The State of San Jose Real Estate in 2025: Competitive, Costly, and Quietly Shifting

San Jose real estate in late 2025 is full of contradictions.
Prices are high but not surging. Inventory is low but a bit less suffocating. Buyers are cautious but still showing up for the “right” home. Sellers still hold an advantage—but only if they’re realistic.

If you only read national headlines, you might assume the market here has cooled off dramatically. It hasn’t. San Jose remains one of the most expensive and competitive housing markets in the U.S., even as the pace normalizes and affordability gets pushed to its limits.

As local, data-obsessed real estate people, we live this market every day through buyers, sellers, and the stories behind each move. This article breaks down what’s actually happening right now in San Jose real estate, what’s driving it, and what it means if you’re thinking of buying or selling in the next year.

1. By the Numbers: What the Market Looks Like Right Now

The first step in understanding the current state of San Jose real estate is stripping out the noise and looking directly at the data.

Recent numbers paint this picture:

• Median sale price: Around $1.4M–$1.45M for San Jose homes as of October 2025, up roughly 1–2% year-over-year.
  
  

• Average home value: About $1.39M, down slightly (around 2–3%) from last year, reflecting some softening at the edges.
  
  

• Days on market: Redfin shows homes selling in about 18 days on average in October, while some local and listing-based sources show medians in the 30–35 day range depending on property type and methodology.
  
  

• Sales volume: Roughly 500+ homes closed in October 2025, slightly fewer than the same month in 2024—suggesting a cautious, but still active, market.
  
  

• Regional pricing: At the metro level (San Jose–Sunnyvale–Santa Clara), the median single-family price sits near $1.9M, keeping this metro at the top of the “most expensive” list nationally.
  
  

So is the market crashing? No.
Is it cheap? Absolutely not.

We’re in a high-price, slower-but-still-competitive phase: prices are not soaring the way they did in the 2020–2022 run-up, but they’re also not falling in a way that meaningfully improves affordability.

2. Affordability: San Jose at the Top of the Cost Pyramid

Affordability is where the San Jose story stops being just “expensive” and starts looking like a structural problem.

Several independent analyses rank San Jose as the least affordable or one of the least affordable major housing markets in the country.

Here’s what that looks like in real numbers:

• One recent mortgage-income study estimates a household needs roughly $470K/year in income to comfortably afford a median-priced home in the San Jose metro.
  
  

• Another popular analysis puts that figure even higher, at about $500K+ per year to buy the median home here.
  
  

• Nationwide, the income required to buy a median-priced home is closer to $110K–$125K, depending on down payment.
  
  

That means the “cost of entry” into homeownership here is four to five times higher than in many U.S. metros.

Yet interestingly, San Jose still has a homeownership rate north of 55%, higher than San Francisco’s, thanks to generally higher local incomes and long-time owners who bought before the big run-up. 

From a critic’s standpoint, this exposes the core tension of our market:

• On paper, incomes “support” these prices.
  
  

• In reality, even many tech workers feel like owning in San Jose requires extreme trade-offs.
  
  

The gap between local incomes and local housing costs has widened faster here than almost anywhere else, turning real estate from a lifestyle choice into a sorting mechanism—favoring households with substantial stock-based wealth, family help, or long-time equity.

3. Inventory, Pace, and the Myth of a “Slow” Market

A lot of buyers come into conversations saying, “The market’s slow now, right? So we can take our time.”

Yes and no.

Compared to the frenzy of 2021, today’s San Jose market feels calmer:

• Fewer 20-offer bidding wars
  
  

• More contingent offers getting accepted
  
  

• More room to negotiate repairs or credits
  
  

But relative to the rest of California, San Jose is still moving quickly:

• A recent market analysis shows active inventory around the high-300s for single-family homes.
  
  

• Each week, more homes go under contract than come on the market, signaling ongoing tight supply.
  
  

• Homes spend a median of about 35 days on market, roughly half the statewide median of ~70 days—still firmly in seller’s-market territory.

Other tracking sites measuring only “hot” active listings show even shorter marketing times—sometimes single-digit median days—as the most desirable homes are snapped up quickly. 

In plain terms:

• The frenzy is gone.
  
  

• The floor is not.
  
  

Buyers have a bit more room to breathe, but there’s nowhere near enough inventory to flip this into a true buyer’s market. Sellers still have leverage—just not absolute power.

4. Two Markets, One City: Luxury Strength vs. Middle-Market Friction

Another defining feature of San Jose in 2025 is how uneven the market has become depending on price point.

At the top of the market, luxury is holding—and in some cases, surging:

• Across the Bay Area, the top 5% of homes by price have seen some of the strongest appreciation, driven by cash-heavy buyers benefiting from AI and tech stock gains.
  
  

• In the broader San Francisco Bay Area, luxury prices are up significantly, and the San Jose metro’s luxury segment has logged double-digit price gains in recent reporting periods.
  
