San Jose, CA follows a traditional spring to fall sales cycle with peak closed sales in early to mid summer (May- July). San Jose averages about 500 sales per month with the summer peak around 600 homes in recent years
San Jose CA Real Estate Market Trends
How has the San Jose market recently performed?
With the extremely low, unprecedented inventory levels experienced in all areas of San Jose in late 2017 and early 2018 (see yellow line in below chart), most areas and properties for sale experienced multiple offers which spurred a quick increase in home prices. PRICES in San Jose peaked in May 2018 and then softened quickly in the later part of 2018 due to the return of more normal inventory levels.
Spring 2019 in San Jose started off as a typical sales season with ramping inventory, sales and increasing prices. In April 2019, inventory continued to increase as usual, but sales slowed down to the lowest number for April since 2008! The lower sales trend continued through the peak summer sales season putting pressure on home prices. The 2019 inventory followed a traditional cycle but 2019 inventory peaked at a lower level than any year since 2008 (except the oddity of 2017).
As a result of the market changes in 2019 and a rebalancing of the unusual activity from 2017/18, prices returned back to levels similar to those seen in the Fall of 2017.
What is the CURRENT average price?
The average PRICE in October 2019 for San Jose was $1,171,300. The median price in October 2019 was $1,075,000 with an average sales price to list price ratio of 100.1% of asking price. Compared to the San Jose market peak of May 2018 ($1,366,990), the market today is down. Today’s prices correlate to prices from Fall 2017. For current month market statistics and metrics, visit the raw data below.
Which direction is the market trending?
Sales in recent months of San Jose have still been slightly low for each given month based on recent history, but inventory levels are also low, so the market is fairly balanced.
Days of Inventory (DOI) is a monthly metric I follow to understand the speed and direction of the market. Days of inventory is a simple calculation using the inventory and current rate of sales to understand how long it would take to sell all available homes. Around 90 days of inventory is a transitioning market where negotiation power moves from sellers (under 90 DOI) to buyers (over 90 DOI). Certainly, this is not an exact line bit rather a gray zone or general guideline with around 60 DOI a more neutral market is noticed. As of October 2019, the DOI in San Jose is down to 33 days. If inventory continues to decrease seasonally while sales stay flat or increase, the DOI metric will decrease creating supply and demand pressure once again.
Since the San Jose market is back to a typical seasonal cycle, the market intensity has settled. Consequently, I expect prices to soften as they typically do seasonally and then rebound in Spring 2020. Certainly, a housing market that has experienced extremely healthy appreciation over the last 10 years could use a few years of stability!
What is the market outlook?
The overall trend of the San Jose market is positive moving forward. San Jose is still one of the most affordable areas of Silicon Valley. I expect the current healthy balanced market to conservatively appreciate in 2020 with continued historically low interest rates , low county-wide unemployment and numerous corporate development projects in downtown San Jose.
Sellers who have lived in San Jose more than 3 years are experiencing nice equity gains even after the softening experienced in later part of 2018 and into 2019. Buyers are happy to see a more balanced market and continue to invest in the area.
This article is updated once a quarter (next one Feb 2020). To see more recent updates visit my San Jose Market update YouTube playlist or the San Jose Real Estate blog. The current month’s market metrics are below.