SAN JOSE — South Bay real estate prices have been hit hard because the industrial real estate market continues to weaken following layoffs within the technology industry and the office sector falters, a brand new report shows.
The assessed value of real estate in Santa Clara County increased through the most up-to-date reporting period, however the pace of increase was the slowest in three years, in keeping with the annual report released by the Assessor's Office.
The slowing growth of real estate prices within the South Bay may lead to a discount in property tax revenues for cities, towns and counties, since taxes are based on assessed value.
“This year's annual tax list reflects the complex and unpredictable status of the region's residential and commercial real estate markets,” the Santa Clara County Assessor's Office said in the brand new report.
The total value of real estate in Santa Clara County was $696.8 billion in fiscal 12 months 2024-2025, a 5.4% increase from the $661.16 billion in assessed values in fiscal 12 months 2023-2024. The assessment list represents an official snapshot of values as of January 1, 2024.
“This is good news for Santa Clara County,” said Bob Staedler, managing director of Silicon Valley Synergy, a land-use consulting firm. “The increase in value will contribute to increased revenue for local governments.”
As the annual survey shows, industrial real estate and residential real estate have very different performance.
“Residential real estate experienced a decline in value in 2023, rebounded in 2024 and is now at the highest levels nationwide,” the county assessor's office report said. “Commercial real estate sales are volatile and new commercial real estate construction has stalled.”
The latest total assessment in Santa Clara County is at a record high.
Still, the 5.4% annual increase in South Bay home prices represents the bottom rate of increase in three years, in keeping with this news organization's evaluation of the Assessor's Office's annual reports.
In the 2021-2022 fiscal 12 months, Santa Clara County's assessed values (as of January 2021) increased only 4.6%.
The sluggish increase this 12 months was no big surprise given the economic problems attributable to the coronavirus, including widespread business closures that left countless office buildings, industrial properties, retail stores and restaurants empty.
This time, the weaker pace of growth in Santa Clara County's assessed real estate values might be related to an uneven return to work, layoffs within the technology industry, and lower demand for office space from technology corporations.
Commercial and residential real estate prices may rise in the following few years, especially as developers begin constructing latest projects in downtown San Jose.
Residential high-rises and Google's downtown transit village are among the many projects that would significantly increase the worth of local real estate.
Google is reviewing the schedule for a transit-oriented mixed-use district on the western fringe of downtown San Jose near the Diridon train station and SAP Center.
Google is considering constructing a housing project as a prelude to the Downtown West transit village. The tech giant's development partner recently discussed the housing project with a number of San Jose city officials.
Google is considering an inexpensive housing project on the positioning of a former ironmongery shop on West San Carlos Street.
Development within the catchment area of Google Transit Village could drive up property prices in the encircling area.
The final result of some real estate transactions has shown that industrial property values for office buildings have fallen sharply in some cases.
In December 2023, an eleven-story office tower at 303 Almaden Boulevard was purchased for nearly $23.8 million – but that price was 70% below the constructing's value when it was last sold in 2017.
“While commercial real estate prices fluctuate, residential real estate is the winner,” said Staedler.
The report also revealed very different changes in property values across South Bay cities:
These cities saw the fastest increases in estimated values: Mountain View, up 7.7%, Santa Clara, up 7.3%, and Sunnyvale, up 6.1% – all of that are residential hotbeds. Google has also opened a big campus in Mountain View, near the search giant's headquarters.
The communities with the smallest increase in property values were Milpitas with a rise of three.8%, Los Gatos with a rise of 4.2% and Cupertino with a rise of 4.4%.
Home prices in San Jose rose 5%, which lagged behind the South Bay overall but was still near the rise in Santa Clara County.
“More and more office buildings are being sold for less than their appraised value and foreclosures due to delinquent loans are becoming more common,” the County Assessor's Office report said.
The variety of residential property transactions has declined this 12 months in comparison with last 12 months, but the common value of transactions has increased sharply, contributing to a rise in property prices.
According to the County Assessor's Office report, residential real estate prices in Santa Clara County are currently the very best within the country.
“With office vacancies increasing due in part to telecommuting and residential sales declining, the volatile and unpredictable nature of the Santa Clara County real estate market raises concerns about the future of property values,” said County Assessor Larry Stone.
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