rd most expensive rental market in the nation 1 Santa Clara County has highest median household income in nation 2 Only 27% of the households can afford to buy a median priced home vs national average of 66% 3 1 National Low Income Housing Coalition, Out of Reach San José Mercury News August 11, National Association of Home Builders Housing Opportunity Index, Q

3 2014 Year-to-Date San José Residential Permit Activity 4,000 3,500 Number of Multi-Family Residential Permits 3,000 2,500 2,000 1,500 1, (To-date) Multi-Family Market Rate Multi-Family Affordable SOURCE: City of San Jose Housing Department 3

4 San José Average Rent Continues to Make New Records, Up 9% Annually, Up 5% from Q1, 2014 $3,000 $2,800 $2,600 $2,400 $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $2,947 $2,504 $2,169 $1,945 $1,584 $800 2nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr-2008 Average Monthly San José Rents 2nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr-2014 Studio 1bd/1bath 2bd/2bath 3bd/2bath Average SOURCE: RealFacts Second Quarter Data only includes rental projects with 50 units or more 4

5 Vacancy Down from Q1 2014, Approaching the Natural Rate 10% 9% 8% 7% Percent Vacant Rental Housing Units 6% 5% 4% 3% 2% 1% 0% 2nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr nd Qtr % 5 % 4.0% 2nd Qtr-2014 San Jose Vacancy Rate Natural Vacancy Rate SCC Vacancy Rate SOURCE: RealFacts Data Q2, 2014 Data only includes rental projects with 50 units or more, which makes up about 20% of rental market 5

6 North San José Rents Trend Higher than Average Rents Citywide Project 1BR 2BR Average Rent (Q2 2014) $1,945 $2,504 Enso $2,430 - $2,765 $3,095 3,380 Elan at River Oaks $1,970 - $2,299 $2,617 2,922 Epic $2,423 - $2,576 $2,908 - $2,917 The Oaks at North Park $2,275 - $2,550 $3,015 - $3,315 The Sycamores $2,530 - $3,470 $2,985 - $3,345 SOURCE: Zillow, July 16,

7 Market Rents Significantly Out of Reach for San Jose s Lower-Income Workers $120,000 $110,000 $100,000 Annual Income to Rent Three-bedroom Apartment ($117,880) Annual Income to Rent Two-bedroom Apartment ($100,160) $90,000 $80,000 Annual Income to Rent One-bedroom Apartment ($77,800) $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Retail Salesperson Janitor Healthcare Support Occupation Construction Laborer Elementary School Teacher Fire Fighter Police Officer SOURCE: Employment Development Department (EDD) May 2014 Wages. Income to rent calculation assumes rent is at 30% of income 7

8 San José Housing Affordability Remains Low Relative to the Nation Less than 1/3 rd of San Jose s Families Can Afford a Median Priced Home Q % Q % SOURCE: National Association of Home Builders 8

9 Mortgage Rates Continue to Remain Historically Low 8.00% 7.00% 6.00% 5.00% Interest Rate 4.00% 3.00% 2.00% 4.16 % 2.40 % 1.00% 0.00% Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun year Fixed Rate One-year Adjustable Rate Federal Funds Rate 0.10 % SOURCE: Federal Reserve, Freddie Mac Primary Mortgage Market Survey 9

10 Single-Family Median Price for SCC at Highest Level, Up 12% YoY and 5% from Q $1,000,000 $900,000 $910,000 Median Single Family Home Price ($) $800,000 $700,000 $600,000 $500,000 $795,400 $400,000 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Santa Clara County San José SOURCE: Santa Clara County Association of Realtors, MLS Listings June

11 Townhome/Condo Price Near Pre-Recession Highs, Up 5% YoY in San José, Slight Drop from Q $575,000 Median Towhome Price ($) $525,000 $475,000 $425,000 $375,000 $325,000 $275,000 $525,000 $457,000 $225,000 $175,000 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Santa Clara County San José SOURCE: Santa Clara County Association of Realtors, MLS Listings June

12 YoY Sales and Inventory remain flat; Inventory up 40% from Q San José Single-Family Homes Data Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 New Listings Sales Total Listings SOURCE: Santa Clara County Association of Realtors, MLS Listings June

13 Single-Family Homes Selling Faster - Days on Market Drops 30% YoY, 40% from Q Days on the Market in San Jose Days 18 Days 0 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Single Family Condo/Townhomes SOURCE: Santa Clara County Association of Realtors, MLS Listings June

14 Foreclosure Filings Back to Pre-Recession Levels 1,400 1,200 1, Sep-06 Dec-06 Mar-07 Jun-07 Number of Filings in San José 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 Notice of Defaults Auctions Bank-owned SOURCE: San Jose Foreclosure Radar June