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San José house prices are unlikely to decrease significantly in the next 12 months, with most experts forecasting continued appreciation at 2-4.6% annually despite cooling market conditions.
The San José residential market is experiencing a shift toward more balanced conditions as of September 2025. While home values have risen 5% year-over-year to a median of $1,498,500, monthly price growth is moderating with increased inventory and longer market times. High mortgage rates around 6.72% and affordability challenges are cooling buyer demand, but strong tech sector job growth and new housing developments continue supporting price stability.
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San José house prices have risen 5% in the past year but growth is slowing due to increased inventory and high mortgage rates.
Despite affordability challenges, strong tech job growth and new construction projects are expected to support modest price appreciation of 2-4.6% over the next 12 months.
| Market Indicator | Current Status (September 2025) | Year-over-Year Change |
|---|---|---|
| Median Home Price | $1,498,500 | +5% |
| Homes for Sale | ~3,100 units | +34.4% |
| Average Days on Market | 20 days | +5 days |
| Monthly Home Sales | 514 (July 2025) | -6.9% |
| Mortgage Rate (30-year) | 6.72% | Significantly higher than 2022 |
| Unemployment Rate | 4.7% | Slight increase |
| Tech Job Growth | +15.9% projected | Strong expansion |
How fast have house prices in San José been rising or falling over the past 12 months?
San José house prices have increased 5% over the past 12 months, with the median sale price reaching $1,498,500 as of September 2025.
The San José residential market has experienced moderate price appreciation compared to the dramatic increases seen in previous years. Home values have risen between 5-12% year-over-year depending on the property type and specific neighborhood, with luxury areas like ZIP code 95125 seeing median prices hit $1.9 million.
Monthly price growth is showing clear signs of moderation as market conditions shift. Recent data indicates less intense bidding wars and some softness in selling prices, suggesting the rapid appreciation phase is cooling. The market has moved from aggressive buyer competition to more balanced conditions where price negotiations are becoming more common.
Price growth varies significantly by neighborhood and property type. While the overall median increased 5%, some areas have experienced higher appreciation rates, particularly in neighborhoods with new tech company developments or improved infrastructure.
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What is the current median house price in San José, and how does it compare to last year?
The current median house price in San José is $1,498,500 as of September 2025, representing a 5% increase from the previous year.
Average home values in the San José market range around $1,501,267, indicating consistency across different pricing methodologies. This represents a significant premium compared to most other major U.S. metropolitan areas, reflecting the area's concentration of high-paying tech jobs and limited housing supply relative to demand.
The 5% year-over-year increase marks a notable deceleration from the double-digit appreciation rates experienced in previous years. This moderation reflects the impact of higher mortgage rates, increased inventory, and some cooling in buyer demand as affordability challenges intensify.
Luxury market segments continue to command premium prices, with some neighborhoods exceeding $2 million median values. The entry-level market remains particularly constrained, with few options available below $1 million in most desirable areas.
Compared to July 2024, when prices were approximately $1,427,000, the current median represents steady but slowing appreciation that aligns with broader market cooling trends.
How many homes are currently listed for sale, and is inventory growing or shrinking month to month?
Approximately 3,100 homes are currently listed for sale in San José as of September 2025, representing a substantial 34.4% increase from the roughly 1,900 homes available the previous year.
The San José housing market has experienced 21 consecutive months of inventory growth, marking a decisive shift from the severe shortage conditions that characterized the market during the pandemic years. This sustained inventory increase indicates the market has transitioned from a strong seller's market to more balanced conditions favoring buyers.
Despite the significant year-over-year inventory growth, current levels remain below pre-pandemic benchmarks. The market is still considered supply-constrained compared to historical norms, which continues to provide underlying support for home values even as conditions moderate.
Month-to-month inventory trends show continued growth, with new listings coming to market at a faster pace than homes are selling. This dynamic is creating more choices for buyers and reducing the urgency that previously drove rapid price appreciation.
The inventory increase reflects both increased seller confidence in listing their homes and some hesitation among buyers due to higher mortgage rates and affordability concerns.
What is the average time a house stays on the market before selling in San José right now?
Houses in San José currently average 20 days on the market before selling as of July 2025, representing an increase of 5 days compared to the previous year.
The current 20-day average still positions San José as a faster-moving market compared to most U.S. metropolitan areas, where typical days on market often exceed 30-40 days. However, the increase from 15 days the previous year signals a clear shift toward more normalized market conditions.
Market timing varies significantly by price range and property type. Homes priced competitively below $1.5 million typically sell faster, while luxury properties above $2 million may remain on the market for 30-60 days or longer. Properties requiring significant updates or in less desirable locations are experiencing even longer marketing periods.
