Q3 2015 housing statistics are in. What does this mean for our rental market?
2016 has arrived. January was a pretty slow month for us. January is historically slow so this isn't unusual. The holiday season behind them, many would be tenants do not have the will or money to shop for a new place to live. Our team strives to stay educated on the market. This quarterly report is one of the ways we like to keep our clients informed. We have analyzed the 3rd quarter numbers from 2015. We will put it on the website so that you can see the report for yourselves but here are some highlights:
Q3 2015 San Jose Housing Market
San Jose is the third most expensive rental market and the second most expensive home ownership market in the nation
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(according to their statistical data)
The average rent for a 3 bedroom, 2 bath home is $3,269/month
The average studio apartment rent is $1,831/month
San Jose's vacancy rate rose from 4.7% in Q2 to 6.3%in Q3, the peak of rental season
Less than 1 out of 5 families can afford to rent or purchase a median priced home (6th least affordable)
I wanted to focus on the facts but there is one area that I will discuss at greater length here. The 3rd quarter of the year is from July to September. This quarter is usually robust for our rental market. Yet, we saw a rise in the vacancy rate from 4.7% in Q2, to 6.3% in Q3. One theory is that all the new construction in San Jose over the past couple of years has started to increase inventory. An article in the San Jose Mercury News, written on January 19, 2016 says "rents continue to rise at least in part because thousands of new units have been built. 'Construction starts are at the highest level in about 30 years',said Sara Bridge of RealFacts in Novato".
The vacancy rate isn't shockingly high in and of itself, but it does come at a peculiar time. Depending on where you look, the rental market has never been better. Everyone needs a place to live in Silicon Valley. Our market seems to be almost immune to the extremes we see in other regions of our state. Our real world experience tells us that higher end properties are still not receiving the interest we would like to see. If your property is in a more challenging neighborhood or if your home has some oddities that make it less desirable, we should adjust accordingly. Of course, our property managers are already aware of this and should be adjusting at a more aggressive pace as necessary. If your property manager has advised you to reduce your rent by one hundred dollars, there is probably a good reason. Like any investment, the market may have minor corrections during certain periods of time. Our market is ever changing. Nothing is static but we do know that a property does not generate any income while it sits vacant. We would like to see our properties move quickly and we hope to see the trend of low vacancy rates continue. If you have any questions about your home call your property manager to discuss your home soon.
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