COMPREHENSIVE HOUSING MARKET ANALYSIS

San Jose-Sunnyvale-Santa Clara,

U.S. Department of Housing and Urban Development Office of Policy Development and Research As of July 1, 2014

Summary

Economy Rental Market Housing Market Area Nonfarm payrolls in the San Jose HMA The rental housing market in the HMA increased during the 12 months ending is very tight, with an estimated vacancy June 2014 by 39,500 jobs, or 4.2 percent, rate of 2.5 percent, resulting in strong reaching 980,700 jobs and surpassing growth in multifamily units permitted. the 2008 peak of 925,200 jobs. The Average apartment rents increased 6.2 average rate was 6.2 Alameda percent from the second quarter of 2013 San JoaquinStanislaus percent, down from 7.8 percent dur- to the second quarter of 2014 (Reis, Inc.). San ing the previous year. Top employers Mateo During the 3-year forecast period, de - Santa Clara include , Inc., Kaiser Merced mand is expected for 11,750 rental units. Santa Cruz Permanente®, and Apple Inc., with The 6,675 units under construction will 16,450, 13,500, and between 12,000 likely meet a portion of that demand Fresno and 13,000 employees, respectively. San Benito (Table 1). Nonfarm payrolls are expected to grow Monterey at an average annual rate of 2.1 percent Table 1. Housing Demand in the during the 3-year forecast period. San Jose HMA* During The San Jose-Sunnyvale-Santa Clara the Forecast Period Housing Market Area (hereafter, the Sales Market San Jose HMA* San Jose HMA) consists of Santa Clara Sales Rental The sales housing market in the HMA and San Benito Counties in the San Units Units is very tight, with an estimated vacancy Francisco Bay Area, approximately Total demand 9,150 11,750 rate of 0.5 percent. New and existing 35 miles southeast of . Under home sales prices increased 24 and 14 2,700 6,675 The HMA is known as Valley construction percent, respectively, during the 12 because of its reputation as a hub of *San Jose-Sunnyvale-Santa Clara HMA. months ending April 2014. Demand Notes: Total demand represents estimated technology research, , and is expected for 9,150 homes during the production necessary to achieve a balanced entrepreneurship and includes the market at the end of the forecast period. 3-year forecast period (Table 1). The Units under construction as of July 1, 2014. headquarters of Cisco Systems, Inc., A portion of the estimated 9,000 other 2,700 homes under construction and , and Apple Inc. vacant units in the HMA will likely satisfy some of the 9,000 other vacant units some of the forecast demand. The forecast period is July 1, 2014, to July 1, 2017. that may return to the market will Source: Estimates by analyst satisfy a portion of the demand.

Market Details Economic Conditions ...... 2 Population and Households ..... 6 Housing Market Trends ...... 8 Data Profile ...... 13 San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 2 Table 2. Source: Full-Time Equivalents(FTEs). Notes: Excludesstateandlocalgovernment agencies.Thenumberofemployeesisin *San Jose-Sunnyvale-SantaClara HMA. Corporation Lockheed MartinSpaceSystems Co. Stanford HospitalandClinics United StatesPostalService Google Apple Inc. California Kaiser PermanenteNorthern Cisco Systems,Inc. Economic Conditions Silicon V

Name ofEmployer Major Employersinthe alley BusinessJournal BookofLists2014 San JoseHMA* Manufacturing Manufacturing Information Education &healthservices Government Information Education &healthservices Manufacturing Education &healthservices Manufacturing Nonfarm Payroll Sector represents 15 percent of nonfarm pay nonfarm 15percentof represents sector, educationandhealthservices, largest employers (Table 2).Afourth thetop10 payrolls nonfarm and6of of acombined42percent which represent professional andbusinessservices), (manufacturing, and information, primarily fallwithinthreesectors ley.” Technology companypayrolls the regionitsnickname, “SiliconVal - companiesthatearned technology of torically onthecluster hasdepended T $2.7 trillioninannual revenue (Eesley, accounting for5.4millionjobsand alumni have founded 39,900 companies, 2012 estimatedthatStanfordUniversity companies andproducts. Astudy in tional researchthatleadstonew startup new hiresandfounda workforce of cation hasamutually beneficialrela $4.6billion.Higheredu expenses of faculty andstaff,hadoperating 57,600students, employed 19,300 of universities hadacombinedenrollment University. Infiscalyear 2012–13,these University (SJSU),andSantaClara Stanford University, SanJose State largest universities intheHMAare rolls and3topemployers. Thethree in theHMA,providing awell-trained companies tionship withthetechnology omy intheSanJose HMAhis thelocalecon he strengthof 11,000–16,500 12,000–13,000 Employees Number of 11,450 13,500 16,450 5,800 6,400 8,000 8,450 9,000 ­ ­ - ­ - ­

