Silicon Valley & Peninsula Multifamily ENews – March 2017

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.

Tax Reform Threatens 1031 Exchange
House Republicans are working on a major tax reform proposal that, as part of an overall streamlining of the Internal Revenue Code and reduction in tax rates, may eliminate or seriously restrict the use of tax-deferred exchanges — property swaps — under Section 1031 of the code. Trump has identified tax reform as one of his top priorities, and legislation is expected to move quickly in the new Congress.  read more
Send a message to congress supporting 1031 exchanges.  Start here

San Jose & Peninsula Among Top Rental Markets in the US
Despite dropping rents and move-in incentives, San Jose, San Francisco, Oakland and Los Angeles are again ranked at the top of the list for most expensive rental markets in the US.  Here are the top ten:

1. San Francisco         6. San Francisco
2. New York                 7. Washington
3. Boston                     8. Chicago
4. San Jose                 9.  Miami
5. Oakland                  10. Seattle

Read the full report here.

San Jose Ranks 3rd in “Best Places to Live”
San Jose took third place in U.S. News & World Report’s “Best Places to Live” rankings, a major jump from its 10th place showing a year ago. U.S. News analyzed the 100 most populous metro areas to find the best places to live. To make the top of the list, a place had to have good value, be a desirable place to live, have a strong job market and a high quality of life. read more

Outlook for Apartment Sector Looks Strong
Since the election, “uncertainty” has been a buzzword among economists. The direction of U.S. policy is not clear on major issues ranging from immigration to tax reform. But the fundamentals of the apartment sector are relatively strong despite it all.  read more

San Francisco & Bay Area Ranked as the Top Sell Market
San Francisco and New York have gotten so ludicrously expensive, and have so much new supply coming on the market, just as their economic growth has begun to slow, that they’re now the top two SELL markets for investors, according to Ten-X Research’s report and outlook.  Contact me for a copy of this report. read more

Fed Frets About Commercial Real Estate Bubble
Boom and bust: that’s Commercial Real Estate in a nutshell. We had seven years of boom, and now the Fed is worried about the bust. Yellen didn’t mention CRE in her prepared testimony on Tuesday before the Senate Committee on Banking, Housing, and Urban Affairs. But it featured in the twice-yearly report that the Fed delivered to Congress in support of Yellen’s testimony.  And it wasn’t the first time that it was mentioned in these twice-yearly reports – but the fifth time in a row.   read more

What Impact Will Rising Interest Rates Have on Apartment Rental Rates & Occupancy Growth?
The homeownership rate may have bottomed as affluent renters begin to swap leasing contracts for mortgages ahead of expected interest rate increases   read more

Bill Introduced to Repeal Costa-Hawkins, California’s Rent Control Limitation Law
Lawmakers have introduced a bill to repeal the Costa-Hawkins Rental Housing Act, landmark legislation that exempts new construction and single-family homes from local rent control laws. Should AB 1506 succeed and Costa-Hawkins be repealed, each city and county in California would have the ability to adopt rent control measures without any limitations. Anticipating this bill, the California Apartment Association already has begun efforts to defeat it.  read more

San Jose City Council Approves Critical Change to Rent Control Policy
Spurred by a critical city audit that raised the ire of Mayor Sam Liccardo and some veteran council members, city leaders Tuesday approved a major change to the city’s rent control policy — before it even went into effect.  San Jose’s rent control law, which applies to 45,820 units built before 1979, caps rent increases to a maximum of 5 percent a year. Under the initial policy, if a landlord decided not to raise the rent any given year, they could “bank” the unused rent hikes and apply them at a later time. But a council majority Tuesday agreed to eliminate the banking option on a 7-4 vote. That policy would have allowed rent increases up to 8 percent a year.  read more

Multifamily Development Cools in Bay Area While Single Family Maintains Growth
Research from JLL indicates that a number of factors have converged to push multifamily asking rents downward, causing building permits for new apartment construction to taper off over the past year. Meanwhile there hasn’t been a corresponding decrease in permits issued for single family homes as pricing and demand remain strong.  read more

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