Are San Jose Home Prices Dropping? What Buyers & Sellers Need to Know in 2025

San Jose’s real estate market often makes headlines for its high prices—median sale price around $1.45 million—and frantic competition among buyers.

But in 2025, many wonder: Are home prices dropping in San Jose? After years of double‑digit annual gains, the market has cooled slightly, with modest 1–2% price declines compared to mid‑2024 levels.

In this comprehensive guide, we’ll cover:

• Current price trends and statistical overview

• Inventory & supply dynamics

• Neighborhood snapshots (Evergreen, Almaden, Silver Creek)

• ADU & buyer programs affecting affordability

• Taxes, rents, and carrying costs

• Expert forecasts and strategic takeaways

By the end, you’ll understand whether now is the right time to buy, sell, or hold your San Jose property.

1. San Jose Price Trends at a Glance

1. Median Home Price: $1,450,000 (May 2025)

2. Year‑Over‑Year Change: -1.5% from May 2024

3. Monthly Sales Volume: ~320 homes sold, down 10% YOY

4. Months of Inventory: 0.9 months (a seller’s market threshold is under 3 months)

Insight: A 1–2% dip reflects market stabilization rather than a crash. Persistent demand from tech workers and limited new construction keep values elevated.

2. Supply & Demand Dynamics

2.1 Tight Inventory

• Active Listings: ~350 homes—25% fewer than last year.

• Pending vs. Active Ratio: 1.4 pending offers per active listing .

Why It Matters: Low supply drives competition. Even with slight price drops, homes often receive multiple offers—often “buyer San” investors waiving contingencies.

2.2 New Construction & ADUs

• Single‑Family Permits (2024): down 12% YOY.

• ADU Permits: up 20%, reaching 1,200 annual approvals .

Impact of ADUs: Adding an Accessory Dwelling Unit on a 7,000 sq ft lot in Alden or Evergreen can generate $2,200/mo rent, offsetting higher purchase costs.

3. Neighborhood Snapshots

3.1 Evergreen (95123)

• Median Price: $1.48 M

• Price Change YOY: -1%

• Highlights: Top‑rated schools, family parks, Dog Park San network.

3.2 Almaden Valley (95120)

• Median Price: $1.65 M

• Price Change YOY: -2%

• Highlights: Luxury homes, hillside views, Almaden Country Club membership.

3.3 Silver Creek (95138)

• Median Condo Price: $1.32 M

• Price Change YOY: -1.8%

• Highlights: Transit access, modern developments, robust buyer demand.

Takeaway: Even high‑end submarkets mirror the slight overall dip, but local amenities and school quality continue to support values.

4. Affordability Aids & Buyer Programs

1. CalHFA First‑Time Buyer Grants: Up to $45,000

2. City of San Jose Forgivable Loans: $50,000 for eligible buyers

3. Mortgage Credit Certificates: 20% federal tax credit on mortgage interest

How to Leverage: Pair these programs with a strategic ADU plan to reduce your net purchase cost by up to $60K, significantly softening the impact of rising interest rates.

5. Carrying Costs: Taxes, Insurance & Rent

5.1 Property Taxes

• Rate: ~1.18% of assessed value → $17,110/year on a $1.45 M home.

5.2 Homeowners Insurance

• Annual Premium: $1,200–$2,000, depending on coverage and earthquake add‑ons.

5.3 Rental Market Pressure

• Average Rent (2‑Bed): $3,200/mo—up 5% YOY .

• Investor Note: Strong rents support buy‑to‑rent strategies, even with small price dips.

Budgeting Tip: Factor 1.5%–2% of home value annually into your cost‑of‑ownership calculations.

6. What Experts Predict Next

• Short‑Term (6–12 Months): Continued 1–3% price softening as interest rates remain near 6.5%.

• Mid‑Term (1–3 Years): Return to 3–5% annual appreciation driven by tech job growth and limited land.

• Long‑Term (5+ Years): Sustained upward trajectory mirroring Silicon Valley’s economic expansion.

Action: Buyers can time purchases during brief dips; sellers aiming for peak should plan listings in late spring when seasonal demand peaks.

Conclusion

San Jose’s real estate market shows a mild 1–2% price drop in 2025, but tight 0.9‑month supply and strong rental demand keep it fundamentally robust. Neighborhoods like Evergreen (95123), Almaden, and Silver Creek reflect similar stabilization—yet continue to command premium prices thanks to top schools, lifestyle perks, and ADU opportunities.

Buyer programs and tax credits help offset entry costs, while experts forecast a return to healthy appreciation as tech growth resumes. Whether you’re a first‑time buyer or seasoned investor, understanding these nuanced trends will empower your next move in San Jose’s dynamic market.