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! 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.
The strong demand seen in Summer 2020 continued through 2021. In January through December 2020 there were 4529 single family home sales. In 2021 same timeframe, sales are up to 5672 (25.2% higher!). While San Jose experiences more sales than usual, the inventory is record low, similar to the market of 2017 where more sales occur than inventory is available at a time.
2022 started off with seasonally low sales, mostly driven by supply not demand. Many homes experience multiple offers and some over 10 offers! March 2022 closed with 408 sales, a 36% increase compared to pre-pandemic closed sales of the same month. (March 2020)
What are the current San Jose home prices?
The average PRICE in March 2022 for San Jose was $1,750,000. The median price in March 2022 was $1,852,840 with the average sales price to list price ratio of 118.7% of asking price. Compared to the San Jose market peak of May 2018 ($1,366,990 average price), the market today is up 28% to a new record level ($1,750,000).
Which direction is the San Jose real estate market trending?
Current Sales in San Jose in the first quarter of 2022 have been extremely strong. Inventory is at a new record low and sales are extremely strong. Young Millennial homebuyers are aging into homebuying and are extra motivated to make offers due to the low interest rates. Interest rates though are rising and starting to temper demand.
The San Jose market hit a record number of pending sales for March 2022 (680), a level we have not seen any month since May 2013! The extremely strong demand will continue to consume any new inventory in the 2nd quarter of 2022 and will keep prices strong. I do expect prices to level in Q2 as the rising interest rates are making affordability more difficult for many buyers.
Days of Inventory (DOI) is a monthly metric I follow to understand the speed and direction of the market. As of March2022, the DOI in San Jose is at 20 days, a strong sellers market. Until there is a significant increase in inventory, I expect prices to continue to hold strong. My prediction for 2022 is price appreciation of about 10-12% which we have already had from January through March. Prices may slightly appreciate until summer and then soften again back to an overall 10% gain for the year.
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 market is currently fueled by high demand by young buyers, lack of inventory and great interest rates. The inventory in 2021 did not exceed 400 single family homes for saleat once (when the average since 2003 is 1,156!!).
Will the inventory increase in Q1 2022? Stay tuned with monthly updates by watching my San Jose Market update videos, signing up to be emailed a monthly update or visit the current month’s market metrics below.
This article is updated once a quarter (next update April 2022 with data through end of March).