The California real estate market is known to have some of the most profitable, and most expensive, markets in the country. Among the plethora of city markets in CA is the San Jose real estate market- one of the top rental markets,
according to the PwC. Why should you invest in this superb rental market? Where exactly should you invest in the San Jose real estate market ? This blog will answer these two questions!
San Jose Real Estate Market: Traditional Rental Strategy Data
The San Jose real estate market is a top-tier market for the traditional rental strategy. But how exactly can this statement be quantified? Quite easily, actually! By using Mashvisor’s investment property calculator, you can measure the profitability, cost, and performance of any rental market. To learn more about Mashvisor’s investment property calculator, click here. In the meantime, here is the investment data of the San Jose real estate market:
Pricing
- Median Property Price: $1,017,954
- Price per Square Foot: $630
- Price-to-Rent Ratio: 27
Traditional Investing
- Rental Income: $3,096
- Cap Rate / Cash on Cash Return: 1.1%
As you can see from the San Jose housing market data, there is a lot to be discussed about the market. So, let’s take a look at the San Jose real estate market trends, along with why a San Jose real estate investor should invest in this market.
4 Reasons to Invest in the San Jose Real Estate Market
There are many reasons why the San Jose housing market is a desirable market. The reasons break down into four: a strong economy, growing population, lucrative investments, and high appreciation rates.
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Economy
To say the brightness of the San Jose housing market forecast is due to its stellar economy would be an understatement. Between 2014 and 2016, San Jose was the second fastest growing economy in the world and the fastest in the US. The city’s economic growth hasn’t subsided since, as it experienced a 3.3% increase in job growth from January 2018 to January 2019. This was the sixth highest US job growth rate over the last year- more than double the national rate of 1.6%. High job growth is expected over the next 10 years at 38.9%, which is considerably higher than the US expected average of 33.5%.
Related: These Are the Features of the Best Place to Invest in Real Estate
The city’s economy is one of the San Jose real estate market conditions that surpasses those of the California real estate market. This is best illustrated with unemployment rates. San Jose’s rate is 2.7%, which is the fourth lowest in the nation. The US unemployment rate is 3.8%, while California’s is 4.3%. Unemployment is very low in San Jose, as it’s the capital of Silicon Valley. It is home to the headquarters of many tech giants, such as PayPal, eBay, and Cisco. Though San Jose is a bastion of the tech industry, that isn’t all it has to offer. The city hosts a mixed workforce of white and blue-collar jobs and had the second-best small business growth in the US for two years in a row. These strong economic indicators make San Jose a top location for investing in real estate.
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Population
San Jose’s population growth is largely due to its economic success, as would be expected from any strong economy. The city has the third largest community in the state and the tenth largest in the nation. It is also the largest city in Northern California. As a result, there are plenty of prospective tenants for San Jose rental properties. Even with people moving out of Silicon Valley, San Jose’s population continues to grow. Since 2010, the city’s population has had a growth rate of 10.56%, which is much higher than the US average of 5.96%.
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Profitability
Another reason to invest in the San Jose real estate market is the mere fact that San Jose rental properties are very lucrative. The average rental income for traditional San Jose investment properties is a little over $3,000, which is much higher than the national rent. Long-term rental properties in the best neighborhoods in San Jose have even higher income and return on investment averages, as will be shown later.
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Appreciation
San Jose long-term rental properties also generate exceptionally high appreciation rates. The latest appreciation rate, according to Neighborhood Scout, is a whopping 13.38%. This rate of San Jose investment property appreciation is consistent with the market performance over the last 10 years, which appreciated at 77.36% during that time. San Jose’s annual appreciation rate is higher than that of 90% of cities and towns in California and a staggering 99.44% of cities across the nation.
Start looking for an investment property in San Jose right now.
Related: Cash Flow vs. Appreciation What Should Drive Your Real Estate Investment Decision?
Best Neighborhoods in San Jose for Traditional Rental Strategy
Now, we can discuss where a San Jose real estate investor should focus on investing. According to Mashvisor, the best neighborhoods in San Jose are North San Jose, Edenvale – Seven Trees, Fairgrounds, North Valley, and Blossom Valley.
North San Jose
Pricing
- Median Property Price: $628,225
- Price per Square Foot: $490
- Price-to-Rent Ratio: 16
Traditional Investing
- Rental Income: $3,295
- Cap Rate / Cash on Cash Return: 5.0%
Edenvale – Seven Trees
Pricing
- Median Property Price: $650,968
- Price per Square Foot: $481
- Price-to-Rent Ratio: 16
Traditional Investing
- Rental Income: $3,452
- Cap Rate / Cash on Cash Return: 3.2%
Fairgrounds
Pricing
- Median Property Price: $683,346
- Price per Square Foot: $555
- Price-to-Rent Ratio: 19
Traditional Investing
- Rental Income: $2,950
- Cap Rate / Cash on Cash Return: 3.0%
North Valley
Pricing
- Median Property Price: $689,898
- Price per Square Foot: $669
- Price-to-Rent Ratio: 21
Traditional Investing
- Rental Income: $2,754
- Cap Rate / Cash on Cash Return: 1.9%
Blossom Valley
Pricing
- Median Property Price: $840,429
- Price per Square Foot: $488
- Price-to-Rent Ratio: 24
Traditional Investing
- Rental Income: $2,923
- Cap Rate / Cash on Cash Return: 1.4%
To start investing in the San Jose real estate market, click here to start your 7-day FREE trial with Mashvisor, followed by 15% off for life.