San Jose, located in the heart of Silicon Valley, is known for blending a rich Spanish history and cultural heritage with all of the conveniences and amenities of a world-class metropolitan city. Area schools such as the University of California, Berkeley and Stanford University release thousands of engineering and computer science graduates into the region each year. For this reason, it's easy to see why Forbes ranks San Jose as the seventh most-educated metropolitan area in the country.
Q2 2015 San Jose Rental Market Update
Although once again overshadowed by its more-renowned Bay Area cousin, San Jose is still easily one of the best housing markets in the U.S. to own rental property in. In Q2 2015, San Jose was the third-best market for rental real estate investment in the Western U.S. and the country as a whole, right behind San Francisco and Seattle.
San Jose's absurdly high year-over-year median rent price increase of 14.94 percent, the third-highest increase in the country for that metric and 200 percent higher than the U.S. average, should be enough to pique the interest of any real estate investor. Its annual property value appreciation of 9.65 percent, the seventh-highest increase in the country for that metric and almost 90 percent greater than the national average, is almost equally as impressive and further indicates how lucrative investments in San Jose rental housing can be.
Three other real estate statistics give clear signs that demand for San Jose housing is unlikely to wane anytime soon. Its annual job growth rate of 5.74 percent (close to three times the national average) and median age of housing inventory of just 27 days (less than half the national average) are both the best in the country for their respective metrics. San Jose's moderately low vacancy rate of 4.40 percent is around 35 percent less than the national average.
Q1 2015 San Jose Rental Market Update
The cost of living in San Jose is among the highest in the nation, and a hyper-competitive real estate market leaves many thousands of residents looking for rental housing each year. It is easy to understand, then, why the Q1 2015 Rental Ranking Report found San Jose the be the fourth-best market for rental real estate investors in the West - and in the nation as a whole.
In the year ending in Q1 2015, San Jose rental properties posted a capitalization rate of 3.92 percent, ranking it next to last among the 75 rental markets tracked by the Rental Ranking Report for that metric. San Jose's low cap rate can largely be explained by booming home values, which have increased over 10 percent in the last year - the sixth-highest rate of property value appreciation in the country. Relatively low vacancy rates caused by Silicon Valley's tremendous demand for highly-trained, highly-educated tech talent also helps investors achieve high returns on their rental housing investments. San Jose's real estate market is the most active and liquid in the country, with homes staying on the market for a median of just 22 days - 48 days less than the median age of inventory for the U.S. as a whole.
What data is this Rental Ranking Report based on?
To calculate the statistics found in the Q2 2015 Rental Ranking Report, All Property Management gathered data, including the most recent government housing and jobs data, for 75 metros across the United States. Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth rates, changes in rental prices, and the average number of days properties have been on the market to determine which U.S. metros will give investors the highest returns on rental investments. Click here to learn more about the Rental Ranking metrics.
Should I invest in San Jose rental property?
There has never been a better time to invest in rental real estate in the San Jose metropolitan area. Its active real estate market and low vacancy rates indicate strong demand for rental housing. San Jose's superb improvement in rental prices suggests that there is plenty more rental income to be made there. While this may not be the best market for those relying on sheer income yield to pay the bills, San Jose rental housing is an excellent play for those with the patience to wait for property values to appreciate even further and who are bullish on the U.S. technology industry.
Thinking about renting out a property in San Jose? Save time, avoid hassle and maximize your rental income by having a professional property management company operate your rental property for you. Click here to get a free quote from a local property manager or call 877-780-4510 to have the All Property Management staff get quotes for you.
All Property Management specializes in connecting rental property owners with professional property managers in communities across the United States. These property managers help set rental rates, advertise properties, screen and manage tenants, collect rent, manage vendor relationships and ensure compliance with local, state and federal housing regulations. They take the hassle and worry out of managing rental properties - all while maximizing rental property owners' rental incomes.