City of San José Produced by City of San José Department of Housing Housing Market Update Second Quarter 2016
Q2 2016 San José Housing Market In Q2 2016, 368 residential permits were issued - 81 affordable, 233 multi-family market and 54 single-family/other permits The San José, Sunnyvale, Santa Clara Metro Area is the third most expensive jurisdiction in the nation for fair market rents 1 Donner Lofts received 1,515 applicants for its 81 available affordable apartments in two weeks 19 applicants per apartment SJ Average Rents up 4% year over year (YoY) 2 Average monthly rent for a 2 bedroom apartment is $2,847; Renters must earn $55/hour ($113,880/year) to afford the average rent for a two bedroom, two-bath apartment 3 SJ Median single-family home price is $920,000, up6%yoy 4 1 Out of Reach 2016, National Low Income Housing Coalition: http://nlihc.org/oor 2 realanswers, Q2 2016. 3 Based on Q2 2016 realanswers average rents, income calculation assumes rents are 30% of income, 40 hour work week,and a single income household. 4 Santa Clara County Association of Realtors, June 2016. 2
Q2 2016 Residential Permits Up 24% from Q1 2016 and Doubles YoY 1600 City of San José Second Quarter Residential Permit Activity 1400 63 135 1200 Units Permitted 1000 800 600 933 1,287 400 200 0 54 54 16 15 311 399 233 42 234 17 94 124 81 5 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Multi family Affordable Multi family Market Single family/other SOURCE: City of San José Housing Department, Q2 2016 3
Average Rent Growth Slows, Up 1% from Q1 2016 and 4% YoY $3,800 $3,500 $3,200 $2,900 $2,600 $2,300 $2,000 $1,700 $1,400 $1,100 $800 SOURCE: realanswers Q2 2016 - Data only includes rental developments with 50 apartments or more 4 $3,397 $2,847 $2,503 $2,258 $1,810 2nd Qtr-2005 2nd Qtr-2006 2nd Qtr-2007 2nd Qtr-2008 2nd Qtr-2009 2nd Qtr-2010 2nd Qtr-2011 2nd Qtr-2012 2nd Qtr-2013 2nd Qtr-2014 2nd Qtr-2015 Average Monthly San José Rents 2nd Qtr-2016 Studio 1bd/1bath 2bd/2bath 3bd/2bath Average
SJ Q2 2016 Vacancy at 5.1%, Close to Natural Rate, Up 11% from Q1 2016 & Up 8.5% YoY 9% 8% Percent Vacant Rental Housing Units 7% 6% 5% 4% 3% 2% 5.1% 5 % 4.7% 1% 0% 2nd Qtr-2005 2nd Qtr-2006 2nd Qtr-2007 2nd Qtr-2008 2nd Qtr-2009 2nd Qtr-2010 San Jose Vacancy Rate SCC Vacancy Rate Natural Vacancy Rate SOURCE: realanswers Data Q2, 2016 Note that data only includes rental developments with 50 apartments or more; demand for affordable housing far exceeds the supply and the vacancy rate for affordable housing is nearly 0% as evidenced by long wait lists at most developments. 2nd Qtr-2011 2nd Qtr-2012 2nd Qtr-2013 2nd Qtr-2014 2nd Qtr-2015 2nd Qtr-2016 5
Rents in Some San José Areas Trend Higher Project 1BR 2BR Avg. Citywide Rents (Q2 2016 realanswers) $2,258 $2,847 Domain (North SJ) $2,650 - $2,777 $2,938 - $3,094 Crescent Village (North SJ) One South Market (Downtown SJ) Centerra (Downtown SJ) Ascent Apartments (Edenvale SJ) $2,540 - $3,350 $3,275 - $4,165 $2,423 - $3,499 $3,728 - $6,168 $2,474 - $5,686 $3,564 - $4,909 $2,305 - $2,745 $2,895 - $3,940 One South Market SOURCE: Zillow.com, July 20, 2016 Domain 6
Q2 2016 Market Rents Significantly Out of Reach for Many San José Workers $130,000 $120,000 $110,000 $100,000 $90,000 Annual Income to Rent Three-bedroom Apartment ($135,880) Annual Income to Rent Two-bedroom Apartment ($113,880) Annual Income to Rent One-bedroom Apartment ($90,320) $80,000 $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) First Quarter 2016 Wages; Income to rent calculation assumes rent at 30% of income and a single income household 7