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percent in2010.Payrolls inthe mining, declined 6.2percentin2009and 0.3 payrollsnational recession;nonfarm HMA whencomparedwiththe 2001 led torelatively mildjoblossesinthe in 2007andensuingforeclosurecrisis thenationalrecession The impactof 1.6 percentfrom2005through2008. increasing atanaverage annual rateof growth in2005after4years indecline, payrolls to sion. Nonfarm returned activity afterthe2001nationalreces- bolstered byrecovering homebuilding The localeconomy inthe HMAwas , Data:ThomsonReuters).Report ture CapitalAssociationMoneyTreeture ( $6.8billionin2003 2000 toalow of $33.4billionin fromapeakof sharply investments inSiliconValley declined companiessubsided,venture ogy capital technol- As theenthusiasmforstartup respectively, from2000through2003. which declined31,25,and26percent, sectors, fessional andbusinessservices manufacturing, andpro- information, were particularlyconcentratedin the percent in2003.Job lossesintheHMA declined 1.1percentin2002and0.2 were relatively unchanged in2001and 2003. Bycomparison,nationalpayrolls 9.8 percentin2002,and5.0 before declining2.5percentin2001, peaked at1.05millionjobsin2000 to thelocaleconomy. payrolls Nonfarm companies technology of importance the impact ontheHMAbecauseof 2001, hadadisproportionately large national recession,whichbeganin boom,thesubsequent tion technology the1990s informa-After thecollapseof ship. Stanford,CA:StanfordUniversity). Impact viaInnovationandEntrepreneur­ Impact: Stanford University’s Economic Charles, andMiller, William. 2012. PricewaterhouseCoopers/National VenPricewaterhouseCoopers/National TM

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 3 Source: U.S. BureauofLabor Statistics *San Jose-Sunnyvale-Santa ClaraHMA. Figure 1.TrendsinLaborForce,ResidentEmployment,andUnem Source: U.S.BureauofLaborStatistics through June2013and2014. Notes: Numbers maynotaddtototalsbecauseofrounding. Basedon12-monthaverages *San Jose-Sunnyvale-SantaClaraHMA. Table12-Month Average 3. NonfarmPayroll JobsintheSanJose Total nonfarmpayroll jobs Goods-producing sectors Labor force and Service-providing sectors Government Other services Leisure &hospitality Education &healthservices Professional &businessservices Financial activities Information Transportation &utilities Wholesale &retail trade Manufacturing Mining, logging,&construction resident employment Economic Conditions 1,005,000 705,000 755,000 805,000 855,000 905,000 955,000 by Sector ployment Rateinthe Labor force

2000

2001

2002

2003 Continued

2004 Resident employment

2005 San JoseHMA,* ue21 June2014 June 2013 4,0 980,700 941,200 191,500 138,500 185,700 120,400 749,700 155,400 91,500 25,100 85,300 33,500 56,200 13,500 36,100

2006 12 MonthsEnding vious 12months(Figure1). workers, or1.2percent,fromthepre- the laborforceincreasedby11,200 declined from7.8to6.2percentand period, theaverage unemployment rate months. 12-month Duringthecurrent 4.4 percent,duringtheprevious 12 payrolls increasedby36,700jobs, or 4.2 percent(Table 3).Bycomparison, payrolls increasedby39,500jobs, or months endingJune 2014,nonfarm HMA arevery strong. Duringthe12 economicconditionsinthe Current 33 percentfrom2008through2011. declining new homeconstruction, of particularly impactedbyfallinglevels sectorwerelogging, andconstruction 2007

2008

2009 149,300 194,100 123,000 782,700 159,000 198,000 93,100 25,500 88,600 33,700 61,300 14,300 39,000 2000Through2013 2010

2011 Unemployment rate

2012 Absolute Change 39,500 10,800 33,000 1,600 3,300 8,400 5,100 2,600 3,600 2,900 6,500

2013 400 200 800 Change Percent 10.0 12.0 0.0 2.0 4.0 6.0 8.0 HMA,* 4.2 1.6 0.6 5.9 1.7 3.9 4.5 9.1 2.2 2.3 8.0 3.4 7.8 4.4 - Unemployment rate

and passenger service beginning in late beginninginlate and passenger service be followed bysystem testingin2017 The expected completionin2016will lion BART Extensionproject. Berryessa the$2.3bil- SanJose of aspart city of areainthe Milpitas andtheBerryessa stations arebeingbuiltinthecityof HMA. Bay AreaRapidTransit (BART) projectsinthe ongoing construction building activity since2009andmajor recently bystronggrowth inhome- percent since2000,ithasbeenboosted sector employment hasdeclined22 by 2,900jobs, or8.0percent.Although months endingJune 2014,increasing fastest rateintheHMAduring12 sector payrolls grewatthesecond Mining, logging, andconstruction July 12,2013). Jose News,July Mercury 5,2013,and in July 2013forredesignwork (San however, Googleannouncedadelay space for3,500to5,000employees; complex includeninebuildingswith completion in2015.Plansforthe 2013withexpected the summerof onBayconstruction View beganin itsBay View campus. Initial site of MountainView andthefuture of Google’s inthecity headquarters of 2014). MoffettAirfieldis4mileseast 11, (San JoseNews,February Mercury to space, aviation, androver/robotics developing new related technology researching, testing, assembling, and ways, whichthecompanywillusefor includes threehangarsandtwo run- tion (NASA) atMoffettAirfieldthat Aeronautics andSpaceAdministra- bid toleasespacefromtheNational in theHMA.Thecompanywon a been steadily expanding itspresence employers inthesector, Google, has thelargest or 9.1percent.Oneof June 2014,increasingby5,100jobs, growth duringthe12monthsending sectorhadthefastest The information

