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Market Report

San Jose Multifamily Market Report

2024 Investment Forecast

Employment Opportunities and Population Growth
Aid Apartment Demand Across San Jose

Construction activity returns to Santa Clara. By year-end, San Jose’s total populace will come within 1.5 percent of its 2019 measure, a much stronger recovery than nearby San Francisco. This dynamic is partially the result of a strengthened local employment market, with higher wage industries, such as professional-technical and healthcare services, exhibiting positive momentum entering 2024. Still, income growth since 2019 has been far outpaced by the cost of housing, particularly single-family homes. In 2023, the spread between an average mortgage payment on a median-priced home in San Jose and the mean effective Class A rent eclipsed $8,700 per month, surpassing San Francisco as the nation's widest affordability gap. These dynamics are a boon for apartment demand, as net absorption reaches a three-year high in 2024. Supply pressures, however, elongate the metro’s run on upward vacancy momentum. Completions this year will double 2023’s recording as construction activity in Santa Clara resumes. While last year’s inventory expansion here was marginal, in 2024, builders will increase the area’s stock by the fastest rate in multiple decades. Coupled with a luxury vacancy rate 200-plus basis points above its historical average, operators here will likely offer more concessions in the near-term.
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