SJ Renters Spend Greater % of Income on Rent than Renters Nationwide 50% 40% 30% 20% 10% 42% 30% 0% 1979 03 1980 03 1981 03 1982 03 1983 03 1984 03 1985 03 1986 03 1987 03 1988 03 1989 03 1990 03 1991 03 1992 03 1993 03 1994 03 1995 03 1996 03 1997 03 1998 03 1999 03 2000 03 2001 03 2002 03 2003 03 2004 03 2005 03 2006 03 2007 03 2008 03 2009 03 2010 03 2011 03 2012 03 2013 03 2014 03 2015 03 2016 03 Median Rent as a % of Median Income San Jose Metro United States SOURCE: Zillow Rental Affordability Index Q1 2016 8
San Jose s SF Median Home Price Up 1% from Q1 2016 and Up 6%YoY $1,060,000 $1,050,000 Median Single Family Home Price ($) $950,000 $840,000 $730,000 $620,000 $510,000 $920,000 $400,000 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 San José Santa Clara County SOURCE: Santa Clara County Association of Realtors, June 2016 9
Taken as a multiple of Median Income, SJ Metro Area Median Home Prices are 3 Times the National Average Ratio of Median Home Price to Median Income 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 9.5 3.3 0.0 San Jose Metro United States SOURCE: Zillow Price to Income Index Q1 2016 10
SJ Housing Affordability Remains Low Relative to the Nation (6 th least affordable) Less than 1 in 5 families in San José can afford a median priced home % of Homes Affordable to Families Earning Median Income 90 80 70 60 50 40 30 20 10 0 Q2 92 Q3 94 Q4 96 Q1 99 Q2 01 Q1 05 Q2 07 Q3 09 Q4 11 Q1 14 Q2 16 62% 17.5% San Jose, Sunnyvale, Santa Clara Metropolitan Area HOI National HOI SOURCE: National Association of Home Builders, Housing Opportunity Index Q2 2016 11
SJ Homeowners Pay Almost 3 Times the Mortgage Costs of the Average US Homeowner 70% 60% 50% 40% 30% 20% 10% 42% 15% 0% 1979 03 1980 03 1981 03 1982 03 1983 03 1984 03 1985 03 1986 03 1987 03 1988 03 1989 03 1990 03 1991 03 1992 03 1993 03 1994 03 1995 03 1996 03 1997 03 1998 03 1999 03 2000 03 2001 03 2002 03 2003 03 2004 03 2005 03 2006 03 2007 03 2008 03 2009 03 2010 03 2011 03 2012 03 2013 03 2014 03 2015 03 2016 03 Mortgage Payments as a % of Median Income San Jose Metro United States SOURCE: Zillow Mortgage Affordability Index Q1 2016 12
SJ Townhome/Condo Median Prices Up 2% from Q1 2016 and Up 10% YoY $650,000 $680,000 $603,000 Median Townnhome Price ($) $550,000 $450,000 $350,000 $250,000 $150,000 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 San José Santa Clara County SOURCE: Santa Clara County Association of Realtors, June 2016 13
SF Total Listings & Sales Up 40%,New Listings Down 2% from Q1 2016; 4,000 3,500 3,000 San José Data 2,500 2,000 1,500 1,000 500 873 680 600 0 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 New Listings Sales Total Listings SOURCE: Santa Clara County Association of Realtors, MLS Listings March 2016 14
SF Days on Market Rises 10% from Prior Quarter and 16% YoY 140 Days on the Market in San José 120 100 80 60 40 20 22 Days 16 Days 0 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Single Family Condo/Townhomes SOURCE: Santa Clara County Association of Realtors June 2016 15
Interest Rates Remain Low 8.00% 7.00% 6.00% 5.00% Interest Rate 4.00% 3.00% 2.00% 3.57% 2.78 % 1.00% 0.00% Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 0.38% 30 Year Fixed Rate 5/1 Hybrid Adjustable Rate Federal Funds Rate SOURCE: Federal Reserve, Freddie Mac Primary Mortgage Market Survey, June 2016. Note that going forward the City will use the 5/1 Hybrid Adjustable Rate instead of the One-Year Adjustable Rate Mortgage used in prior reports. 16