San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 4 Source: U.S.Bureau ofLabor Statistics Note: Current isbasedon12-monthaverages through June2014. *San Jose-Sunnyvale-Santa ClaraHMA. Economic Conditions Figure 2.SectorGrowthintheSanJoseHMA,*PercentageChange,2000toCurrent – 40 – 30 – 20 – – 10 Continued 10 0 rooms andanexpansion atStanford surgical, diagnostic, andtreatment 150bedsandadditional Hospital of pansion atLucilePackard Children’s ect underway thatincludesanex- Center hasa$5billionRenewal Proj - 2014. StanfordUniversity Medical during the12monthsendingJune increased by10,800jobs, or7.8percent, tional recessions(Figure2).Payrolls losses duringthe2001and2007na- was theonly sectorthathadnonetjob since 2000,increasing71percent,and tor grewmorethananyothersector sec-The educationandhealthservices host SuperBowl 2016. 50inFebruary seats, suitesandwill and165luxury 68,500regularseats, 8,500club of in August 2014,itwillhave acapacity the $1.2billionstadiumiscomplete SantaClara.After tion inthecityof Stadium, iscurrently underconstruc- ball League’s SanFrancisco 49ers, Levi’s theNationalFoot- The new homeof Clara Valley Transportation Authority). after theextension iscomplete(Santa cisco willtakeapproximately 1hour 2017. Traveling onBART toSanFran- 20 04 06 080 70 60 50 40 30

12 monthsendingJune 2014. 3,600 jobs, or2.3percent,duringthe tems, Inc. Sectorpayrolls increasedby including AppleInc. andCiscoSys- the top 10 largest employers, with 4 of thelocaleconomy, of part important the manufacturing sectorremains an downward trendinsectoremployment, ing June 2014(Figure3).Despite the 16 percentduringthe12monthsend- payrolls nonfarm to 24 percentof 37 percentsince2000andfallenfrom ployment inthesectorhas declined turing sectorhave beenmixed. Em- conditionsinthemanufac-Long-term 2014. of plete bythefallquarter the residencesareexpected tobecom- Village studentapartments; graduate 362 bedstotheexisting Escondido that willaddfournew buildingsand the Kennedy GraduateResidences an on-campushousingfacilitycalled Stanford University isalsobuilding inearlyto beaccepted 2017 and 2018. 2016 and 2017, with patients expected Expected completiontimesareinlate rooms, andaLevel-1 traumacenter. 368beds, 17operating Hospital of Total nonfarmpayroll jobs Goods-producing sectors Service-providing sectors Education &healthservices Professional &businessservices Financial activities Transportation &utilities Manufacturing Government Other services Leisure &hospitality Wholesale &retail trade Mining, logging,&construction Information

San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 5 Economic Conditions Continued companies includeHGST, Inc., and Other expanding manufacturing News,MayMercury 21,2014). mately 1,450employees (SanJose Sunnyvale with spaceforapproxi- of square-foot officecomplex inthecity company recently leaseda290,000- (Keyser MarstonAssociatesInc.). The and inducedjobsinSantaClaraCounty create 9,200directand3,400indirect 2013 estimatedthattheprojectwill An economicimpactstudy inMay expected tobecompletebylate2016. themainbuildingis occupancy of and week, April4,2013).Construction $3 to$5billion( estimates fortheprojectrange from Cost Cupertino). employees (Cityof a secondphase, withspacefor2,200 with spacefor12,000employees, and million-square-foot mainbuilding, that thecampuswillincludea2.8- Cupertino. Recent plansindicate of quarters, AppleCampus2,inthecity itsfuturehead- on the176-acresiteof Apple Inc. hasbegunconstruction Figure 3. Source: U.S.Bureau ofLabor Statistics Note: Basedon12-monthaveragesthrough June2014. *San Jose-Sunnyvale-SantaClaraHMA. Education &healthservices15.2% ent NonfarmPayroll Jobsinthe Leisure &hospitality9.0% Curr Professional &businessservices 19.8% Bloomberg Business­ Other services2.6% Government 9.5% Government

turing sectors. and businessservices, andmanufac- professional growth intheinformation, panies areexpected toboostpayroll com and hiringbymajortechnology - forecast period.Ongoingexpansions 2.1percentduringthe3-year rate of expected togrow atanaverage annual payrollsNonfarm inthe HMAare by mid-2015. July 2013andcompletionisexpected employees; was groundbreaking in facility, datacenter, andspacefor2,000 clude two officetowers witharesearch million regionalcampusthatwillin- , Inc., isbuildinga$300 12,2014). News, February SanJose (SanJose Mercury city of campusesinthe itscurrent to oneof ees. Thebuildingswillbeanaddition with spacefor1,300to1,700employ- 2014 onofficeandresearchbuildings, in which planstobeginconstruction manufacturer Western DigitalCorp., hard-drive of Inc., isasubsidiary Samsung Semiconductor, Inc. HGST, Mining, logging,&construction4.0% Financial activities3.4% San JoseHMA,*bySector Manufacturing 16.2% Information 6.2% Transportation &utilities1.5% Wholesale &retail trade12.5%