The extended market time reflects buyers becoming more selective and taking additional time to evaluate options, a significant change from the immediate-offer environment that previously characterized the market. This shift benefits buyers by providing more negotiating power and time for due diligence.
Seasonal factors also influence marketing time, with spring and early summer typically showing faster sales compared to late fall and winter months.
How many home sales are closing each month compared to the same period last year?
San José recorded 514 home sales in July 2025, representing a 6.9% decrease compared to the same month in the previous year.
The decline in monthly sales volume reflects the combined impact of higher mortgage rates, increased home prices, and affordability challenges that are limiting the pool of qualified buyers. This reduction in transaction activity is consistent with broader market cooling trends observed across California's major metropolitan areas.
Sales volume varies considerably by price segment, with the most significant declines occurring in the entry-level and mid-range markets where affordability constraints are most acute. Luxury home sales above $2 million have shown more resilience, supported by cash buyers and high-income tech professionals.
The year-over-year sales decline also reflects a normalization from the exceptionally high transaction volumes experienced during the pandemic-driven market surge. Current sales levels, while lower than peak periods, remain within historical ranges for the San José market.
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What is the current mortgage interest rate, and how has it shifted over the past year?
The current 30-year fixed mortgage rate in San José is approximately 6.72% as of July 2025, significantly higher than the sub-3% rates available in 2021-2022.
Mortgage rates have increased dramatically over the past year, rising from historically low levels to the current elevated range. This increase represents one of the most significant factors impacting housing affordability and buyer demand in the San José market.
The rate increase has effectively reduced purchasing power for most buyers by 20-30% compared to the low-rate environment. A buyer who could afford a $1.5 million home at 3% interest can now only qualify for approximately $1.1-1.2 million at current rates, assuming the same monthly payment capacity.
Current rates are approaching levels not seen since the mid-2000s, representing a fundamental shift in the financing environment. This change has prompted many potential buyers to delay purchases while waiting for potential rate decreases, contributing to reduced sales volume.
The elevated rate environment has also increased demand for rental properties as homeownership becomes less accessible, supporting rental market strength and potentially encouraging real estate investment strategies focused on rental income.
How are rental prices in San José trending, and do they suggest more demand for renting or buying?
San José rental prices average $3,067 per month as of August 2025, which is 53% above the national average, with rents declining approximately 3% year-over-year but increasing 1% in the past month.
Rental pricing varies significantly by property type, with studios averaging $2,286, one-bedroom units at $2,658, and two-bedroom apartments reaching $3,524 monthly. Single-family rental homes command even higher rents, often exceeding $4,000-5,000 per month depending on location and amenities.
The slight year-over-year rental decline suggests some cooling in rental demand growth, though prices remain elevated compared to most U.S. markets. This moderation may indicate that some renters are transitioning to homeownership or relocating to more affordable areas.
Current rental trends suggest increased demand for renting among those priced out of homeownership. High mortgage rates and home prices above $1.5 million make renting the only viable option for many households, even at premium rental rates.
The rental market dynamics support continued housing demand but channel it toward rental rather than ownership, which may provide underlying support for real estate investment strategies focused on rental income generation.
What is the unemployment rate in San José, and how secure are local jobs in major industries?
San José's unemployment rate stands at 4.7% as of June 2025, representing a slight increase from earlier months but remaining below national averages.
The local job market is anchored by the technology sector, which is projected to experience 15.9% job growth in 2025. Major tech companies continue expanding their presence in the area, with strong hiring in artificial intelligence, cloud computing, and cybersecurity roles that command average salaries ranging from $111,193 to $206,000.
Job security in the tech sector remains generally strong despite some layoffs in certain segments. The industry's focus on emerging technologies like AI and machine learning continues creating high-paying positions that support housing demand. Healthcare and professional services also provide stable employment with competitive compensation packages.
The slight unemployment increase reflects normal economic fluctuations rather than fundamental structural problems. San José's diverse tech ecosystem and continued innovation investments provide resilience against broader economic uncertainties.
Strong employment fundamentals in high-paying industries continue supporting housing demand, even as affordability challenges limit the pool of potential buyers to higher-income households.
Are new housing developments or construction projects adding significant supply to the market?
San José has seen over 700 multifamily units break ground in 2025, a dramatic increase from zero new units in 2024, with over 2,000 additional units expected by year-end due to new incentive programs.
| Development Type | Units Planned/Under Construction | Target Completion |
|---|---|---|
| Multifamily Apartments | 700+ units (ground broken) | 2025-2026 |
| Additional Multifamily | 2,000+ units (expected) | Late 2025-2026 |
| Affordable Housing Project | 780 units (North San José) | 2026-2027 |
| Market-Rate Developments | Multiple projects ongoing | 2025-2027 |
| Mixed-Use Projects | Several downtown projects | 2026-2028 |
A significant 780-unit affordable apartment project has been approved in North San José, specifically targeting families earning 80% of the area median income. This development represents a substantial addition to the affordable housing stock that has been severely limited in recent years.
