Qtr 4 housing stats quite revealing
What has changed?
The fourth quarter housing numbers are out for San Jose and what can we say? During the most challenging quarter of the year for rentals our office experienced a bit of a lull in the market, but you wouldn't know it by these numbers. Like a hot air balloon in a wind storm, the cost of renting a home continues to rise and the percentage of people that can afford to live here plummets. Here are some of the highlights:
- Record number of multi-family housing residential permits issued for 2014: This is the largest number of permits in a single year since Ronald Reagan was president. You would think with over 4,050 permits issued that we would have more housing available. Well not exactly.
- Rent Price for a 3 bedroom 2 bath up 10% annually, to $3,047.00: Compared to December 2013 when the same property rented for $2,607.00, you can see why only 22% of our community can enjoy living here while nationally the average is 63%.
- Vacancy rate near all time low: In 2013, the vacancy rate jumped up to 6.9% on the December report. This number does tend to fluctuate wildly in the last quarter but usually it is higher in December and trends downward throughout the remainder of the year. The natural vacancy rate for San Jose is set at 5%. Impressively, our vacancy rate during the first quarter of 2014 was higher than our December number. What does that mean? For Santa Clara County, the first quarter of 2014 ended with a vacancy rate of 7.9%, but as our year concluded, we came all the way down to 4.3%. Since the natural vacancy rate is 5% this means that we have virtually nothing available for rent.
- Affordability out of reach for Police and Fire Fighters: This disturbing trend has been evident since I started following these numbers closely. Considering that most landlords and/or property management firms require the income threshold to be three times the rent, the average person has to earn $80,360.00 per year to rent a one bedroom apartment in San Jose. The average salary of a fire fighter is about 85,000.00. That is great if you are a single person in your early 20's but if you have a family forget about it. These are the people that protect our city and save lives.
Those are some of the highlights. These numbers change often and our company checks rents from May to July each year to see if a rent increase is due. Give us a call if you have any questions about our strategies or if you would like more information on the rental market. You can also go to www.calwestrents.com and click the tools and resources tab for the full report.