San Jose Housing Market: Trends and Forecast 2025-2026

The San Jose housing market is known for being dynamic and, frankly, quite competitive. So, what's the real story right now in 2025? In short, while still demanding, the market has seen some cooling. As of April 2025, the median sale price of a home in San Jose was $1.5 million, a decrease of 1.3% compared to the same time last year. This slight dip, coupled with a few other key indicators, suggests a market that's catching its breath after a period of intense growth. Let's dive deeper into the trends and what they mean for both buyers and sellers.

San Jose Housing Market: What's Happening Right Now?

A Closer Look at Key Housing Metrics

To really understand what's going on, we need to look beyond just the median price. Here are some of the vital statistics shaping the San Jose housing market trends:

• Median Sale Price: According to Redfin, the median sale price in April 2025 was $1.5 million, a 1.3% decrease year-over-year. This indicates a slight easing in pricing pressure.
• Number of Homes Sold: There were 555 homes sold in April 2025, down 4.0% from the 578 sold in April of the previous year. Fewer transactions could suggest buyers are being more cautious or that there's slightly less inventory compared to demand.
• Median Days on Market: Homes are staying on the market for a median of 12 days, which is three days longer than the 9 days it took last year. This increase suggests that buyers might have a little more time to make decisions, and the urgency seen in previous years has softened somewhat.
• Median Sale Price per Square Foot: This metric stood at $914 in the last month, a 0.54% decrease since last year. This further reinforces the trend of slightly moderating prices.
• Number of Offers: On average, homes in San Jose receive around 5 offers. While still indicating a competitive environment, this is something to keep an eye on as it could fluctuate.
• Sale-to-List Price Ratio: Homes are generally selling for about 5.4% above the list price, a decrease of 3.6 percentage points year-over-year. This suggests that bidding wars, while still happening, might not be as intense as they were previously.
• Homes Sold Above List Price: In April 2025, 70.8% of homes sold above their list price, a 7.2 percentage point decrease compared to last year.
• Homes with Price Drops: Interestingly, the percentage of homes with price drops has increased to 28.5%, up by 7.6 percentage points year-over-year. This could indicate that some sellers initially overprice their properties in the current market.

Key Takeaway: While the San Jose housing market remains competitive, the data clearly points towards a slight cooling compared to the previous year. Prices are moderating, homes are staying on the market a bit longer, and the frenzy of bidding wars seems to be easing somewhat.

Why the Shift? My Thoughts on the Market Dynamics

Having followed the San Jose real estate scene for a while now, I believe several factors are contributing to these shifts.

Firstly, interest rates have played a significant role. The increases we've seen over the past year have undoubtedly impacted buyer affordability and their willingness to engage in aggressive bidding. Higher mortgage payments naturally lead some buyers to either postpone their search or look for more affordable options.

Secondly, the overall economic climate and concerns about a potential recession can also influence buyer sentiment. When there's economic uncertainty, people tend to be more cautious with big financial decisions like buying a home.

Thirdly, I think we're seeing a bit of a normalization after the unprecedented surge in demand and prices during the peak of the pandemic. That period saw record-low interest rates and a rush for more space, driving prices to incredible heights. Some of the current adjustments are likely a recalibration of the market.

Finally, while San Jose remains a highly desirable place to live due to its proximity to tech companies and excellent quality of life, affordability has become a major hurdle. Even a slight increase in inventory or a pause in demand can have a noticeable effect on prices when they are as high as they are here.

Migration Patterns: Who's Moving In and Out of San Jose?

Another fascinating aspect of the San Jose housing market trends is the migration data. Understanding who is moving in and out can provide valuable insights into future demand and price dynamics.

According to recent data (February 2025 – April 2025):

• A significant 23% of San Jose homebuyers were searching to move out of the city, while 77% were looking to stay within the metropolitan area. This suggests strong local demand remains.
• Only 3% of homebuyers searching in San Jose were from outside the metropolitan area. This highlights that the primary demand is still driven by those already living in or near San Jose.

Where are people moving to San Jose from (outside the metro)?