While the new construction represents meaningful supply additions, the volume remains insufficient to dramatically impact pricing given continued population growth and job creation. The new units will help moderate price appreciation but are unlikely to cause significant price declines.
Construction activity is concentrated in multifamily developments rather than single-family homes, which may help address rental market demand while having less direct impact on the for-sale housing market that drives home prices.
What are experts or major real estate firms forecasting for San José housing prices in the next 12 months?
Real estate experts forecast continued price appreciation in San José at a slower pace of 2-4.6% annually over the next 12 months, with some risk of stagnation or minor price declines if mortgage rates remain elevated or tech hiring slows.
Most forecasts anticipate continued modest appreciation rather than price declines, supported by strong employment fundamentals and limited housing supply relative to demand. However, the pace of appreciation is expected to remain well below the rapid increases experienced in previous years.
Expert projections acknowledge significant uncertainty related to mortgage rate movements and broader economic conditions. If rates decline toward 5-6%, demand could strengthen and support higher appreciation rates. Conversely, rates remaining above 7% could lead to market stagnation or minor price corrections.
Migration patterns are expected to remain more balanced, with continued inflow from other high-cost metropolitan areas offsetting some outward migration to more affordable regions. This balanced migration should support stable demand without creating the intense competition that drove previous price surges.
The consensus view suggests San José's strong economic fundamentals will prevent significant price declines while affordability constraints will limit rapid appreciation, resulting in modest continued growth.
How affordable are homes relative to average household income in San José?
San José homes are severely unaffordable relative to household income, with median home prices of $1,498,500 representing 10.6-11 times the median household income of $136,229-$141,565.
| Affordability Metric | San José Value | Conventional Standard |
|---|---|---|
| Median Home Price | $1,498,500 | N/A |
| Median Household Income | $136,229-$141,565 | N/A |
| Price-to-Income Ratio | 10.6-11x | 3-5x (affordable) |
| Required Income for Median Home | ~$300,000+ | 30% of gross income |
| Homeownership Rate Impact | Severely constrained | Broad accessibility |
Conventional affordability standards suggest homes should cost 3-5 times annual household income, making San José's 10.6-11 times ratio extremely challenging for most residents. This affordability crisis limits homeownership to high-income tech professionals, executives, and households with significant wealth or family assistance.
To afford the median-priced home using conventional lending standards, households need annual incomes exceeding $300,000, which represents only the top 10-15% of local earners. This constraint fundamentally limits the buyer pool and creates ongoing affordability pressures.
The severe affordability disconnect means that most middle-class professionals, including teachers, healthcare workers, and public safety personnel, cannot qualify for homeownership without significant compromises or extended commutes from more affordable areas.
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What broader economic or tech-sector trends could strongly influence demand for housing in the area?
Several major economic and technology trends will significantly impact San José housing demand over the next 12 months, with artificial intelligence expansion and remote work policies being the most influential factors.
AI startup growth and innovation hub development continue attracting high-skilled workers to the San José area. Major tech companies are establishing new AI research facilities and expanding existing operations, creating sustained demand for housing from well-compensated professionals. Average tech salaries ranging from $111,193 to $206,000 support continued housing demand despite affordability challenges.
Remote work policy changes across major tech employers could significantly impact demand patterns. Companies requiring return-to-office mandates may increase local housing demand, while expanded remote work flexibility might allow some workers to relocate to more affordable areas while maintaining San José employment.
Federal Reserve monetary policy and interest rate decisions will directly influence mortgage availability and housing affordability. Rate decreases could stimulate renewed buyer demand, while continued elevated rates may further cool the market and support rental demand over homeownership.
Immigration policy changes, particularly related to H-1B visas and skilled worker programs, could affect demand from international tech professionals who have historically supported luxury housing segments. Changes in visa availability or processing times may influence high-end market dynamics.
Regional competition from other tech hubs like Austin, Seattle, and emerging markets may influence migration patterns and labor demand, potentially affecting long-term housing demand sustainability in San José.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
San José's housing market is unlikely to experience significant price declines in the next 12 months, with modest appreciation of 2-4.6% expected despite cooling conditions.
While affordability remains a critical challenge with homes priced at 10-11 times median income, strong tech sector growth and limited supply continue supporting price stability in this premium metropolitan market.
Sources
- Zillow San José Home Values
- BlockChange Average House Prices
- Norada Real Estate Market Analysis
- San José Real Estate Market Analysis
- San José Housing Market Forecast
- Redfin 95125 Housing Market
- California Homes Inventory Analysis
- Realtor.com July 2025 Data
- CNBC Middle Class Salary Analysis
- San José Tech Job Market 2025