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Silicon Valley & Peninsula Multifamily eNews – September 2016

Welcome to the Silicon Valley Multifamily Group monthly eNews.  This newsletter provides a collection of multifamily related articles and insights from various industry publications to help you as a building owner have a better understanding of the market. This newsletter is distributed with no obligation to multifamily property owners and investors in Santa Clara and San Mateo counties. If you would like to see specific information in this newsletter, or not see this newsletter at all, please let us know.  We welcome your comments.

Rents Drop in Silicon Valley, The Peninsula and San Francisco Markets
The construction boom of apartment and condo buildings around the US, especially in high-priced metro areas on the East Coast and the West Coast, is now colliding with the reality of squeezed household incomes and soaring rents. As a consequence, in many of the hottest markets – including San Jose and San Francisco – rents have started to drop.

Rank    City                           Price/1 BR      M/M%      Y/Y%
1          San Francisco, CA       $3,440             -0.60%     -2.50%
2          New York, NY              $3,130            -2.20%     -0.90%
3          Boston, MA                 $2,220            -0.40%     -2.20%
4          Washington, DC          $2,200              2.80%      4.30%
5          San Jose, CA              $2,140             -3.60%     -3.60%
click to read more

Rent Control Measures on Ballot in San Mateo and Mountain View
San Jose is not the only municipality to enact rent control measures.  Rent control will also be on the ballot in San Mateo, Burlingame and Mountain View.
For San Mateo, click to read more
For Mountain View, click to read more

Campbell Enacts Rental Mediation
The City of Campbell has recently enacted a version of non-binding rent control in the form of mediation with the pro-tenant/renter organization, Project Sentinel.  The ordinance has no specific restriction on frequency or amount of rent increases, only that rent increases be “reasonable.”  Unfortunately, Project Sentinel determines what is reasonable. click to read about the program

Renters Rate San Jose a “C-“
Renters in San Jose rated their city near the bottom of a desirablity list in many areas:  Affordability was rated an F and renters weren’t pleased with the state and local tax rates, either, handing them a D. Somewhere in the middle were commute time (C), quality of schools (B), public transit (another B), recreational activities (B+) and pet-friendliness (C+). San Jose renters even gave their city a C+ in the “safety and crime rate” category.  click to read more

San Jose Rent Control Articles Recently Published
For those that have recently awoke from a Rip Van Winkle-like sleep, the San Jose City Council updated their Apartment Rent Ordinance in April, approving a new rent control plan for multifamily properties built before 1979. The new directive says that, as of June 17, 2016, owners within this category of multifamily properties may only increase rents by up to 5 percent, instead of the 8 percent previously allowed. We recently wrote a white paper and articles about the negative impacts of rent control which were published in the San Jose Mercury News and Globest.com.  Click on the publication titles to read them.

San Jose Updates Rent Control Ordinance – Again
San Jose has again updated it’s rental ordinance  On Tuesday, August 30, the City Council approved the regulations that will implement the fair return petition process. Beginning Sept. 2, 2016, in order to increase rent over the 5% annual allowable limit, an apartment owner must file a fair return petition to prove that their net operating income has fallen below the fair return standard.  Also, as of Sept. 2, 2016 opportunities to pass through the costs of debt service, operations and maintenance, and rehabilitation will be permanently eliminated for rent stabilized properties. The capital improvement cost pass-through opportunities have been temporarily suspended until the fully modified ARO is enacted by the City Council and the Ordinance becomes effective.  click to read more

San Jose Ranked in the Top Ten for Multifamily Development Markets in USA
According to Globest.com, the North San Jose/Milpitas area is ranked in the Top Ten Markets Nationwide for Apartment Development
Uptown/South End submarket in the Charlotte, NC metro area
Frisco/Prosper in the Dallas metro
Central Nashville submarket in Nashville;
Downtown/Montrose/River Oaks in Houston;
Navy Yard/Capital South in Washington, DC;
North San Jose/Milpitas in San Jose;
Downtown/Highlands/Lincoln Park in Denver;
Central Orlando in Orlando;
Far Northwest San Antonio in San Antonio; and
Cedar Park in the Austin, TX metro.
The top 10 submarkets were determined based on inventory growth rates that include completions since Q1 ‘12 and ongoing construction at the end of Q1 ’16.  Click to read more

“If you own a home in Palo Alto, Sell it now”
Rarely do I publish this type of article, but it is interesting and does have some relevant information for multifamily building owners in Palo Alto.  For instance, the median rent in Palo Alto is $5,800, which puts even San Francisco to shame. click to read more

The 25 most expensive housing markets in the US
The most expensive housing markets in America are primarily packed into one state: California. The Golden State dominates Coldwell Banker’s annual Home Listing Report, which ranks the most expensive places to purchase homes in America, claiming every spot in the top 10 and 18 total out of the top 25. Read the full story

One Reason for High Rents in the SF Bay Area
Single family housing prices in the SF Bay Area are among the highest in the U.S. This, of course, contributes to some of the highest rents in the country. Using data from Zillow, the 3D map below shows the cost of housing by U.S. county. The height of each area represents the average price per square foot of its homes. click to read more

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