Property values in the South Bay hit a record high of $697B

Property values across the South Bay have hit record highs, but have slowed from their previously frenzied pace.

The assessed value for property in Santa Clara County rose 5.4 percent to about $697 billion as of Jan. 1, from $661 billion a year earlier, SiliconValley.com reported, citing a report from the Santa Clara County Assessor.

While the property tax value for the 2024-2025 fiscal year set a record, the pace of the rise in values was the slowest in three years.

Commercial real estate and residential properties drew stark contrasts in value, sites produced sharply contrasting performances, the yearly survey revealed.

“Residential properties experienced a decline in value in 2023, rebounded in 2024, and are now the highest in the country,” County Assessor Larry Stone said in his report. “Commercial property sales are volatile and new construction of commercial properties came to a halt.”

The 5.4 percent annual increase in South Bay properties represents the slowest rate of increase in three years, according to an analysis of annual reports from the Assessor’s Office.

In the 2021 to 2022 fiscal year, Santa Clara County assessed values rose 4.6 percent as the pandemic shut down commercial properties.

This time around, the weaker pace of assessed value growth may be tied to an uneven return to the workplace, job cuts by the tech industry and a decreased appetite by tech companies for offices, according to SiliconValley.com, operated by the San Jose Mercury News.

“While commercial property values are unsteady, residential properties are carrying the day,” Bob Staedler of Silicon Valley Synergy, a land-use consultancy, told the newspaper.

The Assessor’s report showed different rates of property value increases across the county.

Overall values rose 7.7 percent in Mountain View, 7.3 percent in Santa Clara, 6.1 percent in Sunnyvale, 5 percent in San Jose, 4.4 percent in Cupertino, 4.2 percent in Los Gatos and 3.8 percent in Milpitas.

“An increasing number of office buildings are selling for less than assessed value and foreclosures due to delinquent loans are becoming more frequent,” the county assessor said in its report.

The number of residential sales declined this year from a year ago, but the average value of the transactions soared, which helped to propel residential values higher.

Santa Clara County’s residential property values are now the highest in the country, according to the report.

“With office vacancy increasing due in part to remote work, and residential sales decreasing, the volatile and unpredictable nature of Santa Clara County real estate causes concern for the future of property values,” Stone said.

— Dana Bartholomew