San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 6 estimates byanalyst Sources: 2000and2010—2000Census2010Census;currentforecast— Notes: ThecurrentdateisJuly1,2014.forecast2017. *San Jose-Sunnyvale-SantaClaraHMA. Figure 4. estimates byanalyst Sources: 2000and2010—2000Census2010Census;currentforecast— Notes: ThecurrentdateisJuly1,2014.forecast2017. *San Jose-Sunnyvale-SantaClaraHMA. Figure 5. analyst Sources: 2000and 2010—2000Censusand2010Census; current—estimatesby Note: Thecurrent dateisJuly1,2014. *San Jose-Sunnyvale-SantaClara HMA. Figure 6.NumberofHouseholdsbyTenureintheSanJose Population andHouseholds

– 10,000 Average annual change

100,000 150,000 200,000 250,000 300,000 350,000 400,000 Average annual change – 5,000 10,000 15,000 20,000 25,000 50,000 10,000 15,000 20,000 5,000 5,000 0 0 0

HMA,* 2000toForecast Components ofPopulationChangeintheSanJose HMA,* Population andHouseholdGrowth inthe HMA,* 2000toCurrent 2000 to2010 2000 to2010 2000toForecast 2000 Net naturalchange Population Renter P and thenationalrecessionthatbegan boom technology 1990s information the July 2005becausethecollapseof 0.1percentayear fromJuly 2000to of 2010 tocurrent 2010 tocurrent 2010 Jose HMAslowed toanaverage opulation growth intheSan Owner Households Net migration San Jose San Jose Current toforecast Current toforecast Current

nology companies.nology Duringthisperiod, net out-migration occurred atanaver occurred net out-migration in March2001affectedhiringbytech From July 2011toJuly 2013,netfor skilled workers fromaroundtheworld. with operationsintheHMA recruit companies technology International thetotalpopulationchange. cent of 7,500 people, or33per annual rateof rental households, upfrom40per during thattime, reachingan rate of 6,250households, or1.0percent, rate of households grew atanaverage annual million (Figure5).Thenumber of percent, reachinganestimated1.93 average 22,850,or1.2 annual rateof theHMAgrewatan population of From April2010toJuly 1,2014,the periods, respectively. duringthesetwopeople occurred 2,750 annual of netout-migration 1,150peopleand of net in-migration the ensuingforeclosurecrisis. Annual which beganinDecember2007,and thenational recession, 2010 becauseof or 0.8percent,fromJuly 2008toJuly 2008 andthenslowed to14,150 people, 1.1 percent,fromJuly 2005toJuly growth increasedto19,950people, or (Figure 4).Average annual population which averaged 18,950peopleayear minus (resident births residentdeaths), change was offsetbynetnaturalchange 16,250people;this age annual rateof 7,675 people (California Department Department 7,675 people(California wasand netdomesticout-migration totaled30,950 people eign in-migration July 1, 2014,increasedtoanaverage fromApril2010to Net in-migration population andhouseholds. thetotal for morethan97percentof HMA, SantaClaraCountyaccounts thetwo countiesinthe (Figure 6).Of cent in2000and42percent2010 holds, approximately 44percentare thesehouse 647,600 households;of estimated estimated ­ - ­

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 7 Population andHouseholds Continued led tohouseholdsdoublingupor Rising housingcostssince2010have Community Survey 1-year estimates). rope at8percent(2012American fornia Association of REALTORS Associationof fornia the state budget deficit. One role of the statebudget deficit.Oneroleof toaddress California’s efforts state of the of 2012 aspart nia inFebruary gions of originwere Asiaat62percent, gions of the HMA) declined from 24 percent in the HMA)declinedfrom24percentin to purchasethemedianpricedhomein householdsthatcanafford (percent of to tighten.Saleshousingaffordability and rentalmarketconditionscontinued Housing affordabilitydeclinedassales Dynamics Program). Longitudinal-Employer Household 2014. “OnTheMap”Application, Francisco County(U.S. CensusBureau. Costa County, and3percentinSan Mateo County, 3percentinContra Alameda County, 6percentinSan lived outsidetheHMA:9percentin percent, were heldbyworkers who HMA during2011,330,600,or38 approximately 878,100jobsinthe the ing GoogleandAppleInc.). Of of local technology companies(includ localtechnology of offeredforemployeesshuttle services commuter railline, orprivate com Latin Americaat27percent,andEu to theHMA,theirmostcommonre thesepeoplewho migrated percent; of 13 compared withanationalfigureof outsidetheUnited States was born thepopulationinHMA in2012 of Finance).Approximately 37percent of RDAs was toprovide fundingforde ment agencies (RDAs) acrossCalifor 2014(Cali of cent inthesecondquarter 2013to19per of the secondquarter Assembly Bill 3674 required that at Assemblyat Bill3674 requiredthat veloping affordablehousing. In1976, affected by the closing of redevelop- affected bytheclosingof was Affordable housingconstruction ­muting intotheHMAbycar, the ® - ­ ). - ­ - ­

