Why Is San Jose So Unaffordable? 9 Real Reasons (and How to Work Around Them)

When people ask this, they’re really asking: “How can I live, buy, or invest here without feeling broke?”
San Jose’s mean and median home prices, rent levels, and everyday costs are the result of layered forces—jobs, zoning, taxes, schools, lifestyle demand, and even dog-park culture. Understanding those layers is step one. Step two is using data and strategy to bend the numbers in your favor.

1. World-Class Paychecks vs. World-Class Prices

High salaries attract talent—and raise bids.

• Tech firms pay big, so buyers show up pre-approved for higher loans.

• Sellers price to that demand; appraisals trend up; comps follow.

• Result: “Average” no longer looks average when stacked against national medians.

Workaround: Target micro-markets (think parts of 95123 or Alum Rock) or property types (condos, townhomes) where the salary-pressure gap is smaller. Let Block Change Real Estate model “Evergreen vs. Blossom Valley” so you see real savings.

2. Not Enough Homes: Years of Underbuilding

Low supply = bidding wars.

• Strict zoning, long permit times, and neighborhood opposition make new SFHs rare.

• Even ADU-friendly policies can’t fill the gap fast enough.

• Condo and townhouse projects help, but HOAs add another cost layer.

Workaround:

• Consider properties with ADU potential to create supply for yourself (rental income).

• House-hack: buy a duplex or a home with rentable rooms.

• Look at “contingent” or “pending” listings that fell out of contract—often ripe for a second, smarter offer.

3. Prop 13 & Tax Structures: The Double-Edged Sword

Older owners pay far less in property tax, so they stay put.

• Prop 13 caps annual tax increases, discouraging moves. Less turnover = fewer listings.

• New buyers shoulder full market-rate taxes, adding to the monthly payment shock.

Workaround:

• Seek homes where the assessed value hasn’t skyrocketed (e.g., “off-market” opportunities).

• Ask about Mello-Roos or special assessments in Evergreen or Silver Creek before you fall in love with a house.

4. School Quality & “Soft” Amenities Drive Hyperlocal Prices

Evergreen schools, Silver Creek Valley Country Club perks, Almaden’s outdoor vibe—these aren’t free.

• Families prioritize test scores and safe, quiet streets.

• Dog parks, nearby trailheads, and community centers add value buyers are happy to pay for.

Workaround:

• If schools aren’t your factor, look just outside strict boundaries.

• Compare HOA amenities vs. your lifestyle. Paying for a gym you won’t use? Choose a different community.

5. Fees, Rules, and Red Tape = Higher Build & Hold Costs

Permits, impact fees, and code requirements add up.

• ADU and remodel permits take time and money.

• Condo HOAs may charge high reserves for future repairs.

Workaround:

• Budget in realistic upgrade costs from day one.

• Have your realtor (hi, that’s us) review HOA docs and reserve studies early—no surprises after you’re in contract.

6. Interest Rate Swings & Lending Rules

Even a 1% rate move can blow up affordability.

• Many buyers wait for a rate drop…while prices sneak back up.

• Creative loans (ARMs, buydowns) help but need pro guidance.

Workaround:

• Use seller credits for rate buydowns in slower weeks.

• Model “rate now vs. rate later” with actual monthly payments, not headlines.

• Consider pairing a smaller down payment with PMI if it lets you keep a cash cushion (comfort matters).

7. Investors, iBuyers & Short-Term Rental Dynamics

Cash investors change the game.

• They move fast, waive contingencies, and buy at scale.

• Even if they exit, their renovated flips raise neighborhood comps.

Workaround:

• Lean on speed and strategy, not just price: clean offers, short contingency periods, strong local lender letters.

• Find inventory before it’s public—networked, proactive agents uncover “quiet” listings.

8. Everyday Costs: Not Just the Mortgage

Living costs stack up:

• Utilities (PG&E), insurance, HOA dues, car payments, EV charging, dog walkers, kid activities, your favorite coffee habit.