  

Why? High-net-worth buyers are less sensitive to mortgage rates. They can write cash offers, absorb tax and insurance costs, and treat real estate as a long-term wealth store or lifestyle choice.

The middle of the market tells a different story:

• Mid-priced homes are more likely to experience small price declines or flat growth, especially where monthly payments cross key psychological thresholds.
  
  

• Condos and townhomes, especially with high HOA dues, have seen more downward pressure as buyers run into payment fatigue.
  
  

At the same time, buyers nationwide—and especially in higher-cost markets like San Jose—are securing record discounts via price cuts, with the average cumulative cut in San Jose topping $70,000 per listing when reductions happen. 

So the reality is nuanced:

• This is not a broad fire sale.
  
  

• But it is a market where sellers who overshoot on price can end up chasing the market down with painful price cuts—while well-priced, well-presented homes still sell quickly and strong.
  
  

5. What This Means If You’re Buying or Selling in 2025–2026

From a critical, boots-on-the-ground point of view, here’s how all of this translates into real decisions.

For Buyers

1. You’re not crazy—this is hard.
   The affordability math in San Jose is brutal. Acknowledging that doesn’t mean you can’t buy; it means you need a clear, honest financial plan before you fall in love with a listing.
   
   

2. Look at the market, not just the headline price.
   A $1.4M list price in one neighborhood may be “cheap” relative to recent sales; in another, it might be aspirational. Understanding micro-market trends by zip code, school district, and property type is critical.
   
   

3. Use the new leverage you do have.
   Compared to 2021, buyers today are more likely to:
   
   

• Negotiate repairs or credits
  
  

• Ask for rate buydowns from sellers
  
  

• Win homes without waiving every contingency
  That doesn’t fix affordability, but it does reduce risk and soften the monthly blow in some cases.
  
  

4. Think in phases, not forever.
   Many successful buyers are treating their first San Jose home as a 5–10-year move, not “the final forever home.” That mindset opens up more neighborhoods, more condo/townhome options, and more realistic price targets.
   
   

For Sellers

1. Price truthfully—or pay for it later.
   Overpricing in this climate leads to longer days on market and bigger discounts. You might still sell, but you’ll do it with more stress and less net. Local Realtor leadership is blunt about this: realistic pricing is non-negotiable if you want a smooth sale.
   
   

2. Presentation matters more as the market normalizes.
   With more inventory than the ultra-tight days of 2021–2022, buyers compare:
   
   

• Who staged?
  
  

• Who has professional photography and video?
  
  

• Who tells a compelling story about lifestyle, schools, and commute?
  
  

3. Expect a narrower—but still real—seller advantage.
   If your home is in a desirable neighborhood, in good condition, and priced in line with recent sales, you’re still likely to see solid interest—just not the same frenzy as the peak.
   
   

4. Be clear about your next move.
   If you’re sitting on a 2–3% mortgage and moving means taking a 6–7% rate, you need a strategy that makes sense for your life, not just for the spreadsheet. That might mean downsizing, relocating to a more affordable region, or using equity strategically rather than just “trading sideways.”
   
   

5. Looking Ahead: A Market in Transition, Not in Freefall
   
   

Zooming out, San Jose’s housing market in late 2025 looks less like a bubble about to pop and more like a high-altitude market adjusting to thin air:

• Prices remain among the highest in the country.
  
  

• Affordability is historically stretched.
  
  

• Inventory is still tight, even as the pace feels calmer.
  
  

• Luxury continues to outperform, while the mid-market and condo segments feel more of the strain.

Conclusion

At this stage, calling San Jose “too expensive” or “cooling off” misses the point. The more useful question is: given this reality, what kind of market is this for you? For some, it’s a moment to finally move equity from a long-time home into something that fits a new phase of life. For others, it’s the time to be patient, data-driven, and opportunistic—especially in segments where price cuts and longer days on market are quietly creating openings.

What’s clear is that we’re past the era where you could rely on headlines, cocktail-party anecdotes, or last year’s comps to make good decisions. In a city where one neighborhood can feel like a frenzy and another like a slow burn, the difference between a smart move and an expensive mistake usually comes down to details: micro-trends by school zone, how aggressively to price or offer, what repairs actually matter to buyers, where HOA dues or tax bills quietly tip the scales.

San Jose real estate in 2025 isn’t collapsing, and it isn’t effortlessly rewarding. It’s demanding. It asks buyers to be brutally honest about their budgets and time horizons. It asks sellers to respect the market instead of trying to will it back to 2021. And it rewards the people who treat housing not as a lottery ticket, but as a high-stakes, long-term decision that deserves real analysis.

If you’re planning a move in 2025–2026, the takeaway isn’t “buy now before it’s too late” or “wait for a crash that may never come.” It’s this: understand the market you’re actually in, get clear on your own numbers and non-negotiables, and lean on local expertise that lives in this data every day. In a high-altitude market like San Jose, that’s how you turn a difficult landscape into a deliberate, confident decision.