The federal government's guarantee of full deposits at Silicon Valley Bank was a huge relief for the local tech industry, but jitters remain.
After years of overexuberance, venture capital funding for startups has diminished amid higher interest rates and economic uncertainty. The collapse of a top startup lender, and lingering concerns about the broader financial system, could make it even tougher for startups to obtain the capital they need to operate.
Given the tribulations startups and big tech companies are experiencing and the industry's outsized impact on housing, it remains to be seen if a bigger chill will fall upon the San Jose, California, market.
Strengths
Google is moving forward on its Downtown West project that will feature 4,000 housing units, a hotel, retail, and 7 million square feet of office space. The project will be transformational for San Jose, and Google has two more megaprojects planned in Mountain View.
Weaknesses
The Bay Area is one of the most difficult and expensive regions in the nation to build homes. In percentage terms, the Bay Area's population loss (-2.1%) during the 2O2Os has exceeded the state's (-1.3%). Santa Clara County's population declined -3% from 2019 to 2022.
Supply
Quarterly housing starts decreased 56.1% from a year ago, while the number of available vacant developed lots sits at 1,070, up 22.6% over the same quarter last year. In terms of supply-demand balance, the market area is 5.14% undersupplied.
Sales
New-home sales in the metropolitan area decreased 62% year over year to an annualized rate of 623 units in April. Existing-home closings for the 12-month period ending in May posted a year-over-year decline of 45% to an annualized rate of 11,591 units.
Prices
The average list price for a new detached home in the San Jose-Sunnyvale-Santa Clara, CA, region decreased 38.4% from 2022 to $946,973 in May, while the average list price for a new attached home decreased 10.5% over the same period to $1,127,580.
Economy
Total nonfarm employment in the metropolitan statistical area increased 3.1% from the same period last year to 1,182,900 payrolls in April. There were approximately 300 more jobs in April compared with the previous month. The local unemployment rate decreased to 3.1% in April compared with 3.2% in the previous month. April's jobless rate is higher than it was this time last year when it stood at 2.6%. Zonda forecasts the region's unemployment rate will finish the year at 3.2%.
Community
The current population for the metropolitan area is approximately 1,968,130 people and is projected to increase by 0.5% this year. Approximately 651,080 households are in the region, which is up 0.8% year over year. Forecasts show that current household formation is expected to increase by an annual growth rote of 1.9% for 2027. Incomes increased by 4.7% from the previous year to $154,038.
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