Housing
Housing <strong>Projections</strong> Conventional indicators and statistics still show that housing affordability and availability in <strong>Silicon</strong> <strong>Valley</strong> remains a challenge. Median home prices are high at $746,800 and we have managed to be successful in retaining our status as one of the least affordable places to live, according to the National Association of Homebuilders Housing Opportunity Index. The Housing Opportunity Index shows that only 14.9% of homes are affordable to families and individuals earning the median income. This puts <strong>Silicon</strong> <strong>Valley</strong> in second place behind New York at 6% with Boston in third at 24%. The most affordable high tech region is Raleigh-Carey, North Carolina at 65.8%. 2006 Q1, Housing Opportunity Index (%) San Jose, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.90% Austin, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58.30% Boston, MA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24.80% Chicago, IL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.30% Denver, CO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62.40% New Jersey/Philadelphia* . . . . . . . . . . . . . . . . . . . . .56.40% New York, NY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.10% Portland, OR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42.50% Raleigh-Cary, NC . . . . . . . . . . . . . . . . . . . . . . . . . . .65.80% San Diego, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.20% Seattle, WA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32.60% Washington, DC . . . . . . . . . . . . . . . . . . . . . . . . . . .23.60% Source: National Association of Home Builders, www.nahb.org Residential property appreciation rates over a short period of time show a more pleasant picture. Our region sits in the middle of the pack with housing prices appreciating 25.9% between 2003 and 2006. The lowest rate of appreciation was at 6.7% in Austin, Texas and the highest was in Washington, DC at 52%. Focusing on <strong>Silicon</strong> <strong>Valley</strong>, recent data collected by the Association of Bay Area Governments (ABAG) offers some insight into why prices continue to escalate. In their recently released report called “A Place to Call Home” ABAG measures how well cities are doing in achieving the housing goals set for the 1999-<strong>2007</strong> housing element cycle. For the ninecounty Bay Area, ABAG found that 80% of the homes needed were permitted. For Santa Clara County and San Mateo County, the figure is 75% and 58% respectively. Digging a little deeper into these numbers shows that cities excel in permitting homes for the above moderate range. Only 19% of the 2005 4th Quarter, Average Monthly Rental Rate <strong>Silicon</strong> <strong>Valley</strong>, CA (San Jose) . . . . . . . . . . . . . . . . . . .$1,330 Austin, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$733 Boston, MA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,216 Chicago, IL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,003 Denver, CO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$761 New York, NY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,400 Portland, OR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$698 Raleigh-Durham, NC . . . . . . . . . . . . . . . . . . . . . . . . . .$728 San Diego, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,213 Seattle, WA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$859 New Jersey/Philadelphia . . . . . . . . . . . . . . . . . . . . . .$1,046 Washington, DC . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,160 Source: M/PF YieldStar for all cities but New York; NYC data from Reis Client Services MSN Real Estate article, http://realestate.msn.com/Rentals/Article.aspx?cp-documentid=262175 homes needed in San Mateo County for very low-income families was met. Santa Clara County, a county who’s numbers are significantly bolstered by the leadership of San Jose, permitted 55% of the very low income homes needed. The regional average was 34%. These numbers show that <strong>Silicon</strong> <strong>Valley</strong> is falling short in meeting the overall need for homes. They also show that we are doing particularly poorly in permitting homes for those most in need. Residential Property Annual Appreciation Rates Region/Metro Area 2003- 2004- 2005- 2003- 2004 2005 2006 2006 <strong>Silicon</strong> <strong>Valley</strong>, CA* . . . . . . .17.80% . . . .6.60% . . . .1.40% . . .25.90% Austin, TX . . . . . . . . . . . . .-1.30% . . . .5.90% . . . .8.50% . . . .6.70% Boston, MA . . . . . . . . . . . . .8.70% . . . .6.00% . . .-1.50% . . . .8.90% Chicago, IL . . . . . . . . . . . . .9.00% . . .10.00% . . .11.00% . . .19.70% Denver, CO . . . . . . . . . . . . .0.40% . . . .3.30% . . . .3.50% . . . .2.50% New Jersey/Philadelphia . . .10.00% . . .13.60% . . .16.00% . . .26.80% New York, NY* . . . . . . . . .12.30% . . .15.40% . . .11.20% . . .33.50% Portland, OR . . . . . . . . . . . .9.30% . . .18.60% . . .21.80% . . .41.70% Raleigh-Cary, NC . . . . . . . . .4.90% . . .14.70% . . . .3.60% . . .23.20% San Diego, CA . . . . . . . . . .29.80% . . . .9.60% . . . .4.00% . . .42.90% Seattle, WA . . . . . . . . . . . .19.00% . . .11.30% . . .16.40% . . .41.60% Washington, DC . . . . . . . .22.30% . . .25.30% . . .11.00% . . .52.00% Source: National Association of Realtors, Deloitte Consulting LLP 44