Over the past couple of years, the San Jose real estate market has encountered challenges. This is notably due to increased mortgage rates impacting demand, resulting in a decline in home prices and lower consumer confidence.
The region’s significant tech industry also experienced widespread job losses, further impacting the real estate market.
However, recent data indicates a positive shift in the market trend, portraying signs of stabilization and likely improvement.
Home prices have shown signs of recovery in 2024 and jobs are on the rise. There’s also a growing confidence among constructors and consumers regarding future market conditions.
Are you looking to buy or sell a house or invest in the San Jose real estate market soon?
Here’s what you need to know about the market over the past year and its current state. Also, learn about San Jose real estate forecasts from experts.
Understanding the Current Market Landscape
Here’s a snapshot of San Jose’s real estate market, based on figures from Realtor:
- Median home price San Jose: The median listing home price in San Jose is $1.3 million, while the median sold home price is $1.4 million. The median listing home price per square/foot is $817.
- Inventory levels: As of March 2024, there were 1,176 homes up for sale. This implies that San Jose is a seller’s market, indicating higher demand from buyers than available homes for sale.
- Days on market: Typically, houses in San Jose take about 20 days to sell. Recently, the trend for the median days on the market has increased compared to last month but slightly decreased compared to the same time last year.
- Sale-to-list price ratio: Homes in San Jose sold for roughly the same asking price on average as of March 2024.
Decoding the Factors Shaping the Current Market
Here are the top factors shaping the San Jose house price trends:
Strong demand from tech professionals
San Jose is home to the world’s largest tech giants and start-ups, which are well-known for their competitive remuneration packages. Demand for housing from tech workers is a significant factor driving the San Jose housing market.
Limited supply of housing
Currently, the San Jose real estate market is extra competitive for buyers, with homes typically receiving around six offers and selling in roughly 20 days. The low inventory pushes the home prices higher as there are more buyers than sellers.
Rising interest rates
Typically, when interest rates rise, the housing market trends to slow down. As interest rates increase, the expense of owning a home goes up, making it costlier for buyers. Consequently, this increased cost dampens demand, leading to a decrease in home prices.
Key Trends and San Jose Real Estate Market Predictions
San Jose is the heart of Silicon Valley, so the city’s housing market has thrived alongside the tech industry’s expansion. People who bought houses before prices skyrocketed now possess highly valuable assets.
The combination of high demand, limited available homes, and cash buyers has driven prices to incredibly high levels over the last few decades.
Despite some fluctuations in the past year, current patterns suggest that the desire for homes in San Jose, CA, will continue to be robust.
This sustained demand will likely push the average selling price even higher. Moreover, the limited housing supply in San Jose will persist, further strengthening the upward trajectory of home prices.
Identifying the Driving Forces of Market Transformation
Here are some key driving forces behind San Jose real estate trends:
Continued Strong Housing Demand From Tech Companies
Silicon Valley isn’t just crucial for the American economy; it’s a significant global player, too.
Big tech players, including Apple and Tesla, have substantial investments there, boasting extensive employee networks. Apple’s Cupertino headquarters alone houses around 12,000 employees.
These are just two of the standout tech giants in San Jose. The city is also home to other significant players in manufacturing, science, and technology, such as eBay, Cisco, and Adobe.
The projected job growth in San Jose is well above the national U.S. average.
However, the job market tends to lean toward hiring younger talent, which can present challenges for older workers with outdated skill sets.
Yet, there are rewarding opportunities for those who update their education and training.
As technology continues to integrate further into our daily lives, it’s indisputable that Silicon Valley in San Jose will maintain a leading role in shaping these advancements.
Increased Focus on Affordable Housing
Affordability remains a concern for families in San Jose and those considering moving there. The high price-to-rent ratio makes choosing between renting and buying challenging.
While renting can often be the more practical choice, there are government assistance programs available for home buyers to save money.
The cost of living, particularly the median home price, is notably higher than the national average in San Jose.
As of March 2024, the median price for a single-family home sits around $1.3 million.
Without significant support through infrastructure and social programs, lower-income families might face increasing affordability issues.
Micro-housing is anticipated to alleviate the strain of unaffordable properties. These smaller accommodations, ranging from 300 to 900 square feet, are expected to come at more affordable rental prices.
