Although the prospective forecast for the rental market in 2012 is still showing signs of uncertainty, those with real estate in San Jose, Santa Clara County and Silicon Valley are only seeing dollar signs.
Recently there has been a lot of talk in the news regarding the rental market this year, but the one thing they all agree on is that the San Jose-Sunnyvale-Santa Clara area is going to see another tech boom; which will dramatically affect the housing market.
What is so special about this market? The fact is San Jose has had the largest increase than any other major metro market in the nation, according to a RealFacts Inc. survey released in earlier January.
Silicon Valley / San Jose Business Journal also reported that by the end of 2011 the metropolitan area climbed 11.7 percent to $1,783 compared to $1,596 at the end of 2010. These areas, along with San Francisco, were the only market rents to see double digits for 2011.
A lot of this is due to short sales, foreclosures, and people looking to rent before deciding to invest in property. However, the one thing Silicon Valley and its neighbors like Santa Clara County have, compared to other cities, is a mass amount of tech companies.
Thanks to these tech businesses, more jobs have become available making the rental market in Silicon Valley especially competitive.
“Forty thousand jobs in the Silicon Valley, 19,000 jobs in San Francisco, so we are adding jobs because of the social media business, the technology business, bio-tech, so the strongest economy is leading people to need to have a place to live and we don’t build stuff as rapidly here,” said UC Berkeley Fisher Center for Real Estate and Urban Economics Chairman Kenneth Rosen for ABC news.
Amongst the many enterprises, Facebook has stirred up a lot of discussion since their announcement to launch an initial public offering (IPO) this spring.
According to Los Gatos property manager Mike Catalano, there are quite a few IPOs in the area that will be going public which will influence the rental market. However, he also notes that these things only last for so long, so a property owner’s goals should be to try and stay within the market.
Catalano says if the market call for it then you should increase rent, but be prepared that there is going to be a threshold at one point where people are going to think, “My rent is so high, I think it’s time to buy.”
Regardless, Silicon Valley is a strong market and will most likely continue that way. In fact the current average home price, according to Yahoo Finance, is $511,186 and is likely to see a 3 percent increase in the coming year.
So, what’s the best advice a landlord can receive? Don’t be over rent and don’t be under rent. Stay within the market and your property will do just fine.
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