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unit podstoprovide shelter forthe building microhousing possibility of the SanJose CityCouncilsuggests the sumer PriceIndex. Aproposalbefore raised theminimum wage to$10an an initiative inNovember 2012,which SanJose, votersIn thecityof passed part1.pdf resources/documents/ahar-2013- ment. Community PlanningandDevelop- and UrbanDevelopment, Officeof DC: U.S. Housing of Department mates of Homelessness (AHAR) Report Assessment Development. 2013. Community Planning and Office of Housing andUrbanDevelopment, at 76.0percent(U.S. of Department and LosAngeles Cityand County, Fresno/Madera County, at81.0percent, highest rateinthecountry, behind thethird sheltered, whichrepresents hour andlinkedittotheregional Con to Congress: 1,Point Part County areaand74.4percentwere un were living intheSanJose/Santa Clara approximately 7,631homelesspeople WhitePaper.pdf). InJanuary 2013, Publications/pdf/Redevelopment_ http://www.huduser.org/portal// Economic MarketAnalysis Division: Housing andUrbanDevelopment, Washington, DC:U.S.of Department Working Paper No. EMAD-2014-01. History, Benefits, Excesses, andClosure Redevelopment Agencies inCalifornia: (Blount, Ip, Nakano, andNg. 2014. and 2014beforeitsclosurein2012 RDA in2013 fundsforconstruction units plannedthatwould have used RDA had1,096affordablehousing SanJose’s Housing Fund.Thecityof placed inaLow- andModerate-Income taxes intheredevelopment areabe funds generated byincreasedproperty tax-increment least 20percentof https://www.hudexchange.info/ ). The 2013 Annual The 2013Annual . Washington, - in - Time Esti

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 8 Population andHouseholds Housing Market TrendsHousing Continued Owned) status peaked in April 2010 at Owned) statuspeakedinApril2010at or transitionedintoREO(Real Estate days delinquent,were inforeclosure, loansthatwere mortgage 90ormore of been relatively rapid.Thepercentage andtherecovery fromithas country the less severe of thaninotherparts foreclosure crisisontheHMAwas the 0.5percent.Theinitialeffectof of tight, withanestimatedvacancy rate the SanJose HMAarecurrently very Sales housingmarketconditionsin Sales Market house The populationandnumber of build ( feet andcostapproximately $5,000to homeless; eachunitwould be 150square jobs lost,thesaleshousingmar 7.5 percentbeforefallingto4.6per and 22percent, to1,875new homes 7 percent,to22,700 existing homes, same periodin2002,ithaddeclined 12 monthsendingApril2001; bythe 2,400 new homes soldduringthe to 24,500existing homessoldand less affected.Salesvolume amounted nearly 2millionpeopleand666,800 and 1.0percent,respectively, reaching grow atanaverage 1.1 annual rateof holds intheHMAareexpected to the 2007 national recession in terms of of the 2007nationalrecessioninterms was totheHMA than moreharmful Although the2001nationalrecession and 2.5percent,respectively. significantly higherat11.0,6.9,4.5, duringthosemonthswere California By comparison,theaverage ratesin (Black KnightFinancialServices, Inc.). 2013, and1.5percentinApril2014 cent inApril2012,2.9percent San Jose Inside,April29,2014). ket was ­

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rate of 47 percent, to a peak of 4,750 47percent,toapeakof rate of through 2006atanaverage annual 2003 andthenincreasedduring2004 home salesdeclined20percentin ing homessold.Bycomparison,new the past4years bystrongpopulation Sales demandwas boosted during and thendeclined10percentin2009. unchanged from2005through2008 Average pricesremainedrelatively prices was weaker andrelatively brief. HMA. Therecovery innew home the housingcrisisbegantoaffect then declined26percentin2009as and 5percentin20072008;it 16percentin2005and2006 rates of ing homesoldgrew ataverage annual this report provides additionalhouse this report home pricesin theHMAduringApril companies.technology Single-family large, stable efits fromthepresenceof growth andalocaleconomy thatben anexist new homessold.Thepriceof 33,600exist 2005, reachingapeakof 30 percentin2004,and6 volume increased7percentin2003, market begantorecover first:sales same time. Theexisting homesales $613,600, foranew homeduringthe an existing homeand5percent,to declined 9percent,to$478,000,for (CoreLogic, Inc.). Average salesprices July 1, 2014. Table DP-1 at the end of July 1,2014.Table DP-1attheendof down from33percent2010to totalpopulation growth, 26 percentof expected approximately torepresent is forecast period.Netmigration the3-year households bytheendof hold and demographic data. hold anddemographic

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 9 Sources: U.S.Census Bureau,BuildingPermitsSurvey; estimatesbyanalyst Notes: Includestownhomes. Currentincludesdata throughJune2014. *San Jose-Sunnyvale-SantaClara HMA. Figure 7. 1,000 1,500 2,000 2,500 3,000 3,500 500 Sales MarketContinued Market TrendsHousing 0

2000 toCurrent 2000 Single-Family HomesPermittedinthe

2001

2002

2003

2004

2005

2006 Sales volume amountedto19,800ex previous peakinmid-2006;bycompar 2014 were 7percenthigherthanthe phase, plansindicatethatit butcurrent project isintheplanningandzoning Convention Centerand SJSU. The do line includethe101-unitBalbachCon Company). Developments in the pipe 24 percent, to $828,000, for a new home. to $788,500,foranexisting homeand ending April2014increased14percent, homessoldduringthe12 months of Housing PriceIndex). Theaverage price their respective peaks(CoreLogic, Inc. remain 17and14percentlessthan andnationalprices ison, California home (Metrostudy, AHanley Wood 15 percent,to$678,800,foranew $553,800, foranexisting homeand sales pricesincreased21percent,to new homeswas up24percent.Average 12 monthsandthesalesvolume of relatively unchanged sincetheprevious existing homeshasbeen volume of months endingApril2014.Thesales and 1,000new homesduringthe12 amounted to5,700existing homes Condominium andtownhome sales previous 12-monthperiod. 22percent,respectively,of sincethe 4percentand an increase a decreaseof isting homesand1,850new homes, or