If home prices in San Jose continue their upward trend, young professionals may increasingly opt for rental properties with monthly rent averaging $2,487.
Impact of Interest Rates on Affordability
Continued higher interest rates have been a weight on the housing market.
With the Federal Reserve increasing short-term interest rates in 2022-2023, borrowing costs across the board surged.
This shift has significantly changed the landscape for both buyers and sellers, resulting in a housing market that’s currently experiencing a slowdown.
Many current homeowners are hesitant to sell their homes and take on a new, potentially more expensive mortgage.
While there was a slight improvement in activity, existing home sales seemed set for their poorest performance by the end of 2023 since 1990.
Expert Insights on the Trajectory of San Jose Real Estate Market Trends in 2024
Zillow anticipates a decline in home prices in both the San Jose and San Francisco markets within the coming year.
Zillows’ San Jose housing market forecast for 2024 suggests the area might experience the most significant drop among the top 100 metro areas in the U.S.
Zillow attributes this prediction to various factors. In places like San Jose, characterized by high costs and growing population trends, current mortgage rates remain notably high, which doesn’t align with the preferences of many potential homebuyers.
Additionally, limited available land poses challenges for builders in these areas. Zillow believes these factors will decelerate the housing market in San Jose, leading to decreased prices.
According to market experts, while consumers are worried about rising interest rates and the already high prices in the area, the demand remains robust. However, buyers are adjusting their expectations regarding the purchase price and are becoming more realistic in their approach.
Zillow also mentions that if interest rates decrease next year, potential sellers might be more inclined to list their homes for sale. This shift could potentially increase the housing inventory in the market.
Experts highlight the potential for lower prices to attract more buyers into the market, pointing out that earlier in 2023, there were talks of prices trending downward.
However, by July 2023, there was a year-over-year increase in prices, a trend that continued through November.
Zillow, known for adjusting its forecasts, had previously anticipated an increase in home prices year over year, as they mentioned during the summer.
Moreover, some homeowners who purchased in recent years are content to have secured lower interest rates before they began impacting the market, likely contributing to their satisfaction with their purchases.
San Jose Real Estate Market Forecast for 2024
In 2023, the real estate scene in Santa Clara County underwent significant changes. After a cooling period in the previous year, the housing market in the South Bay area, especially in San Jose, is showing strong signs of revival.
Home prices in San Jose and Santa Clara County, after a nine-month decline, are once again climbing.
As we move into 2024, it’s expected that the San Jose housing market will continue grappling with remarkably low inventory levels while facing continued high demand from potential buyers.
This ongoing imbalance might intensify competition among buyers and contribute to a further increase in the average sale price in the near future.
Unveiling Projected Home Price Growth
Despite San Jose’s median sale price being higher than the national average and its cost of living soaring above the national average, there’s a continued influx of people to the city.
The number of homes selling above their initial listing price has surged, resulting in multiple offers and competitive bidding situations.
Home prices have risen year-over-year, with an average of six offers per home.
Forecasts suggest a sustained upward trajectory in home prices. After a period of declining home values in the past year, San Jose and Santa Clara County are witnessing ongoing increases in home prices.
These trends are likely to drive both the list price and median home value in San Jose even higher, potentially surpassing the record high set in summer 2022.
Deciphering Inventory Trends
In 2023, the San Jose housing market grappled with a severe shortage of homes, reflecting a larger trend seen across major cities in the country.
This shortage isn’t unique to San Jose but echoes the situation in many metropolitan areas nationwide.
During the COVID-19 pandemic, home buying surged, causing a decline in housing supply. Although there was a brief rebound in the second half of 2022, the supply has dwindled significantly since the start of 2023.
By late summer 2023, the market had less than a one-month supply of homes for sale, significantly below the threshold for a balanced market.
Compared to other major cities in California, San Jose has faced the most notable drop in available homes over the past two years. The scarcity of homes for sale fails to meet the demands of potential buyers.
Unfortunately, there’s no indication that this decline in available homes will reverse anytime soon. San Jose’s real estate market has seen substantial year-over-year declines in new listings, severely limiting the number of homes up for sale.
This shortage of housing is anticipated to persist in the foreseeable future, aligning with the national trend of a widespread shortage.
Consequently, the local real estate market in San Jose remains a seller’s market due to insufficient inventory to meet the high demand from eager buyers in the area.
