San Jose, CA follows a traditional spring to fall sales cycle with peak closed sales in early to mid summer (May- July). San Jose 10 year average is about 450 sales per month with the summer peak month near 600 homes.
San Jose CA Real Estate Market Trends
How has the San Jose real estate 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. The competitive buying environment 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 and an increase in interest rates.
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. 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.
2020 started off as an extremely healthy market with low inventory and strong number of home sale closings in February, March and April. But the effect of Shelter-in-place (which started locally on March 17, 2020) showed up in the April pending sales numbers and then May closings. May 2020 pending sales were back to normal seasonal levels and actually continued strong through the rest of 2020. As of December 2020, San Jose closed sales units are slightly up from 2019 (48 more sales in 2020).
What are San Jose prices?
The average PRICE in December 2020 for San Jose was $1,316,240. The median price in December 2020 was $1,227,500 with the average sales price to list price ratio of 104.1% of asking price. Compared to the San Jose market peak of May 2018 ($1,366,990), the market today is only slightly down, however 2020 peak prices in October 2020 reached 2018 levels. December 2020 closed median prices are up 15.3% year over year.
Which direction is the San Jose real estate market trending?
Sales in 2020 throughout San Jose have been extremely strong, later into the season than usual. Inventory is near records lows and sales are very strong. Homebuyers are extra motivated to make offers due to the historically low interest rates.
The San Jose market hit a record number of pending sales for December (381), a level we have not seen this time of year since 2012. The strong sales through the slow season will carry into a very active early 2021.
Days of Inventory (DOI) is a monthly metric I follow to understand the speed and direction of the market. As of December 2020, the DOI in San Jose is down to 11 days, but this sellers’ market is likely going to soften with increase inventory in early 2021. Until there is a significant increase in inventory though, I expect prices to continue to appreciate.
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 and is home to a revamping downtown. The “after shelter-in-place market” has found a new rhythm which is currently fueled by lack of inventory and great interest rates. The inventory in 2020 has not yet exceeded 400 single family homes for sale at once in 2020. Will the inventory increase in 2021? I do think Prop 19 will have some affect on this but will it be significant enough to temper the demand?
This article is updated once a quarter (next update April 2021 with data through end of March). To see more recent updates visit my San Jose Market update videos, signup to be emailed a monthly update or visit the current month’s market metrics below.