2007 ­ miniums neartheSanJose McEnery

2008

2009 San JoseHMA,*

2010

2011

2012

2013

2014

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The most active markets in terms of The mostactive of marketsinterms Palo Alto(MLSListings, Inc.). city of Cupertino, and$2.43millioninthe tain View, $1.65millioninthecityof 870 ayear from 2008 through2011 2,050ayear in2006and2007, of a year, beforedecliningtoanaverage 2,600 rosetoanaveragepermitted of homes through 2005,thenumber of to prerecessionlevels: during2003 activity didnotrecoverconstruction payrolls,As withtotalnonfarm home companies.pacted localtechnology in 2001asthenationalrecessionim mitted in2000and1,923permitted sales volume duringthe3monthsend Moun were $1.36millioninthecityof 12 months (preliminary data). 12 months(preliminary from 1,750homesduringthe previous homes were up13percent permitted, ing June 2014,1,975single-family (Figure 7).During the 12 months end 1998, decliningto3,379homesper mitted was 4,575from1996through average homesper annual number of during the3monthsendingApril2014 highest intheHMA.Medianprices companieswere technology amongthe Home pricesinthecitiesnearmajor SanJose). available (Cityof space. Proposedpricesarenotyet retail units, and1,405squarefeetof two-bedroom units, 10three-bedroom will include66one-bedroomunits, 25 boom.The technology information the the late1990satheightof the HMAreachedpeaklevels during in Single-family homeconstruction (MLSListings, Inc.). $853,000 sales atamedianpriceof SantaClara,with110 and thecityof $1.2million; at amedianpriceof Sunnyvale, with110sales the cityof $745,000; sales atamedianpriceof Jose, with1,225single-family home San ing April2014were thecityof - ­

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 10 Sales MarketContinued Market TrendsHousing flats. Approximately 65 percent of the flats. Approximately 65percentof Milpitas, with285townhomes and Estates. Coyote Creekisinthecityof Coyote CreekandClassicsatTownsend intheHMAinclude der construction Developments thatarecurrently un Clara County(MLSListings, Inc.). Santa compared with$851,400forallof Gilroy and$754,000in Morgan Hill ending April2014was $600,000in the medianpriceduring3months theHMA; out fromtheurbancoreof in thesecitiesbecausetheyarefarther homes aresignificantly lessexpensive SanJose. Single-family thecityof of approximately 20to30milessoutheast Clara CountyalongU.S. Highway 101, Santa and MorganHillareinsouthern intheHMA.BothGilroypermitted totalsingle-family units 9 percentof respectively, accountedfor27,11,and Jose, Gilroy, andMorganHill,which, San particularly focusedinthecitiesof activity from2000through2013was acquiring landparcels. Homebuilding thedifficultiesinvolved in because of developments intheHMAhas declined large, single-family of construction Local REALTORS thatthe reported Table 4. Source: Estimatesbyanalyst The forecastperiodisJuly1,2014, toJuly1,2017. 9,000 othervacantunitsintheHMA willlikelysatisfysome oftheforecastdemand. Notes: The2,700homescurrently underconstructionandaportionoftheestimated *San Jose-Sunnyvale-SantaClaraHMA.

1,500,000 1,300,000 1,100,000 San JoseHMA*DuringtheForecast Period Estimated DemandforNewMarket-RateSalesHousinginthe 900,000 700,000 500,000 300,000 100,000 From Price Range($) and higher 1,499,999 1,299,999 1,099,999 899,999 699,999 499,999 299,999 To -

home. for afour-bedroom/three-bathroom bathroomhomeand$2.05 million half million forafour-bedroom/two-and-a- bedroom/two-bathroom home, $1.80 at$1.71millionforathree- Prices start Sunnyvale. being builtinthecityof Townsend 18homes Estatesconsistsof bathroomhome. Classics at and-a-half $750,000 forafour-bedroom/three- bathroomhome, and two-and-a-half home, $665,000forathree-bedroom/ two-bedroom/two-and-a-half-bathroom at$620,000fora occupied. Pricesstart haveunits have been beensoldandhalf During the3-year forecastperiod,de some of thisdemand. some of reenter themarketwilllikely satisfy the 9,000othervacant unitsthatmay under con higher range (Table 4).The2,700units for homesinthe$1.10million-and- to-$1.09 million range, and15percent homes inthe$700,000- for percent 40 homes thatcostlessthan$699,999, thedemandisexpected tobefor of (Table 1). Approximately 45percent mand isexpected for9,150salesunits Demand Units of 2,750 2,750 460 460 920 920 460 460 struction and a portion of andaportion struction ­ Percent of Total 30.0 30.0 10.0 10.0 5.0 5.0 5.0 5.0

