Is the San Jose Housing Market Heating Up Again in 2023?

Last year, the San Jose, California real estate market was ranked as one of the fastest-cooling housing markets in the country. And that came as no surprise at the time, given the meteoric rise in home prices that occurred through 2021 and into 2022.

But now, as we move into the summer months of 2023, the San Jose real estate market could become more competitive for home buyers. The main reason for this is an ongoing decline in inventory levels. (Yes, that story again.)

Here’s what you need to know about the latest housing market trends and developments in San Jose, California, as of late spring 2023.

Big Drop in Real Estate Market Supply

On June 1, the research team from Realtor.com published their latest housing market update with information for the nation’s largest metropolitan areas.

Among other things, this report showed that the San Jose-Sunnyvale-Santa Clara metro area housing market experienced the biggest decline in inventory over the past year. This is based on the total number of active real estate listings for that particular market, on the Realtor.com website.

To quote the group’s June 2023 report:

“Compared to last year, active inventory decreased in 21 out of 50 of the largest metros. Markets that reported large yearly declines included San Jose, Calif. (-35.3%), Sacramento, Calif. (-27.3%), and Hartford, Conn. (-26.0%).”

The San Jose area real estate market has also experienced a sharp decline in the number of new listings. In this context, we are referring to homes that have come onto the market in recent days. According to the report, new listings within the San Jose Metro area declined by -37.4% over the past year.

This shows that supply levels have declined within the San Jose real estate market, both in terms of total active listings and the number of new homes coming onto the market.

San Jose Housing Market Heating Up in 2023

Several factors have contributed to this trend. For one thing, higher mortgage rates have made a lot of would-be home sellers reluctant to list their properties.

Many San Jose-area homeowners who purchased their homes a few years ago have much lower mortgage rates than today’s current rates. So if they were to sell and purchase another home, they would likely take on a much higher rate. And recent surveys have shown that a lot of homeowners are hesitant to do that.

The inventory declines within the San Jose housing market also show that there is still plenty of demand from local home buyers.

We can also measure demand by looking at how long it takes for homes to sell. Since the start of 2023, the median number of “days on market” for this metro area has declined. Homes are selling a lot faster these days than they were five or six months ago.

If inventory levels stay in their current range or drop further, the San Jose real estate market could become a lot more competitive for home buyers. It probably won’t accelerate to the frenzied pace of 2021 and early 2022. But things could certainly pick up over the coming months.

What Home Buyers Can Do to Succeed

The San Jose housing market frequently involves fierce competition among buyers. With low inventory levels and steady demand (partly fueled by the local tech economy), the Silicon Valley area is one of the most competitive real estate scenes in the country.

Because of this, local home buyers need to do everything they can to increase their chance of finding a suitable home within budget.

Here are some proactive steps buyers can take:

• Start by getting pre-approved for a mortgage to strengthen your position as a buyer and demonstrate your seriousness to sellers.
• Set a realistic budget and be prepared to act quickly when a suitable home comes along.
• Work with an experienced real estate agent who understands the local market and can guide you through the process.
• Stay updated on new listings by setting up alerts on real estate websites and regularly checking for new properties.
• Be flexible with your preferences and consider compromise on certain features to increase your chances of finding a home.
• Prepare a strong and competitive offer by researching recent sales in the area and consulting with your agent to determine the appropriate price.
• Make sure you have funds available for the earnest money deposit to show your commitment to the purchase.
• Consider writing a personal letter to the seller expressing your interest and connection to the property to make your offer stand out.
• Be flexible with the closing timeline to accommodate the seller’s needs and make your offer more appealing.
• Be prepared for multiple-offer situations and back-and-forth negotiations. Discuss these scenarios with your agent before you start house-hunting.
• Finally, maintain a positive attitude and stay persistent. It may take time and multiple attempts, but the right home will come along.

Need Mortgage Financing in the San Jose Area?

Bridgepoint Funding offers a wide variety of mortgage loan options and serves San Jose and the broader San Francisco Bay Area. We can pre-approve you for a loan, so you can narrow your search to a specific price range. This could increase your efficiency and overall chance for success.

We can also deliver fast closing times and a streamlined approval process, to help ensure that you get the funding you need when you need it!