Silicon Valley & Peninsula Multifamily ENews – June 2017

Silicon Valley & Peninsula Multifamily eNews

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.


San Jose City Council Approves Tenant Protection Ordinances
On May 9, 2017, the San José City Council approved the Tenant Protection Ordinance (TPO) which goes into effect immediately.  After over two years of public debate over the TPO, the City Council approved requirements for landlords to state a cause when noticing tenants to vacate. The TPO will apply to all apartments with three units or more on the same property, affecting over 87,000 rental units. Landlords will now be authorized to terminate tenancy under one of the twelve just causes stated in the ordinance which include:

Just cause reasons based on tenant actions
1. Nonpayment of rent

2. Material or habitual violation of the lease

3. Substantial damage to the apartment

4. Refusal to agree to a like or new rental agreement

5. Nuisance behavior

6. Refusing access to the apartment, requested in accordance in law

7. Unapproved holdover subtenant

Just cause reasons based on landlord decision or consequence of action 8. Substantial rehabilitation of the apartment

9. Ellis Act removal or demolition

10. Owner move-in

11. Order to vacate

12. Vacation of Unpermitted apartment

read more

San Jose, San Francisco: Ranked Top Sell Markets
1. San Francisco
2. New York City
3. San Jose
4. Miami
5. Milwaukee
Read the full report on the Multifamily Sector from Ten-X.    read more

Zillow Sued for Inaccurate Estimates
Home owners, realty agents and appraisers have been critical for years about the valuation tool, citing estimates that too often are far off the mark — sometimes 20 percent or 30 percent too low or too high — and misleading to consumers.  Zillow itself acknowledges errors…A Zestimate “is not an appraisal,” the company says on its website, but instead is “Zillow’s estimated market value” using its proprietary formula. Another way of looking at the Zestimate error rate: Roughly one quarter of the time, the value estimate is off by 10 percent or more of the selling price, and wrong by 20 percent or more 10 percent of the time. Though the 5 percent median error rate sounds modest, when computed against median sales prices, the errors can translate into tens of thousands of dollars — hundreds of thousands in high cost areas.  read more

Luxury High-Rise boom makes San Jose a Millennial Magnet
Transit-rich, adjacent to freeways and with parks, museums and theaters already in place, the approximately 250-square-block downtown core — with rents lower than San Francisco and more or less on par with Oakland — appears poised to become a new urban destination for millennials and the tech crowd.  Five projects have lately broken ground and — to use the parlance of developers — are now “going vertical,” bringing about 1,300 apartments and condos to the neighborhood. Beyond that, as many as 20 projects with about 6,000 units are in the pipeline, recently approved or under review by City Hall. read more

South Bay Economy Will Cool Off Yet Remain Strong
“Santa Clara County is still hot, but things are starting to slow because growth is being constrained by a lack of housing and a lack of labor,” said Christopher Thornberg, principal economist and founding partner with Beacon Economics, during his presentation at an economic summit at San Jose State University. read more

Silicon Valley and Peninsula Multifamily Rent Growth Tapers Off
Average rent growth in the San Jose Metro Market decreased by 1.1% and 0.8% in the San Francisco Metro Market in the previous 12 months.  Yardi’s Matrix report for May predicts that rent will grow just 0.5% in San Jose Metro area and to remain stable (0.0%) in San Francisco.  Download the full report 

Silicon Valley & San Francisco Still Ranked in Top 5 Rental Markets in Zumper Report

San Jose, CA had a month of strong growth for its one bedroom apartments. Median rent hiked up almost 5% to $2,370. Growth for two bedroom prices was much lower, increasing only 0.7% to $2,870.  San Francisco, CA ranked as the most expensive city for renters in this month’s national rent report despite experiencing no changes for both one ($3,370) and two bedroom ($4,500) apartments. Compared to this time last year, median rent for one bedroom units is down 6.1%, while two bedroom rent is down 6.3%.  read more

30-Year Fixed Mortgage Rate Moves Lower

In a short week following Memorial Day, the 10-year Treasury yield fell 4 basis points. The 30-year mortgage rate remained relatively flat, falling 1 basis point to 3.94 percent and once again hitting a new 2017 low. Rates for commercial multifamily loan are averaging 50 bps to 100 bps higher.  read more