Metro	Net Inflow
Honolulu, HI	1,462
Knoxville, TN	1,398
Santa Barbara, CA	1,160
New York, NY	353
Pensacola, FL	152

It's interesting to see Honolulu, Knoxville, and Santa Barbara as top origins for those moving into San Jose from outside the metro. This could be due to various factors like job opportunities, family ties, or lifestyle preferences.

Where are people moving from San Jose to?

Metro	Net Outflow
Sacramento, CA	12,404
Miami, FL	2,260
Portland, OR	1,891
San Diego, CA	1,572
Reno, NV	1,425

The outflow data is particularly noteworthy, with Sacramento being the top destination by a significant margin. This is likely driven by the search for more affordable housing options within California, as Sacramento offers a lower cost of living compared to the Bay Area. The popularity of Miami and Portland could be attributed to lifestyle factors and potentially lower housing costs as well.

What This Means for Buyers

For potential homebuyers in the San Jose housing market, the current trends offer a mixed bag of news.

• Slightly Less Competition: The increase in days on market and the decrease in the sale-to-list price ratio suggest that the intense bidding wars of the recent past might be becoming less frequent. This could give you a bit more breathing room to make decisions and potentially negotiate.
• Moderating Prices: The small year-over-year decrease in median sale prices is a welcome sign for buyers who have been priced out of the market previously. While prices are still high, the rate of increase has slowed, and in some cases, they are even coming down slightly.
• More Inventory Potentially: The rise in homes with price drops could indicate that more inventory is becoming available, or that sellers are adjusting their expectations to meet current market conditions.
• Importance of Being Prepared: Even with a slightly cooler market, San Jose is still competitive. It's crucial to be pre-approved for a mortgage, have a clear understanding of your budget, and work with an experienced real estate agent who knows the local market well.

What This Means for Sellers

For homeowners considering selling in the San Jose housing market, it's essential to have realistic expectations.

• Still a Seller's Market (Mostly): Despite the cooling trends, San Jose is still considered a seller's market due to the underlying demand and limited inventory in the long run. Homes are still selling relatively quickly and often above the list price.
• Importance of Strategic Pricing: With more homes seeing price drops, it's crucial to price your property strategically from the beginning. Overpricing could lead to longer days on market and the need for price reductions later. Work closely with your agent to determine the optimal listing price based on recent comparable sales and current market conditions.
• Presentation Matters: In a slightly less frenzied market, buyers might be more discerning. Ensuring your home is well-presented, clean, and in good condition can make a significant difference in attracting offers.
• Understanding Buyer Behavior: Be aware that buyers might have slightly more leverage and could be less willing to waive contingencies compared to the peak of the market.

Looking Ahead: My Predictions for the San Jose Housing Market

Predicting the future of any housing market is always a bit of a guessing game, but based on the current trends and my understanding of the San Jose area, here are a few things I anticipate:

• Continued Moderation: I expect the market to continue to moderate in the short to medium term. Interest rates are likely to remain at their current levels or potentially increase further, which will continue to impact buyer affordability.
• Price Stability with Potential for Slight Adjustments: While I don't foresee a significant crash in prices, I also don't expect a rapid return to the double-digit appreciation we saw previously. We might see price stability with some minor upward or downward adjustments depending on economic conditions and inventory levels.
• Importance of Local Factors: The strength of the tech industry in Silicon Valley will continue to be a major driver of the San Jose housing market. Any significant changes in the tech sector could have a ripple effect on housing demand and prices.
• Long-Term Appreciation: Despite short-term fluctuations, I believe that San Jose will continue to be a desirable place to live, and real estate values are likely to appreciate in the long term due to the limited land supply and strong job market.

Why Are Houses in San Jose So Expensive?

San Jose, like the rest of the Bay Area, is an excellent place to call home. However, you should only do so if you can afford it. National Affordability More than Five Times San José Metro Area’s Affordability. San Jose's job market and economy are thriving.

The region has the fastest rate of employment growth among the nation's largest metropolitan areas. San Jose is also located in Silicon Valley, which is home to technology behemoths such as Apple and Google, as well as a slew of successful startup businesses. Numerous well-compensated employees can afford very high market prices. 

Houses in San Jose are known for their high prices due to several factors. Firstly, San Jose is located in the heart of Silicon Valley, which is home to numerous technology giants and startups. The thriving tech industry has led to high demand for housing from highly paid professionals, driving up prices.

