Home Sales Up Across the U.S.
Affordability and lack of inventory isn’t just a Silicon Valley market phenomenon; similar stats are showing up across the country. According to the National Association of Realtors (NAR) existing home sales climbed 1% in March, the second consecutive month of growth. NAR chief economist said, “… the healthy economy is generating sustained interest in buying a home this spring, [but] sales are lagging year-ago levels because supply is woefully low and home prices keep climbing above what some would-be buyers can afford.”
The NAR article further reported that the Bay Area continues to dominate as a hot market. The hottest metro areas in March home sales were San Francisco-Oakland-Hayward, CA, Vallejo-Fairfield, CA, Colorado Springs, CO, Midland, TX, and San Jose-Sunnyvale-Santa Clara, CA.
The national unemployment rate dipped to 3.9% in April according to the Bureau of Labor Statistics; previously the unemployment rate held steady at 4.1% for six consecutive months. February showed its strongest pace since 2015 and March was the 90th consecutive month of job growth, as reported by the NY Times. On the flip side, wage growth is slowing indicating that employers are resisting raising pay to attract and retain workers.
The consumer confidence index, as of April, increased from 158.1 to 159.6. The index measures consumers’ business outlook in the short-term, indicating consumers are moderately more positive than in March.
Bay Area Rent Control
The high cost of rent compared to homeownership is one driving factor for new home buyers. Yet the rental landscape may change as the future of rent control for the state is up for debate. The Mercury News reported that a rent control initiative is likely heading for the November ballot. Currently, a state law makes it illegal for cities to impose rent control on single-family rentals, condo, or apartments built after 1995, or in some cases earlier. The law also prohibits regulation of how much a landlord can raise the price once a tenant moves out (known as vacancy control).
Easing Regulations on In-Law Units
The Bay Area Council is supporting legislation (SB 831) to help ease the financial obstacles to building accessory dwelling units (ADUs) or more commonly known as granny or in-law units. The Council estimates that by making it faster, easier, and less expensive for homeowners to build ADUs could result in over 150,000 affordable housing options in the Bay Area.
South Bay Developments
There are several positive signs related to the South Bay, including these developments:
- Campbell, one of this year’s most up-and-coming neighborhoods, is seeing significant changes. Phase one of four renovations to The Pruneyard is wrapping up. Yet with expansion and updates to the mixed-use shopping center comes some casualties, such as El Burro; the 47-year old restaurant is now seeking a new location as they were unable to reach a lease agreement with Ellis Partners, the center’s developer. On the positive side, the Pruneyard Cinemas are coming back to life after a year of renovations. Books Inc, an independent bookseller, is set to open as are several new restaurants and specialty shops.
- The BART extension into downtown San Jose is big news. Voter-approved Measure A authorized a 16-mile extension of the BART line into Santa Clara, including a 5-mile-long subway tunnel through downtown San Jose. It’s expected to further catalyze development to San Jose and surrounding areas.
- Google’s massive San Jose campus is moving forward. The Silicon Valley Business Journal reported that Google confirmed its interest in an 8.5-acre parcel at West Santa Clara Street at Delmas Avenue.