San Jose has managed to remain a pretty competitive rental market, at least for tenants. Even while other cities in California have struggled to keep tenants in place and attract new residents, San Jose is gaining some traction. Population numbers have continued to edge up slightly, and rental values are strong. While other markets across the state and the U.S. begin to peak and cool, we’re feeling good about the rest of this year and the upcoming year.
A major recession was predicted, but it doesn’t look like that’s going to happen. A real estate market crash was also widely discussed, but here we are, collecting rent and watching our properties appreciate in value.
Predictions are fun to make, but not always reliable to bank on.
Instead of predicting anything, we’re updating you on what our data and insights have told us. Here’s what you can (generally expect) from the San Jose rental market for 2023/2024.
San Jose’s Population and Tenant Pool
The current metro area population of San Jose in 2023 is 1,821,000, a 0.66% increase from 2022. The metro area population of San Jose in 2022 was 1,809,000, a 0.56% increase from 2021. The metro area population of San Jose in 2021 was 1,799,000, a 0.45% increase from 2020.
The city itself had a recorded population of over a million people at the 2020 census. The demographics have been shifting since the worst days of the pandemic, and it’s more difficult to track who lives where, especially with remote workers moving in and out of cities on a whim.
San Jose may not be as populous as it was pre-pandemic in 2020, but it’s gaining back some of the residents it may have lost. And, it’s attracting new people who want to live in the Bay area without committing to San Francisco. San Jose is the third-largest city in California; more people live here than in San Francisco. There are more than enough tenants here needing homes.
San Jose’s Local Economy Contributes to Real Estate Growth
San Jose is in the center of Silicon Valley. While a lot of tech jobs have gone remote, there is still a healthy population of tech professionals who swear by the office. You’ll find plenty of these tenants looking for well-maintained homes that are close to work.
A strong tenant pool requires that there’s a strong economy with jobs and opportunities for income to increase. San Jose has that. The economic opportunity in this part of California is solid, and it’s also expanding in new ways.
In addition to technology, San Jose is attracting businesses that operate in industries such as manufacturing, professional services, sciences and green energy, technical services, healthcare, and social assistance.
Inflation, Interest Rates, and the San Jose Real Estate Market
According to the California Association of Realtors, the median price of existing single-family homes in San Jose for June of 2023 was $1.60 million. This is a 1.6 percent increase in median home prices compared to the previous year.
There’s still a huge demand in the sales market here. The average days on market is eight.
Investors or homeowners who want to sell their homes can do so successfully. Prices are still high and buyers are still abundant.
However, the rising interest rates are making mortgages more expensive. Many buyers are willing to absorb that cost. Some, however, are now forced to delay their plans to buy a home. There is some hesitation among certain demographics of buyers.
So, they continue to rent. Or, if they’re new to San Jose, they rent before they buy.
This is good news for investors and landlords. It means vacancy rates and rental values are high. We will continue to have a strong pool of renters in San Jose, especially as a number of existing and future tenants decide against buying until it becomes more affordable and accessible.
Attracting Remote Workers in San Jose
Working from home has become a large part of the new economy and the workforce. It’s never been more popular and accepted. We’re in the middle of Silicon Valley, which has had the capability for remote work for years; long before the pandemic normalized remote working. While many companies have called their employees back to the office, many workers remain remote, and this has changed the way owners are offering rental properties. They understand that these remote working tenants are looking for:
Strong internet connections.
Work space inside the properties where they live.
Outdoor space.
A place to keep their pets (pet ownership skyrocketed during the pandemic).
It’s hard to tell what kind of impact this remote work trend has had on San Jose. A lot of people employed by San Jose companies no longer need to live here. They may have moved elsewhere in order to find cheaper rents and more space. But, a lot of remote workers have stayed. New remote workers are arriving from elsewhere.
This is an expensive place to live. But, it’s also interesting, and it makes an ideal spot for people who want a particular Santa Clara Valley lifestyle.
Leverage San Jose Property Management
Everything we talk about is, of course, subject to the latest market trend or unexpected shift.
As you’re thinking about a San Jose investment property, or wondering how to position your current portfolio for the market in 2023 and 2024, surround yourself with experts.
We are delivering this overview of what we expect in 2023 and 2024 because we spend every day studying the sales market as well as the rental market. We know the properties that are for sale and we know what to expect from the growing inventory. We also understand the tenant population, the rental values, and the competition that you’ll face from all the single-family homes, condos, and multi-family units that are currently on the market and expected to come onto the market.
Partner with a local San Jose property manager. Having a local resource who can tell you what you’re likely to earn in rent, how much you’ll have to spend on maintenance, and what you’ll need to do to get the home rent-ready is invaluable.
We’d love to be your resource. Please contact us at Cornerstone Property Management.