Additionally, limited land availability and strict zoning regulations restrict new construction, further exacerbating the supply-demand imbalance. The desirable climate, quality of life, and proximity to job opportunities also contribute to the high demand for housing in San Jose, making it a sought-after market with premium prices.

In addition to the factors mentioned earlier, several other reasons contribute to the high cost of houses in San Jose. The region's strong economy and job growth have attracted a skilled workforce from around the world, increasing the competition for housing. The presence of prestigious universities and research institutions in the area further fuels the demand for housing from students and faculty members.

Moreover, San Jose faces challenges in expanding its infrastructure to accommodate the growing population. Limited housing supply coupled with a rapidly increasing population puts pressure on the existing housing stock, leading to higher prices. The high cost of construction materials, labor, and stringent building regulations also contribute to the overall cost of housing in the area.

Additionally, the desirability of the San Jose area, with its excellent schools, cultural amenities, and proximity to natural attractions like beaches and mountains, adds to the demand for housing. The high cost of living in the region is also reflected in the housing prices.

Overall, the combination of a booming tech industry, limited supply, population growth, infrastructure constraints, and desirability of the area contribute to the expensive housing market in San Jose.

San Jose Housing Market Forecast 2025-2026: Will Prices Drop?

Experts predict a slight dip in home values in the coming year. Right now, the average home value in the San Jose-Sunnyvale-Santa Clara area is a hefty $1,692,599, showing a 7.2% increase over the last year. Homes are also selling relatively quickly, going pending in about 9 days. But let's dive deeper into what the future might hold.

Short-Term Outlook: Next Few Months

Looking at the very near future, Zillow's latest forecast gives us some clues. For the period ending in May 2025, they anticipate a decrease of about 0.9% in home values in the San Jose area. This slight downward trend is expected to continue into the summer. By the end of July 2025, the forecast suggests a further drop of around 2.4%.

Personally, I think this short-term cooling could be due to a few factors. We've seen interest rates fluctuate, and that can definitely impact how much people are willing to pay for a home. Plus, after a period of significant price increases, a bit of a correction isn't entirely unexpected.

Mid-Term View: The Year Ahead

If we stretch our view to a full year, from April 2025 to April 2026, the prediction indicates a more significant decrease of approximately 3.8% in San Jose home values. This suggests that the cooling trend we see in the short term might persist over the next year.

It's important to remember that these are forecasts, not guarantees. Many things can influence the housing market, from the overall economy to local job growth. However, these numbers give us a reasonable expectation based on current data.

How Does San Jose Compare to Other California Markets?

Let's take a quick look at how the expected changes in the San Jose housing market stack up against other areas in California:

Region	Predicted Change by May 2025	Predicted Change by July 2025	Predicted Change (Apr 2025 – Apr 2026)
Los Angeles, CA	-0.3%	-0.6%	-1.2%
San Francisco, CA	-0.5%	-1.9%	-5.2%
Riverside, CA	-0.2%	-0.4%	-0.1%
San Diego, CA	-0.5%	-1.2%	-0.7%
Sacramento, CA	-0.4%	-1.2%	-3.0%
San Jose, CA	-0.9%	-2.4%	-3.8%
Fresno, CA	-0.1%	-0.3%	-0.6%

As you can see, the forecast for the San Jose real estate market suggests a more pronounced downturn compared to most other major Californian cities in the one-year timeframe provided by Zillow as of April 30, 2025. San Francisco is predicted to see a larger decrease, but San Jose's expected drop is still notable.

Will Home Prices Crash in San Jose? What About 2026?

Based on the available data, a housing crash in San Jose seems unlikely. A crash typically involves a much more drastic and rapid decline in prices. The current forecast points towards a more gradual correction.

As for a specific San Jose housing market forecast for 2026, the provided data only goes up to April 2026. However, if the current trends continue, we might expect to see a stabilization or perhaps a continued modest downward trend in home values throughout 2026. It will be crucial to keep an eye on economic indicators and market activity to get a clearer picture as we move forward.

In conclusion, while the San Jose housing market has seen significant growth recently, current forecasts suggest a cooling period in the coming year. It's always wise to stay informed and consult with real estate professionals for personalized advice.

