What Are the Latest Trends in the San Jose Real Estate Market?
Since the end of the financial crisis of 2008, real estate in the United States has mostly been on the upswing, demand-wise. A perfect storm of low mortgage interest rates and low inventory certainly drove home sales, especially in the most high-demand areas.
One of those high-demand areas is San Jose. If you’ve paid attention to San Jose real estate market trends over the past several years, you might have taken note of the departure from historical norms. Combined with the high demand for homes and cheap financing, near-historic low levels of the inventory of homes for sale have helped drive home prices sky-high.
The overall economy is faced with inflation rates not seen for decades. Now, mortgage interest rates are creeping up. Those things can affect real estate markets, so you might be asking yourself: “what are the latest trends in the San Jose real estate market?” Here are some quick answers.
Demand Remains Very High
In March of 2022, the median sales price for a home in the San Jose metropolitan market was about $1.83 million; that figure represents a significant increase from just three years prior, when the same house in the same place could be about $1.37 million. What’s the nearly half-million-dollar difference? Very high demand.
Here’s the metric that perhaps measures demand the best: In the quarter that ended in March of 2022, San Jose homes sold for an average of more than 118% of their asking price. In plain terms, that means that if you were selling your home in the first quarter of 2022 and had a $1 million sales price, you statistically were likely to fetch $118,000 above your asking price.
That phenomenon mostly occurs because of bidding wars. Almost all properties on the market receive multiple offers, and it’s not unusual in San Jose for a property to attract 10 or more offers. When buyers are, essentially, competing against each other to over-pay, it tells you that demand is very high.
Homebuyer Candidates are Plentiful
You’ll find no shortage of experts who peg home-buying demand to low-interest rates, but in the hottest markets in the United States, including San Jose, cash offers have ruled the day for years. Silicon Valley remains one of the most high-paying job spots for young buyers of home-buying age, and the relative affordability of San Jose homes fits right in. If you have enough cash to buy a home, mortgage rates don’t matter.
It’s possible the market was driven some by the prospect of rising rates in early 2022, but you can see from San Jose real estate market trends that a number of pending sales not seen since 2013 occurred before rates started to rise. In San Jose, there are plenty of qualified homebuyers out there, regardless of rates.
You Can’t Put the Horses Back in the Barn
It’s easy to see that the inventory of homes for sale, or lack thereof, is driving prices. But don’t discount the other side of the equation: San Jose is home to well-paid professionals, whose employment prospects in the ever-expanding tech segment will make real estate affordable for them almost indefinitely. And these folks are not likely to start earning less income. The more likely reality is that more people of what’s considered home-buying age and who can afford homes in San Jose will land in San Jose.
In fact, if the inventory of homes for sale can’t keep up with the demand by those who are qualified candidates to buy them – a growing number as Silicon Valley jobs attract talent worldwide – prices could easily continue to climb 10% to 12% per year for at least the immediate future.
Theresa Wellman is an experienced real estate agent in San Jose who has earned many positive marks for performance from both buyers and sellers. If you’re thinking about buying or selling a home, check out the free home buyers or home seller’s reports.