Santa Clara County’s real estate value hit another record in 2019.
But in the recently released assessment roll report, county officials warned that those values have hit their peak, and a “crash landing” due to Covid-19 and the subsequent economic downturn is expected.
On July 1, county Assessor Larry Stone delivered the annual assessment roll, which reflected the assessed value of all property as of the lien (valuation) date, Jan. 1.
The total net assessed value of all real and business property grew by $35.5 billion to a total of $551.5 billion, a 6.87 percent increase over the prior year.
San Jose’s assessment roll grew to nearly $196 billion, a 7.3 percent increase. Sunnyvale, meanwhile, grew to almost $50 billion, a 7.2 percent increase.
The growth in assessed value stems from several economic factors, county officials say. For one, the Bay Area grew to a record-breaking four million jobs, largely fueled by the technology sector. In San Jose, the median household income rose by nearly 22 percent in the last few years to $122,000—the 10th highest in the U.S.
Meanwhile, the county jobless rate is little more than 2 percent, far lower than the state’s 4.3 percent rate of unemployment.
“There is little doubt that the 2020 assessment roll captures the peak of the longest economic boom in Silicon Valley’s history,” Stone said.
The major beneficiaries of property tax revenue are public schools, community colleges, cities and the county. Half of local property tax revenue goes to public education.
But things are likely to change quickly.
“Since property assessments are based upon market value of property as of Jan. 1, I fully expect this year will be a transition year,” Stone cautioned. “Next year will not be as positive, as we will be considering the full economic impact of Covid-19 on real estate values. Earlier this year, I advised schools and local government officials that there were signs of a decline in the same geographic areas. It was becoming clear the economic boom of the past 10 years was not sustainable, and that the 2020 assessment roll would reflect the apex of 10 consecutive years of economic prosperity.”
Stone said he had hoped for a gradual decline.
“Instead, the pandemic-triggered recession, and the political chaos that followed, has created the worst economic crisis since the Great Depression,” he lamented. “I expected the next recession would be a ‘normal’ recession, a ‘soft landing.’ Unfortunately, we are facing a ‘crash landing,’ that one analyst described as like being in a wheelchair pushed down a very long flight of stairs.”
Real Estate Rebounds
According to the National Association of Realtors, home sales rebounded by nearly 21 percent in June, showing signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic.
The numbers in Santa Clara County were strong as well.
According to the Santa Clara County Association of Realtors, home sales in the South Bay increased by 72.4 percent compared to May.
San Jose saw 542 home sales in June, compared to just 324 a month prior.
But with Covid-19 cases surging once again, and certain business sectors being forced to shut down, the market may be in for another drop.
According to online real estate database Zillow, low mortgage rates have enticed buyers throughout the pandemic, which are expected to remain for the foreseeable future.
“There are some storm clouds gathering, however, including broader uncertainty due to the surge in coronavirus cases and the prospect of disappearing fiscal support,” a July market snapshot by Zillow reported. “Historically low levels of for-sale inventory could also thwart the strong gains the housing market has recently enjoyed.”