Innovation is great but having it as a neighbor can be a mixed blessing.
Silicon Valley counties are reporting soaring property values thanks to a tech sector boom led by Apple and Google, who have spent the last few years buying huge swaths of land to build new headquarters.
In Santa Clara County, assessed property values rose $33 billion with one property, the new Apple Park, adding $1.52 billion to the value. Apple’s assessed value totaled $7.8 billion in a county with a $483.2 billion assessment roll.
Homeowners could see a higher tax bill, though the assessed value is only part of the equation. For those with a “For Sale” sign in their yard, sellers can expect to get well above the asking price. The average buyer could pay more than 20 percent over the asking price and then risk selling it for a loss during an economic slowdown, experts say.
In the San Jose area in 2017, sellers got more than 26 percent over than the initial listing, the The Mercury News in San Jose reported. The median price of a home was $1.26 million.
A report in Silicon Valley Business Journal said about half of Apple’s assessment increase comes from new equipment. Google also added $1.55 billion to Santa Clara County assessments thanks in part to huge property purchases a new headquarters that could house 20,000 workers.
Assessments are used to calculate what property owners will pay in taxes, though value alone is one part of a tax bill. Schools and municipal services such as police and fire are funded, at least in part, by property taxes. Economic growth can make those services more expensive.
“Employment growth during the past eight years has triggered an incredible demand for office and industrial space, apartments, and homes,” county assessor Larry Stone told The Mercury News. “The result has been a nearly two-thirds increase in the county’s net assessed values.”
Stone said there are signs of an economic downturn in the area. Rents rose 52 percent since 2010, an increase he said is not sustainable. He also said there is an oversupply of new office space. Office vacancy dropped more than 17 percent during the first quarter, he said.
“I anticipate local economic cycles will be reflected in future assessment rolls,” Stone told the Silicon Valley Business Journal.. “Housing will likely contribute to the change due to overvalued home prices, driven by too much money, including foreign investments, chasing too few homes, causing prices to skyrocket. Because of the rapid increase in home sales at record prices, residential properties most vulnerable to a downturn are those purchased during the past three years.”
In 2016-2017, Apple paid more than $45 million in property taxes, The Mercury News reported.
Other nearby counties are reporting increases while others won’t close their rolls until next week.