• Silicon Valley lifestyles mean weekend trips, concerts, and restaurants—fun, but costly.

Workaround:

• Build a total monthly budget, not just a PITI calculator.

• Choose neighborhoods where you can bike or VTA. Fewer car costs = more housing room.

• ADU income, roommate rent, or co-ownership contracts can slash the “salary needed” number.

9. Psychology & Timing: Fear, FOMO, and “Wait For The Crash”

Headlines scream. Real life is quieter.

• “Mean home prices down!” might mean condo sales skewed the median one month.

• Waiting for a huge drop can cost you years of equity growth.

Workaround:

• Track local trend lines: days on market, price-per-square-foot by block, list-to-sale ratios.

• Have a decision framework (we’ll give you one) so you act when your numbers, not your nerves, say “go.”

A Clear Action Plan to Beat (or At Least Tame) Unaffordability

Step 1: Define “Comfortable” for You

• List must-haves vs. nice-to-haves: schools, commute, yard, ADU potential, dog park access.

• Rank lifestyle costs: gym, travel, hobbies. Cut or keep with intention.

Step 2: Build a Real Budget

• Housing (rent or PITI), utilities, HOA, insurance, taxes.

• Debt payments (student loans, auto).

• Savings/investment targets (20% of gross is a solid benchmark).

• Cushion for surprises.

Step 3: Pick the Right Property Type

• Condo/townhome vs. SFH vs. duplex/ADU play.

• Understand HOA docs, reserve studies, and special assessments.

• Ask: “Will this property help pay for itself?”

Step 4: Use Programs & Financing Smartly

• First-time buyer programs, grants, or employer credits.

• Rate buydowns, ARMs (with a strategy), down payment assistance.

• 1031 exchange if you’re rolling an investment.

Step 5: Hyperlocal Data, Not General Headlines

• ZIP-specific: 95123 vs. 95148 vs. 95125—huge differences.

• Block Change Real Estate pulls days on market, $/sq ft, school boundary shifts, HOA rule changes.

• Decide with facts you can point to.

Step 6: Move Fast—but Never Blind

• Pre-underwrite your loan.

• Have a clean offer package (short contingencies when safe, proof of funds, personal letter if appropriate).

• Let us pre-scan disclosures so you’re ready to sign without panic.

Step 7: Re-Assess Each Year

• Rebalance: refinance, add an ADU, sell a condo to trade up to a SFH.

• Life shifts; so should your strategy. Our mid-year portfolio review keeps you aligned with your goals.

FAQs People Ask Us (All The Time)

“Are San Jose home prices dropping?”
They wobble with rates and inventory. Some pockets dip while others rise. Zoom in: Evergreen condos vs. Silver Creek luxury SFHs perform differently. Let’s look at your specific target.

“How much is the average house?”
“Average” masks reality. A median detached home can run 7 figures, but condos or east-side neighborhoods can be far less. We’ll show you current numbers for each micro-market.

“Is San Jose just too expensive to live?”
It’s expensive—but not impossible. With the right plan (co-buying, ADUs, smart financing), many clients live comfortably and build equity here.

“Should I rent instead of buy?”
Sometimes renting wins. If you’re staying <3 years or saving a bigger down payment, rent can be smart. We’ll run buy-vs-rent with your exact inputs.

Conclusion: Unaffordable on Paper, Doable with a Plan

San Jose is pricey because many people want what it offers and supply hasn’t kept pace. But you’re not powerless. With a data-driven, hyperlocal, client-first realtor (hello, Block Change Real Estate), you can:

• Identify value pockets others overlook.

• Use ADUs, grants, and creative financing to lower your true cost.

• Craft winning offers without overpaying.

• Adjust your portfolio as life changes.

Let’s turn “Why is it so unaffordable?” into “Here’s how we’ll afford it—comfortably.”
Reach out for a no-pressure strategy session. We’ll bring the numbers. You bring your goals.