Santa Clara County’s Office of the Assessor released its assessment roll report in July and showed that for yet another year Silicon Valley’s post-Great Recession economic boom has been reflected in assessment roll growth. The assessment roll reflects of the net assessed value of all real estate and business property in the County at the beginning of the year. The County’s roll value was $516 billion, a 6.79 percent increase over the previous year.
However, the City of Santa Clara’s assessment roll growth was scaled back to 5.16 percent with a total roll of $46 billion. Last year, it was 9.62 percent because of the construction of big tech office projects.
Last year, Sunnyvale had the County’s highest rate of assessment roll growth of 11.2 percent due to major commercial property transactions as well as new construction. However this year it’s down to 7.17 percent at $49.6 billion, which puts it a bit above average for the county.
Of the County’s 15 cities, Milpitas showed the highest growth rate at 9.02 percent, followed by Campbell at 8.61 percent, Mountain View at 8.51 percent and Morgan Hill at 8.24 percent. The lowest growth rate was held by Cupertino at 3.30 percent. Conversely, last year Cupertino claimed the second highest rate of growth next to Sunnyvale, due largely to the construction of Apple’s spaceship campus, whereas Mountain View had the lowest growth.
The main factors contributing to this increase are the historical amount of jobs that have been created due to the expansion of the region’s technology sector. The Bay Area’s four million jobs have been coupled with high income growth — a 21.8 percent increase in median income for San Jose — and a low unemployment rate, which for Santa Clara County is at 2.1 percent, compared to the state’s 4.3 percent and the nation’s 3.6 percent.
Apple and Google alone resulted in three percent of the total increase. The assessed value of all Apple properties increased by $271 million. The total assessed value of all Google properties increased by $759 million. The growth in the assessment roll is also due to major office projects and property acquisitions by tech giants like Apple, Google, LinkedIn, Adobe and Nvidia.
“We are adding jobs, in spite of record home prices, traffic jams, fears of trade wars and labor force constraints,” said Larry Stone, Santa Clara County Assessor. “If the Bay Area was a country, it would be the 18th largest economy in the world.
“Extremely low unemployment rates in Silicon Valley have driven the cost of tech talent to an all-time high, creating a serious high-tech labor shortage. Employers, particularly technology companies, are having problems hiring skilled employees due to sky-rocketing housing costs. The lack of affordable worker housing is making it impossible for employers to fill existing jobs,” Stone continued.
The assessment report also touched on the issue of affordable housing. Apartment rents in Silicon Valley have increased 52 percent since 2010, with a vacancy rate below five percent. Stone explained that the Valley’s extremely low unemployment rates have driven up the cost of tech labor to a record high and created a labor shortage. The housing affordability crisis has also made it difficult for employers to hire and retain skilled workers.
“If Silicon Valley fails to solve the housing crisis, both affordable and work force housing, we will go the way of Detroit,” Stone had stated. “Sixty years ago, Detroit was the envy of the world. Today, Detroit is in bankruptcy.”
Despite Silicon Valley’s record economic expansion, Stone cautioned that national economic indicators point to a looming recession and a cooling housing rental market. On Aug. 14, the Dow Jones industrial average fell by 800 points, which analysts said could indeed signal a recession ahead.