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San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 11 Sources: U.S.CensusBureau, BuildingPermits Survey;estimates byanalyst Notes: Excludes townhomes. Currentincludesdata throughJune2014. *San Jose-Sunnyvale-Santa ClaraHMA. Figure 8. Figure 9. Sources: 2000and2010—2000Census2010Census;current—estimates byanalyst Note: ThecurrentdateisJuly1,2014. *San Jose-Sunnyvale-SantaClaraHMA. 1,000 2,000 3,000 4,000 5,000 6,000 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Housing Market TrendsHousing 0

to Current Multifamily UnitsPermittedinthe 2000 Rental Vacancy Ratesinthe

2001 2000

2002 1.9

2003

2004 Continued

2005

2006 The apartment vacancyThe apartment rateinthesec de 2.5per an estimatedvacancy rateof the SanJose HMAarevery tightwith Rental housingmarketconditionsin Rental Market cent (Figure8).Vacancy rateshave $1,619 for aone-bedroomunit, $2,030 2014was $1,250forastudio, of quarter Average rentbyunittypeinthesecond the sameperiodayear ago(Reis, Inc.). rent was $1,814,up6.2percentfrom 2013,andtheaverage asking of quarter down from3.0percentinthesecond 2014was 2.4percent, of ond quarter through 2013was 4.4percent. Average annual rentgrowth from2010 from2009through2011. construction multifamily to renting, andlow levels of in householdpreferencesfromowning ering populationgrowth, strongshifts

2007 San JoseHMA,*2000toCurrent clined since 2009 because of recov ­clined since2009becauseof 2010 4.3

2008 San JoseHMA,*2000

2009

2010

2011

2012 Current 2.5 2013

2014 - ­ ­-

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peaked at an average of 3,650units peaked atanaverage of intheHMA Multifamily construction and $2,031,respectively. 2014,at$2,121,$2,099, of quarter rents intheHMAduringsecond hadthehighestaverageheadquarters) CiscoSystems, Inc. San Jose (siteof andNortheast Google headquarters), Mountain View/Los Altos(siteof AppleInc.’s headquarters), (site of Cupertino/Saratoga market areasof companies.nology TheReis-defined HMA thatareclosetomajortech the of portions andnorthwestern ern rents areparticularly highinthewest a year in2005and2006beforedeclin for a three-bedroom unit. Apartment for athree-bedroomunit.Apartment for atwo-bedroom unit,and$2,470 has been within the city of SanJose; has beenwithin thecityof multifamily historically construction Santa Clara,SanJose, andGilroy. Most Palo Alto, MountainView, Sunnyvale, throughout theHMA,which include connecting SanFrancisco tocities and theCaltraincommuter railline focused alongmajortransitcorridors New multifamily developments are data). months (preliminary from 4,350duringtheprevious 12 units were up49percent permitted, ending June 2014,6,475multifamily to 5,894units. Duringthe12months creased 46percentfrom2012to2013, to 2012,reaching4,031units, andin nearlypermitted doubledfrom2011 units Thenumber of construction. caused stronggrowth inmultifamily tightened significantly since2009and marketconditionshaveApartment in2009. 452unitspermitted low of economic conditionsledtoa30-year during thehousingboomandweak excess supply built of absorption in 2007and2008(Figure9).Prolonged 2,375unitsayearing toanaverage of ­

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Housing Market Trends 12 Rental Market Continued

from 2000 through 2013, it represented 21­story, 347­unit Centerra is under 67 percent of multifamily units per­ construction after work began in Sep­ mitted, followed by the city of Santa tember 2013 and the groundbreaking Clara with 9 percent and the city of ceremony was held in March 2014; Milpitas with 6 percent. expected completion is in 2015 at an estimated total cost of $149 million Recently completed projects include for the development (Silicon Valley the 569­unit Epic Apartments in the Business Journal, September 12, 2013, city of San Jose, which was leased in and July 11, 2014). One South Market four phases during June 2013 through Street is a 23­story, mixed­use develop­ May 2014. An additional 202­unit ment that will include 312 apartment phase is being planned. Rents range ANALYSIS

units and 6,000 square feet of com­ from $2,230 to $2,710 for a studio unit; mercial space; construction began in $2,423 to $2,998 for a one­bedroom, June 2013 with expected completion one­bathroom unit; and $2,940 to in 2015. Silvery Towers was approved $3,492 for a two­bedroom, two­bath­ by the city of San Jose in March 2014. room unit. A low­income housing tax The $250 million development will credit apartment complex, the 93­unit consist of a 20­story tower and a 22­ Mayfair Court, was completed in story tower containing 643 apartment March 2014 in the eastern portion of units and 20,000 square feet of retail the city of San Jose at a cost of $23 space. Construction is expected to million. Initial asking rents ranged from begin in late 2014 with the first units $663 to $1,129 for a two­bedroom completed in 22 to 24 months (Silicon unit and $763 to $1,301 for a three­ Valley Business Journal, March 11, 2014). bedroom unit (Silicon Valley Business Proposed rent levels are not yet avail ­ Journal, March 5, 2014). Mayfield COMPREHENSIVE HOUSING MARKET able for these projects. Court rents are targeted for people who earn 30 to 50 percent of the Area During the 3­year forecast period, Median Income. In May 2014, typical demand is expected for 11,750 rental absorption rates were estimated at 20 units. Table 5 includes expected de ­ to 50 units a month. mand by unit type and rent ranges. The 6,675 units under construction has several will likely satisfy demand during the hig hrise apartment buildings under first year and a portion of the second construction or in planning. The year of the forecast period. le-Santa Clara, CA • a Table 5. Estimated Demand for New Market-Rate Rental Housing in the San Jose HMA* During the Forecast Period

