Santa Clara County: Property values continue to soar

SAN JOSE — In a sign of Silicon Valley’s economic health, Santa Clara County’s property values are up for the fourth straight year, with the assessment rolls rising by nearly 8 percent to $419 billion, according to assessor Larry Stone.

About half of the $31 billion increase in value came from properties changing hands, and the resulting reassessment. About $7 billion came from new construction, with 85 percent of that being commercial and industrial development.

“That’s the statistic that really shot out at me,” Stone said. “And you’re seeing it all over: office buildings, R and D facilities, one after another. This is significant.”

For example, Apple added $700 million in new construction to the “spaceship” campus, bringing the total value to $1.6 billion. Other major developments include the twin seven-story Moffett Gateway towers in Sunnyvale, Samsung’s North American headquarters building in San Jose, the mixed-use Main Street project in Cupertino and Monticello Village in Santa Clara.

The assessor said tech companies currently prefer to own properties rather than lease them long term.

“Clearly they are doubling down on Silicon Valley with enormous investments in land and the development of commercial and industrial buildings and campuses,” Stone said.

For property owners, it means higher tax payments although the vast majority of properties are limited to an increase tied to the Consumer Price Index, which was 1.525 percent this year. For schools and local governments, it means more money to spend, though they counted on that in the budgets they approved last month.

The increase was about the same as last year, and Stone said years of job gains driven by the tech industry have made Silicon Valley’s economy “the envy of the nation.”

The number of homes qualifying for a tax break because their market value had fallen below their assessed value dropped from 22,436 to 10,510.

Both Stone and Rick Smith of the Santa Clara County Association of Realtors said the real estate market may be normalizing. But that might not be so apparent for those in the middle of a house hunt.

“This is what a slowdown looks like,” Smith said, “The best homes in the best marketplaces will get less offers — maybe four or five instead of double digits. Those in other areas might take a little longer to sell, but they’re still getting the asking price or close to it.”

Stone said the normalization is a good thing, as a sizzling market fueled by “too many people chasing too few homes” makes for difficulties for those who earn less than the area’s median family income — which was $106,300 in 2015 according to the state housing department. County supervisors recently approved putting a $950 million housing bond to voters in November, with most of the money earmarked for the poorest residents. A study by affordable housing advocacy group SV@Home stated that between 2013 and 2014 housing prices rose up to 16 percent while incomes grew by only 4.4 percent.

“Santa Clara County has an imbalance of housing and jobs and we continue to add jobs without adding new homes for the new workers,” states the SV@Home report. “In 2015, the region added 64,000 new jobs and only 5,000 new housing units.”

It added that the lack of housing stock affects more than just the lower economic tiers.

“Even middle-income workers like teachers, public safety workers and health professionals find it challenging to find affordable housing options in our region.”

Contact Eric Kurhi at 408-920-5852. Follow him at Twitter.com/erickurhi.