Santa Clara Home Values Rise Amid Slowing Growth

Santa Clara County is witnessing one of the slowest rates of property value growth in over a decade, according to the latest data released by the county assessor’s office. Despite this slowdown, the total assessed value of real estate and personal property—referred to as the assessment roll—has hit an all-time high of nearly $726 billion.

This year's figures mark the last assessment roll compiled by Larry Stone, the long-serving county assessor who will step down mid-year. His departure ends a decades-long tenure that has tracked some of Silicon Valley’s most dramatic economic shifts.

Stone highlighted that home sales saw a modest 3% increase, contributing to 86% of the overall growth in the assessment roll. However, commercial real estate continues to struggle amid rising vacancies, reduced demand for office space, and stalled development projects. “A few years ago, office buildings were the top investment choice for commercial real estate,” Stone explained. “That’s not the case anymore.” He noted that foreclosures are now occurring almost weekly across sectors such as hotels, offices, and industrial properties.

Several major commercial developments remain in limbo due to soaring interest rates, inflated construction costs, and shifting market demands. Among them is Google’s Downtown West project in San Jose, originally slated to break ground in 2023 but still awaiting final approvals. Similarly, The Rise development at the former Vallco Mall site in Cupertino faced extensive redesigns and cutbacks before moving forward. Another large-scale initiative, Related Santa Clara—a 240-acre mixed-use complex—has also seen delays.

Silicon Valley’s office vacancy rate has hovered around 20% for two consecutive years, driven by remote work trends, fewer large leases, and falling rental rates. As a result, commercial properties are being sold at steep discounts. One example cited by Stone was the sale of Sobrato Office Tower in San Jose, where the Valley Transportation Authority (VTA) acquired the building for just 61% of its assessed value. Stone anticipates a prolonged downturn in the commercial sector, with recovery unlikely before several years.

Despite these challenges, the residential market remains relatively robust. Brett Caviness, a local realtor and former president of the Silicon Valley Association of Realtors, noted that the current market offers new opportunities for buyers who previously found themselves priced out. “We’re seeing more people able to access homeownership than they were before,” Caviness said. “It’s still a good time to be selling and an even better time to be buying.”

The assessment roll received boosts from multiple sources: $16.1 billion came from changes in ownership, $3.8 billion from new construction, and $1.8 billion from business and personal property values. Nearly 8,700 properties remain under temporary valuation reductions under Proposition 8, which allows reassessments when real estate values decline.

Proposition 13, the law that caps annual property tax increases, contributed $14.4 billion to the assessment roll. However, Stone warned that it continues to strain funding for schools and local government services that rely heavily on property tax revenue.

Looking ahead, Stone expects sluggish home sales and delayed construction to continue affecting growth in the near term. Still, he remains optimistic about the region’s long-term prospects. Major tech companies like Apple, Microsoft, and NVIDIA maintain a strong presence in Silicon Valley, and the area continues to lead the nation in venture capital investment—particularly in artificial intelligence.

While current trends present significant challenges, Stone believes the foundation for future economic resilience remains intact. “It doesn’t mean we aren’t facing trends that are pretty discouraging right now,” he said. “But I think the future is bright.”