Navigating the Impact of Economic Factors
The overall health of the economy significantly influences real estate values, typically gauged through economic growth indicators like GDP, unemployment rate, manufacturing activity, and commodity prices. In essence, a sluggish economy often translates to a subdued real estate market.
An economic downturn or recession poses a significant threat, primarily due to the potential for job losses and a decline in household income.
This situation can dampen demand for real estate and create challenges for property owners, including individuals and companies, in meeting their mortgage payments.
Inflation can result in property price escalation. As inflation drives up construction costs, fewer businesses can afford to embark on new construction projects.
Constriction in supply, coupled with sustained demand for properties, exerts upward pressure on property values.
Strategies for Navigating the San Jose Real Estate Market in 2024
As the real estate market intensifies, the competition is growing for both buyers and sellers.
Whether you’re in search of your ideal home or aiming to sell your property at an optimal price, maneuvering through this crowded environment can be demanding.
Fortunately, there are effective strategies available to guide you through the challenges of a competitive real estate market.
Below are some tips tailored for both buyers and sellers.
Empowering Buyers to Conquer the Competitive Market
Here are handy tips for finding a home in a challenging market:
Identify what you need in a property: List down and prioritize your needs vs. wants from most to least essential. While it can be challenging, ranking your needs will streamline your decision-making process, especially when you’re in a competitive situation.
This prioritization will empower you to act swiftly when making an offer or to bid competitively, ensuring a more decisive approach. If a property aligns with most of your needs but lacks the critical ones, it may lead to potential regrets post-purchase.
Get your finances in order: Before starting your home-buying journey, there’s a checklist of financial tasks that require attention. For instance, regularly monitor your credit score and thoroughly review your credit report for accuracy.
Save for a down payment and build extra savings. These funds could cover potential appraisal gaps when purchasing a property. Starting these financial preparations early can better equip you for the home-buying process.
Get yourself a top agent: In a seller’s market, securing an experienced agent is crucial. Look for someone who comprehends your needs, communicates effectively, boasts local area expertise, and can dedicate ample time to locating your ideal home.
Opt for a full-time agent, and don’t hesitate to seek referrals from trusted individuals to ensure you find the right match for your home search.
Keep tabs on listings: Stay in close contact with your realtor as they provide you with the most recent property listings.
Be prepared to clear your schedule when it’s time to visit a property for sale. If you find a place that captures your interest, be ready to promptly submit an offer. In a competitive market, acting swiftly is key to securing the home you desire.
Submit a strong offer: In a competitive market, the highest bid tends to catch a seller’s attention. A strong offer with fewer contingencies or demands can also stand out and increase your chances of success.
Be ready for a bidding war: Multiple offers are quite common occurrence in a seller’s market. Be ready to defend your bid but remember to stay disciplined and adhere to your budget. If there’s room for flexibility in your offer, you might consider incorporating an escalation clause to specify an upper limit.
This strategic approach serves to protect you from being outbid when competing with other buyers, allowing you to navigate the competitive landscape more effectively.
The following strategies can bolster your offer in a bidding war and showcase your seriousness about securing the property:
- Get pre-approved: Obtaining pre-approval for a mortgage not only demonstrates to sellers that you’re a serious buyer but also showcases your financial readiness. Presenting a pre-approval letter when making an offer can provide you with an added advantage in the eyes of sellers, potentially strengthening your position amidst competing buyers.
- Work with an experienced agent: Teaming up with an experienced real estate agent can be a game-changer. They offer invaluable guidance on pricing and negotiations and assist in creating a compelling offer. Their knowledge of the local market and understanding of seller preferences can provide you with a competitive edge during the home-buying process.
- Move with speed: Once you identify a home of interest, act promptly to avoid losing out to competing buyers. However, it’s essential not to rush to the extent that you compromise on necessary due diligence. Balancing speed with thorough evaluation is key in such situations.
Guiding Sellers to Maximize Property Value
As the buying frenzy in real estate propels home prices to remarkable heights, home sellers entering the market now might need to adjust their anticipations.
The current scenario no longer supports the traditional approach of simply placing a “for sale” sign and expecting eager buyers to flock in.
In today’s market, a successful sale demands a well-thought-out strategy and a competent team of professionals to execute it effectively.
