The California housing market has always been known for its profitability. In 2020, this trend will undoubtedly continue. In fact, many of The Golden State’s rental markets have been ranked as the best places to invest in real estate in the US. Today, we’ll focus on California’s 3rd best rental market according to the PwC: the San Jose housing market. Most importantly, we’ll focus our real estate forecast on three areas:
- Investment data for the San Jose real estate market
- 6 San Jose real estate trends for 2020
- The 5 best neighborhoods in San Jose
Related: 5 Tips for Investing in the California Housing Market
San Jose Housing Market: Mashvisor’s Real Estate Data
So, how is San Jose CA real estate performing in 2020? The best way to find out is to analyze San Jose’s real estate market data. Where can you get access to such data? Look no further! With Mashvisor’s real estate market analysis, you can analyze the data of any US housing market. Take a look at the San Jose housing market data below:
- Median Property Price: $923,814
- Price per Square Foot: $600
- Price-to-Rent Ratio: 25
- Traditional Rental Income: $3,123
- Traditional Cap Rate / Cash on Cash Return: 1.2%
To learn more about Mashvisor’s assortment of real estate investment tools, CLICK HERE!
San Jose Real Estate Trends for 2020
Why has San Jose been named among the top three markets in California for 2020? And should you invest in San Jose real estate? The answers are best exemplified through San Jose real estate market trends. For our San Jose housing market forecast, we’ll focus on the 6 most important trends.
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Income Property in San Jose Will Be Very Profitable in 2020
The primary goal of investing in real estate is to generate a profit. By investing in San Jose real estate, investors are guaranteed a high amount of rental income. As seen from Mashvisor’s data, the average traditional rental income in San Jose is $3,123. This is significantly more than California’s average of $2,567.
Real estate investors should keep in mind that Mashvisor’s data represents the average income. With the right property search tools, you can find San Jose rental properties that will generate more rental income in 2020.
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San Jose House Prices Will Cool Down in 2020
Real estate in San Jose, and California as a whole, may be known for its profitability, but it’s also notorious for being unaffordable. As seen previously, the median property price in San Jose is a whopping $923,814. For comparison:
- California real estate market: $681,169
- San Francisco real estate market: $1.7 million
- Los Angeles real estate market: $1 million
Therefore, it is clear that unaffordability remains a barrier to entry for San Jose real estate investors. However, there is good news for 2020. San Jose house prices will cool down in 2020 and beyond. As a matter of fact, the trend of price decreases occurred in 2019. According to Zillow, San Jose’s appreciation rate was -8.1% last year. For 2020, Zillow predicts San Jose house prices to drop by -1.8%. As a result, San Jose houses for sale will be more accessible to buyers in 2020.
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The Silicon Valley Economy Will Strengthen the San Jose Housing Market
A strong real estate market is typically the result of a strong local economy. For San Jose, which is part of the Silicon Valley, this is most definitely the case. Since the 1990s, San Jose has been a part of California’s fastest-growing economy. Its economic success is best shown in its various metrics. For instance, San Jose’s unemployment rate is 2.7%. This is significantly lower than the US average of 3.9%. San Jose also shows signs of long-term economic growth. In the next 10 years, San Jose’s job market will increase by nearly 39%. With a top-tier economy in technology and trading, San Jose real estate investing will continue to be a good option in 2020.
Related: Job Growth and Its Effects on the US Housing Market
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San Jose Will Be Impacted by the New California Rent Control Law
The San Jose housing market will be affected by the new California rent control law. As a measure to alleviate the state’s housing crisis, California passed a statewide rent control law. The law limits rent increases to only 5% per year, taking California inflation into account. However, total rental rate increases will not exceed 10%. The California rent control law also includes a ‘just cause’ requirement for evicting tenants. In other words, a San Jose real estate investor will need a reason for starting an eviction. Effective since the start of the year, the California rent control law is something you should keep in mind if you’re interested in buying rental property in the San Jose housing market 2020.
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Non-Owner Occupied Rentals Are Illegal for Airbnb San Jose
While Airbnb is a viable rental strategy for some locations in the California housing market (like the Palm Springs real estate market), this is not the case in the San Jose housing market. Non-owner occupied rentals are illegal. According to the city’s ordinance, only primary residences may be used for Airbnb.
San Jose short-term rental laws also differ whether the host is present or not. If the host is present, there is no limit on the number of nights the Airbnb property can be rented out. If the host is not present, however, rental activity is capped at 180 days a year. San Jose Airbnb laws also require a 10% transient occupancy tax for all Airbnb bookings.
Overall, due to restrictive Airbnb regulations, Airbnb is not recommended as a full-time strategy in the San Jose housing market 2020.
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The San Jose Housing Market Will Be a Buyer’s Market in 2020
As mentioned earlier, buying a rental property in San Jose will be more accessible in 2020 due to decreased prices. As a result, San Jose has been classified as a cool buyer’s market according to Zillow, as opposed to a hot seller’s market. This makes buying an investment property in the San Jose housing market easier as buyers will have the upper hand.
Best Neighborhoods in San Jose for Real Estate Investing
As long as you’re in the market for a long term rental and you have the right budget, San Jose is a good place to invest in real estate in 2020. But, where should you invest in the housing market in San Jose? According to Mashvisor’s neighborhood analysis, the best neighborhoods in San Jose are:
Blossom Valley
- Median Property Price: $670,567
- Price per Square Foot: $444
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $2,958
- Traditional Cap Rate / Cash on Cash Return: 2.1%
Downtown
- Median Property Price: $873,615
- Price per Square Foot: $654
- Price-to-Rent Ratio: 23
- Traditional Rental Income: $3,232
- Traditional Cap Rate / Cash on Cash Return: 1.5%
Edenvale – Seven Trees
- Median Property Price: $789,491
- Price per Square Foot: $500
- Price-to-Rent Ratio: 21
- Traditional Rental Income: $3,112
- Traditional Cap Rate / Cash on Cash Return: 1.5%
East San Jose
- Median Property Price: $863,291
- Price per Square Foot: $588
- Price-to-Rent Ratio: 23
- Traditional Rental Income: $3,188
- Traditional Cap Rate / Cash on Cash Return: 1.4%
Fairgrounds
- Median Property Price: $799,458
- Price per Square Foot: $531
- Price-to-Rent Ratio: 21
- Traditional Rental Income: $3,214
- Traditional Cap Rate / Cash on Cash Return: 1.3%
Related: Real Estate Investing for Beginners: A Guide to Neighborhood Analysis
The San Jose housing market is among the best of the best in 2020. To start searching for a San Jose real estate investment, CLICK HERE to start your 14-day FREE trial with Mashvisor!