 

 

San José Housing Market Update: Q4 2024 (Most Recent Data)

The San José Housing Market Update for Q4 2024 by the Government of San José reveals a mixed bag. While apartment rents saw a slight decrease quarter-over-quarter, home prices continue their climb, albeit at varying paces for single-family homes and townhouses. The main story? Affordability remains a significant challenge, as incomes struggle to keep pace with housing costs.

I've been watching the San José housing market closely for years, and it's a market unlike any other. The allure of Silicon Valley, coupled with limited housing supply, creates a unique pressure cooker. Let's dive into the details and see what Q4 2024 tells us.

ADU Activity: A Sign of Things Slowing?

Accessory Dwelling Units (ADUs), often seen as a key solution to the housing shortage, experienced a slowdown in permit activity compared to the previous quarter. Here's a quick rundown:

• QoQ Decline: ADU permit activity slowed in Q4 2024 compared to Q3 2024.
• Yearly Growth: Despite the quarterly dip, annual ADU permit activity still grew year-over-year.

The city has been actively promoting ADU construction by updating zoning codes in 2016 and 2018 to conform with new State Legislation and to facilitate construction of ADUs.

Here's a table summarizing the ADU trends over the past few years.

Year	ADU Applications	ADU Permits Issued	ADU Completed
2019	422	352	233
2020	382	351	205
2021	536	465	276
2022	452	529	342
2023	506	466	360
2024	694	558	365

While the annual numbers look positive, the quarterly slowdown in permits issued could signal a cooling trend. I believe this is something to watch closely. It could be due to rising construction costs, challenges in navigating the permitting process, or simply a saturation point in certain neighborhoods.

Residential Permit Activity: Overall Weakness

Overall residential permit activity in Q4 2024 was weak. This includes permits for:

• Multi-family Affordable Housing
• Multi-family Market Rate Housing
• 1-4 Unit Dwellings/Second Units

Here's an overview of the annual residential building permits compared to the Regional Housing Needs Allocation (RHNA) Goal.

• Overall: Residential building permits reached only 28% of the RHNA goal
• Affordable: Affordable housing permits achieved 47% of the RHNA goal
• Market Rate: Market-rate housing permits only achieved 5% of the RHNA goal.

San José is clearly struggling to meet its housing goals, especially when it comes to market-rate units.

Apartment Rents and Vacancies: A Slight Shift

The apartment market is showing signs of slight moderation.

• Average Rent (Q4 2024): \$2,782 (Down 0.7% QoQ)
• Average Rent (Annual 2024): \$2,798 (Up 2.2% YoY)
• Vacancy Rate (Q4 2024): 5.3% (Up from 3.8% in Q3)
• Vacancy Rate (Annual 2024): 4.6% (Down from 5.1% in 2023)

While average rents are still up compared to last year, the slight quarterly decrease and the increase in vacancy rates suggest that the market may be starting to soften. It's important to note that a healthy vacancy rate is considered to be around 5%, so San José is hovering around that mark.

Breaking down the apartment market by class:

• Class A (highest quality): Average vacancy of 10.4%.
• Class B and C (more affordable): Vacancies of 4.0% and 3.9%, respectively.

This suggests that newer, more expensive apartments are sitting vacant longer, while there's still strong demand for more affordable options.

Home Prices: Still Climbing, but at Different Paces

The ownership market in San José remains competitive, but the pace of price increases is showing some variation.

• Single-Family Home (Median Price Q4 2024): $1.65 Million
• Townhome/Condo (Median Price Q4 2024): $790,000
• Single-Family Home (Median Price Annual 2024): $1,660,888 (Up 9% from 2023)
• Townhome/Condo (Median Price Annual 2024): $844,000 (Up 1.3% from 2023)
• Single Family Homes (Days on Market Q4 2024): 37 Days
• Townhomes (Days on Market Q4 2024): 23 Days
• Single Family Homes (Days on Market Annual 2024): 16 Days
• Townhomes (Days on Market Annual 2024): 24 Days

Single-family homes continue to appreciate significantly, while townhomes are experiencing much slower growth. Interest rates continue to impact the overall market.

The Affordability Crisis: A Persistent Challenge

The report highlights the stark reality of the affordability crisis in San José. The income needed to afford even a modest home is significantly higher than what many professions earn.