Zero Bedrooms One Bedroom Two Bedrooms Three or More Bedrooms Monthly Gross Units of Monthly Gross Units of Monthly Gross Units of Monthly Gross Units of e-Sunnyv Rent ($) Demand Rent ($) Demand Rent ($) Demand Rent ($) Demand s 1,800 to 1,999 60 2,000 to 2,199 530 2,400 to 2,599 530 3,000 to 3,199 290 Jo 2,000 to 2,199 150 2,200 to 2,399 3,175 2,600 to 2,799 530 3,200 to 3,399 60 2,200 or more 380 2,400 to 2,599 530 2,800 to 2,999 1,575 3,400 to 3,599 90

San 2,600 or more 1,050 3,000 to 3,199 1,575 3,600 to 3,799 90 3,200 or more 1,050 3,800 or more 60 Total 590 Total 5,300 Total 5,300 Total 590

*San Jose-Sunnyvale-Santa Clara HMA. Notes: Numbers may not add to totals because of rounding. The 6,675 units currently under construction will likely satisfy some of the estimated demand. The forecast period is July 1, 2014, to July 1, 2017. Source: Estimates by analyst San Jos e-Sunnyva le-Santa Clara, CA • COMPREHENSIVE HOUSING MARKET ANALYSIS 13 Data Profile Table DP-1.SanJoseHMA*DataProfile, 2000toCurrent Sources: U.S.CensusBureau;DepartmentofHousingandUrbanDevelopment;estimatesbyanalyst 2014. and the12monthsthroughJune2014.MedianFamilyIncomesarefor1999,2009,2012.ThecurrentdateisJuly1, Notes: Numbersmaynotaddtototalsbecauseofrounding.Employmentdatarepresentannualaveragesfor2000,2010, *San Jose-Sunnyvale-SantaClaraHMA. Median FamilyIncome Rental vacancyrate Owner vacancyrate Total housingunits Percent renter Renter households Percent owner Owner households Total households Nonfarm payroll jobs Total population Unemployment rate Total resident employment

1,735,819 1,045,600 $82,600 595,828 232,257 349,491 581,748 937,379 39.9% 60.1% 2000 1.9% 0.5% 3.2% 1,836,911 $102,500 649,790 261,784 359,225 621,009 865,600 804,158 42.2% 57.8% 11.2% 2010 4.3% 1.5% 1,934,000 $105,000 665,700 282,900 364,700 647,600 980,700 896,000 Current 43.7% 56.3% 2.5% 0.5% 6.2% 00t 002010toCurrent 2000to2010 Average AnnualChange(%) – 1.9 – 1.5 2.2 0.9 1.2 0.3 0.7 0.6 0.8 0.6 1.8 0.4 1.0 1.2 3.6 3.1 14

Data Definitions and Sources Contact Information

2000: 4/1/2000—U.S. Decennial Census EMAD staff 2010: 4/1/2010—U.S. Decennial Census 213–534–2676 Current date: 7/1/2014—Analyst’s estimates This analysis has been prepared for the assistance and Forecast period: 7/1/2014–7/1/2017—Analyst’s guidance of HUD in its operations. The factual informa- estimates tion, findings, and conclusions may also be useful to Demand: The demand estimates in the analysis builders, mortgagees, and others concerned with local are not a forecast of building activity. They are housing market conditions and trends. The analysis the estimates of the total housing production does not purport to make determinations regarding the ANALYSIS

needed to achieve a balanced market at the end acceptability of any mortgage insurance proposals that of the 3-year forecast period given conditions on may be under consideration by the Department. the as-of date of the analysis, growth, losses, and The factual framework for this analysis follows the excess vacancies. The estimates do not account guidelines and methods developed by HUD’s Economic for units currently under construction or units in and Market Analysis Division. The analysis and findings the development pipeline. are as thorough and current as possible based on informa - Other Vacant Units: In the U.S. Department of tion available on the as-of date from local and national Housing and Urban Development’s (HUD’s) sources. As such, findings or conclusions may be modi- analysis, other vacant units include all vacant fied by subsequent developments. HUD expresses its units that are not available for sale or for rent. appreciation to those industry sources and state and local The term therefore includes units rented or sold government officials who provided data and information but not occupied; held for seasonal, recreational, on local economic and housing market conditions. or occasional use; used by migrant workers; and the category specified as “other” vacant by the COMPREHENSIVE HOUSING MARKET Census Bureau.

Building Permits: Building permits do not neces- sarily reflect all residential building activity that occurs in an HMA. Some units are constructed or created without a building permit or are issued a different type of building permit. For example, some units classified as commercial structures are not reflected in the residential building permits. As

le-Santa Clara, CA • a result, the analyst, through diligent fieldwork, a makes an estimate of this additional construction activity. Some of these estimates are included in the discussions of single-family and multifamily building permits. e-Sunnyv s For additional data pertaining to the housing Jo market for this HMA, go to http://www.huduser. org/publications/pdf/CMARtables_SanJose- San Sunnyvale-SantaClaraCA_14.pdf.

For additional reports on other market areas, please go to www.huduser.org/portal/ushmc/chma_archive.html.