San Jose MSA’s strong job growth has a negative impact on housing affordability throughout the region. The area is posed to have it strongest year of job gains since 2000, adding another 53,000 jobs this year. The positive jobs outlook, supported by a stable tech sector, is driving the cost of living up throughout the metro area. Home prices in San Jose are expected to grow above 9.0 percent in 2015. This is the third consecutive year that area home prices have outpaced area income growth. While we expect to see home price growth to moderate over the coming years, the price for a single-family home remains exceptionally costly for first-time home owners. Millennials are having difficulty transitioning from multifamily to single-family dwellings. This will be a headwind for the area labor markets as workers seek higher wages or more affordable living.
Demand continues to grow for San Jose commercial real estate. The Samsung Electronic Device Solutions America headquarters formally opened in September. The 1.1 million square foot, 10-story building is located in North San Jose. As of September 700 employees worked at the new facility. However, that number is expected to grow to 2,000 employees. Apple secured a 202,000 square foot building and several other parcels of land in North San Jose. Apple could host between 18,000 to 20,000 workers if it developed the site to full capacity. This is in addition to the new 770,000 square foot campus in Sunnyvale, just miles away from its Cupertino headquarters. The new campus could have room for 3,000 employees.
Superbowl 50 is less than three months away. The game will be played at Levi’s Stadium in February. Events leading up to the game will bring additional tourists into the region and are expected to have a one-off impact on retail, hotel and restaurant spending in the first quarter of 2016.
Click here for the complete San Jose MSA Regional Economic Update: San Jose 2015Q4.