Here are essential steps to prepare a home for sale:
1. Make Necessary Repairs
Living in a home for an extended period inevitably leads to some wear and tear. Issues like a chipped shower tile or a dripping kitchen faucet, which might not significantly impact your daily life, can be easily overlooked.
However, these visible problems are quite noticeable to potential buyers. Such issues may signal to house-hunters that there could be more substantial underlying issues lurking beneath the surface.
2. Declutter Your Property
Decluttering and organizing each room in your home can improve its appeal to potential buyers. Store away extra furniture and items not essential for daily use, including any belongings overcrowding your closets.
This not only enhances the cleanliness of your home but also lays the groundwork for streamlining your packing process once you sell your house.
3. Keep Your Documents in Order
Keeping track of essential paperwork is crucial when preparing to sell a house. Among the necessary documents are:
- Mortgage payoff statement: This document outlines the precise amount required to settle your mortgage loan, along with any applicable fees.
- Property deed: This legal document proves ownership of the property and is transferred to the new owner upon the sale.
- Property survey: A surveyor’s map or drawing that outlines the property boundaries and any structures on the land.
- Homeowners insurance records: Details about your current homeowners insurance policy, which may be required during the selling process.
- Home inspection reports: Any reports or documentation from recent home inspections, which can provide transparency to potential buyers regarding the property’s condition.
- Home warranty documents: If applicable, documents related to any existing home warranty on appliances or systems in the house.
- Utility bills: Records of utility payments and history, which can be useful for buyers to estimate ongoing costs.
Maximizing Sale Price: Home Staging, Curb Appeal, and Photography
Creating an excellent first impression holds significant importance when attracting potential homebuyers. The goal is to enhance your home’s appeal to a broad audience, often leading sellers to enlist professional stagers to achieve an impeccable look.
Staging plays a pivotal role in presenting a home for the market, enabling prospective buyers to envision themselves living there. Statistics indicate that staged properties tend to command approximately higher selling prices compared to those not staged.
Enhance your home’s curb appeal by maintaining a well-groomed lawn, trimming foliage, and cleaning walkways and driveways with pressure washing. Consider adding flowers to your porch or front yard for an inviting touch.
However, even a stunning home might go unnoticed if the listing doesn’t catch attention. A significant number of buyers begin their search online, underscoring the significance of compelling listings.
To make a lasting impression, professional real estate agents often collaborate with photographers skilled in capturing appealing images of properties.
Exploring options like aerial photography or video walk-throughs can further distinguish your listing in a competitive market.
Harnessing the Expertise of Real Estate Professionals
The San Jose housing market is experiencing notable shifts influenced by several key factors, notably the scarcity of available homes, high interest rates, and the high-income levels of local residents.
Despite challenges, such as affordability concerns and intensified competition among buyers, the area remains a sought-after destination.
The allure is particularly evident among tech industry professionals, who are increasingly shaping the dynamics of the home-buying landscape in the region.
The significance of partnering with an experienced real estate agent cannot be emphasized enough. Seasoned agents possess the necessary expertise to navigate the complexities of the San Jose market effectively.
Their insights are invaluable, providing a deeper understanding of the market dynamics. Moreover, their adept negotiation skills and guidance empower both buyers and sellers to make informed decisions.
Whether you’re a first-time homebuyer, seller or investor, having a knowledgeable real estate professional by your side is key to achieving your goals in this competitive market.
San Jose Remains a Hot Market Going into 2024
The San Jose real estate market appears to be becoming unaffordable for many individuals, necessitating more substantial savings, increased debt, or continued renting.
Investors with ample capital might find opportunities, but they should consider engaging a real estate agent for guidance.
Homes staying on the market longer could favor investors, allowing them to propose lower prices that sellers might accept due to their eagerness to close deals.
Yet, real estate remains intricate and unpredictable. Offering a lower price doesn’t guarantee a reduction in the list price set by sellers.
Staying Informed Amidst Market Fluctuations
Even with the surge in job growth in San Jose, CA, the real estate landscape remains challenging for investment.
List prices are not expected to decrease in the near future, and the demand for the limited inventory remains high.
With the high demand, many families face challenges in affording the listed median home prices in San Jose. This presents an opportunity for investors to access areas that might be unattainable for traditional homebuyers.
Yet, investors must also consider potential tech industry layoffs and the subsequent impact on future rent payments, making the market dynamic and somewhat uncertain.
