The real estate market in San Jose, CA, is experiencing a shift. As one of the five coolest large markets in Zillow's 2023 projections, demand has cooled, and home values are beginning to fall. This may come as a welcome relief to potential homebuyers in the area, who have faced rising prices and fierce competition in recent years. Understanding the current state of the San Jose housing market is crucial. In this article, we'll explore the latest updates and trends in San Jose's real estate market. We will provide insights into what the future may hold for this innovative, diverse city.
Quick Facts:
- San Jose has a population of 1,821,000, making it the 3rd largest city in California and the 10th largest in the U.S.
- San Jose home prices fell 14.2% from last year in February 2023.
- On average, homes in San Jose, CA sell after 51 days.
- According to CareerBuilder, San Jose has the second-highest average pay in the U.S. at $93,000.
San Jose, CA, in a Nutshell
San Jose, California, is a city that needs no introduction when it comes to technology and innovation. As the capital of Silicon Valley, this diverse area is home to a thriving tech industry, major suburbs, and an eclectic downtown. But, in addition to its tech prowess, San Jose is also known for its unique attractions. This includes a popular flea market, a sprawling mystery house, and an enormous Monopoly board.
Employment
The San Jose-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) witnessed a rise in the unemployment rate from 2.4 percent in December 2022 to 3.1 percent in January 2023. However, it remained lower than the unemployment rate of 3.6 percent reported in January 2022. The total number of jobs in the MSA, including San Benito County, decreased by 20,600 to reach 1,171,900 in the same period. The decline in employment was primarily driven by a cutback in professional and business services, which lost 4,700 jobs. The administrative and support and waste management and remediation services experienced the most significant loss with 3,000 jobs. Similarly, the Information sector observed a decline of 3,300 jobs. The trade, transportation, and utilities reduced 2,400 jobs, considering retail trade single-handedly saw a cutback of 2,000 jobs as the holiday shopping came to a halt.
Economy
San Jose, a city located in Northern California, originally relied on an agricultural-based economy. The technology industry revolutionized the region starting in the 1970s. This transformation led to the emergence of Silicon Valley, a name given to a cluster of cities along the Santa Clara Valley, spanning from Redwood City to Los Altos. As a driving force in the tech industry, Silicon Valley is a global hub for innovation and technology. However, San Jose's economy is not solely centered around tech. It also includes commercial, retail, professional, high-tech manufacturing, electronic assembly, and service businesses. Covering the southern San Francisco Bay Area, Silicon Valley's footprint corresponds with Santa Clara Valley's. With its fertile land and pleasing climate, San Jose is an ideal location for the technology industry to thrive, encompassing a vast expanse of cutting-edge businesses and industries.
San Jose, CA, Real Estate Market
San Jose's real estate market is notoriously expensive. The limited supply of available homes is pushing prices sky-high. As a result, prospective buyers are struggling with a severe affordability crisis. The inventory of single-family homes is only around two months. Moreover, San Jose's housing prices have seen a recent decline. This is attributed to the dampening effect of soaring mortgage rates on housing demand.
In January 2023, the median price of a home in San Jose plummeted by 14.4%, down to $1.33 million, marking a significant shift in the city's real estate landscape. Even with the decline in prices, the median cost of a two-bedroom house in the region is still a staggering $865,000. If you manage to put down a 20% deposit, you can expect to pay a $5,266 per month. These facts underscore the challenges that prospective homebuyers face in San Jose's ultra-competitive real estate market, one of the priciest in the entire country.
Real Estate Trends
The housing market in San Jose is currently in favor of sellers due to an imbalance in supply and demand. With a high influx of potential buyers, the housing inventory has not been able to keep pace. In fact, in January, the number of houses available for sale was less than half of what it was the previous year. The city had a single-family housing supply of just 2.5 months in January 2023.
Interestingly, San Jose is attracting a growing number of homebuyers from outside the metro area. Around 2% of homebuyers are searching specifically for homes in San Jose. Among those non-local buyers, Kalamazoo was the city with the highest number of searches for moving to San Jose. It is followed by Scranton and Wausau. However, the majority of homebuyers in San Jose are actually local residents who are looking to stay within the metropolitan area - a whopping 75% of buyers. For those who are looking to move out of San Jose, Sacramento is the top destination of choice. Overall, the San Jose housing market presents opportunities for sellers due to strong demand. However, it's important for buyers to act quickly and strategically to secure a home in this competitive market.
Final Thoughts
The San Jose real estate market is one of the priciest in the country, presenting challenges for prospective buyers looking to get a foot on the property ladder. With soaring prices and a limited supply of available homes, it's clear that potential homebuyers need to act quickly and strategically if they want to find their dream home in this competitive market. Despite recent declines in house prices, San Jose remains an expensive place to purchase a home with mortgage repayments expectedly high. However, with the influx of potential buyers from outside the metro area, now could be the perfect time to take advantage of this favorable market for sellers.
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