To really drive the point home, you need an annual income of $426,277 to afford a median-priced single-family home in San José. Think about that for a moment. Even a median priced townhome/condo requires an annual income of $226,376.

Final Thoughts and What's Next?

The San José housing market remains a complex puzzle. While some indicators suggest a slight cooling, affordability remains a critical issue. I believe that:

• ADUs are still important: Streamlining the permitting process and offering incentives could help boost ADU construction.
• Focus on affordable housing: Prioritizing the development of affordable units is essential to address the needs of lower-income residents.
• Monitor interest rates: Mortgage rates play a significant role in housing affordability, and any significant changes will impact the market.

I'll continue to keep a close eye on these trends and provide updates as the market evolves.

Should You Invest in the San Jose Real Estate Market?

Investing in San Jose real estate can be an attractive prospect due to several factors that make it a vibrant market within the larger real estate landscape of California. San Jose, often referred to as the capital of Silicon Valley, is a bustling tech hub renowned for innovation and economic prosperity. This status has positioned it as an appealing destination for both local and international investors seeking opportunities in real estate.

One of the top reasons to consider investing in San Jose real estate is its position as a thriving tech hub. The city hosts numerous technology companies and startups, attracting a high concentration of skilled professionals. This influx of talent has created a consistent demand for housing, both for buying and renting, making it an investor-friendly market. The demand is further driven by the desire of tech professionals to reside in close proximity to their workplaces, enhancing the value of residential properties.

The city's strong and diverse economy is another compelling reason to invest in San Jose real estate. San Jose is not solely reliant on the tech sector; it boasts a diverse economic base that includes industries like healthcare, finance, manufacturing, and education. A robust econom

San Jose's real estate market benefits immensely from being a prominent tech hub, housing major technology companies and startups. The presence of big tech firms not only drives demand for office spaces and commercial real estate but also fuels the need for housing, attracting a pool of high-income tech professionals to the region. This demand contributes to property appreciation, high rental yields, and a consistent influx of talent, making it an attractive proposition for real estate investors seeking to capitalize on the tech industry's growth and stability.

The limited supply of housing and high demand for homes is a significant factor driving property values in San Jose. The region faces constraints on available land for construction, limiting the number of new housing developments. Simultaneously, the city's desirability and employment opportunities attract a growing population. This supply-demand imbalance exerts upward pressure on both property prices and rental rates, making real estate investment potentially lucrative.

The presence of reputable educational institutions also contributes to the investment appeal of San Jose. The city hosts renowned universities and colleges, attracting students and faculty members. This academic influence creates a consistent demand for rental properties, particularly in neighborhoods close to these institutions. Investors can capitalize on this demand by targeting properties suitable for the student population.

Furthermore, ongoing development projects and infrastructural improvements in the city add to its investment allure. The continuous development of commercial spaces, transportation networks, and community amenities enhances the overall quality of life and attractiveness of San Jose. It can result in increased property values over time, providing potential returns on investment.

Drawbacks of Investing in San Jose Real Estate

While the San Jose real estate market offers promising opportunities, it's crucial to consider the potential drawbacks before making investment decisions.

Firstly, the high costs associated with real estate in San Jose can pose a challenge for investors. The median home prices in this region are considerably higher than the national average, demanding substantial initial capital for property acquisition. Investors need to carefully assess their financial capacity and consider the impact on their investment portfolio.

Secondly, the real estate market in San Jose, like any other, is subject to market volatility and economic fluctuations. Changes in interest rates, economic downturns, or shifts in demand can influence property values and rental incomes. Investors need to be prepared for market variations and develop strategies to mitigate risks and adapt to changing market conditions.

Regulatory challenges and legal complexities related to real estate in California can be a potential drawback for investors. The state has specific laws and regulations governing real estate transactions, property taxes, and landlord-tenant relationships. Investors should thoroughly understand these regulations and seek professional guidance to navigate the legal aspects and compliance requirements effectively.

Lastly, the competitive landscape of the San Jose real estate market can present a hurdle for investors. The high demand for properties often leads to competitive bidding, making it crucial for investors to act swiftly and strategically. Additionally, this competitiveness can impact property prices, potentially affecting the overall return on investment.