Silicon Valley & Peninsula Multifamily eNews – August 2016

Welcome to the Silicon Valley Multifamily Group monthly eNews.  This newsletter provides a collection of multifamily related articles and insights from various industry related 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.

Insights on Silicon Valley Apartment Rents
Average apartment asking rents in Silicon Valley could be stabilizing, with annual rent growth in key cities clocking in well under 10 percent, according to the latest quarterly figured out today from Real Answers. But some advocates are saying we’re a ways off from calling an end to the housing crisis. In Santa Clara County, the average asking rent for a one-bedroom apartment reached $2,361, up $23 from the prior quarter and 6.5 percent — or $143 — from a year ago. click to read more

San Jose Ranked Number 4 in Top Ten Multifamily Markets in USA
Along with its northern neighbor, San Jose has consistently ranked as one of the top multifamily markets in the nation for the past several years. The city anchors Silicon Valley, which has experienced a wave of positive economic news.

Here are the Top Ten Multifamily Markets in the USA
1. Oakland, CA – East Bay
2. Portland, OR
3. San Francisco, CA
4. San Jose (Silicon Valley), CA
5. Miami, FL
6. Houston, TX
7. Denver, CO
8. Seattle, WA
9. Orange County, CA
10. San Diego, CA
Click to read more

The Reality of Rent Control in San Jose
In April of 2016, the San Jose City Council updated their Apartment Rent Ordinance, 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 – a reduction of 3 percent. Moreover, the new ordinance eliminates the 21 percent increase previously allowed if rent had not been raised in the last 24 months. It also eliminates any debt pass-through and places much greater restrictions on passing through the cost of capital improvements restrictions for owners of these pre-1979-built assets, a group representing approximately 44,000 apartments that house 11 percent of San Jose’s residents. click to read more — Also published in The Registry

Is the Silicon Valley Real Estate Bubble About to Explode?
While rental prices in the Bay Area are as nightmarishly expensive as they’ve ever been, it’s getting noticeably harder to sell a mansion in Silicon Valley. In super-wealthy Palo Alto, where the median price for a home is $2.1 million, Silicon Valley mansions—those costing more than $5 million—lingered on the market for 16 days in April 2016, compared to 11 days in April 2015 and 10 days in April 2014, Bloomberg reports. (The average national median time a house stays on the market, by comparison, is 67 days.) Luxury-home sales in Silicon Valley had been propped up by tech executives flush with cash after initial public offerings, and foreign buyers. click to read more

Multifamily Rentals Continue to Drive Housing Market
The rental market continues to drive housing’s recovery—36% of U.S. households opted to rent in 2015, the largest share since the 1960s. Posting the largest 10-year gain on record, the number of renters increased by 9 million over the past decade, according to the annual State of the Nation’s Housing 2016 report released today from the Joint Center for Housing Studies of Harvard University. click to read more

As Growth in Apartment Rents Slows, U.S. Developers Press Pause
Developers Steven Shores and Marc Pollack found a way to stand out from the crowd rushing to build apartments in Atlanta’s ritziest neighborhood: they’re putting their 315-unit project in Buckhead on hold. “We found ourselves wondering if it makes sense now to move forward on a project when four or five others are on the exact same schedule,” said Shores. click to read more

Apartment Boom Needs Cooling-Off Period
For years now, there’s been talk on an oversupply problem, specifically at the upper end, in the apartment industry. The Wall Street Journal’s Justin Lahart thinks that supply has finally reached a point where it may be tie for a “cooling-off period.”  The problem, says Bank of America Merrill Lynch economist Michelle Meyer, is that much of the recent apartment construction has been concentrated in luxury buildings in the largest U.S. cities. click to read more

30 Years of San Francisco Real Estate Cycles
This is a look at the past 30+ years of San Francisco Bay Area real estate boom and bust cycles. Financial-market cycles have been around for hundreds of years, all the way back to the Dutch tulip mania of the 1600’s. While future cycles will vary in their details, the causes, effects and trend lines are often quite similar. click to read more

The Average Bay Area Home Sells in 22 Days, But Market Slowing
Over 58 percent of homes in San Francisco sell within a month of going on the market, but even that’s not a ferocious enough rate to be the fastest housing market in the nation. That accolade goes to San Jose, where 63 percent of houses are snapped up within the first four weeks. And the number two spot? You guessed it: Oakland, where 60.2 percent sell in the first month. click to read more

In Silicon Valley Suburbs, Calls to Limit the Soaring Rents
Following soaring housing prices and middle-class family fears of the growing income gap, renters’ rights groups in Californiaare pushing for what could be the largest expansion of tenant laws since the 1970s. New York Times staffer Conor Dougherty takes a look at this movement, which is centered in the south of San Francisco where prices have risen about 50% over the past five years. click to read more