San Jose Housing Market Forecast for 2024: Highly Competitive

Forecasts and predictions for the San Jose metro area real estate market suggest that home buyers could encounter a higher level of competition in the coming months.

Through the rest of 2023 and into 2024, the San Jose housing market will probably continue to experience very low inventory levels along with steady demand from buyers. In addition to making things more competitive, this imbalance could put upward pressure on home prices for the foreseeable future.

San Jose Market Forecast Stretching Into 2024

The real estate market in Santa Clara County has undergone significant changes during 2023. After cooling down for much of last year, the South Bay region’s housing scene is now heating back up again. And nowhere is this more evident than in San Jose, the county seat and largest city.

Here are some highly probable, data-based predictions for the San Jose metro area housing market extending into 2024.

1. Very low inventory levels

This first prediction is a fairly safe bet, because we are seeing these conditions right now.

In 2024, the San Jose and broader Santa Clara County real estate markets will continue to experience very low supply levels. This will present challenges for local home buyers, especially those who are trying to buy in popular neighborhoods.

Supply-related trends within the San Jose real estate market closely mirror those seen in other major metro areas across the country. Inventory levels declined during the COVID pandemic, due to a sharp rise in home-buying activity. Later, during the second half of 2022, the real estate market cooled and inventory levels rose again.

But since the start of 2023, real estate market supply levels within the San Jose metro area have declined steadily.

As of late summer 2023, this housing market had less than one-month supply of homes for sale. Granted, that’s not as low as the rock-bottom levels that occurred in 2021. But it’s still well below what’s considered to be a balance real estate market.

It could be many years before the San Jose housing market has enough inventory to meet the demand from buyers. So from a supply standpoint, the local real estate scene continues to favor sellers. There just aren’t nearly enough homes listed for sale to satisfy the demand from active house hunters in the area.

And this lopsided supply-and-demand situation could linger for quite some time. According to a July 2023 report from Realtor.com:

The nation is in the clutches of the largest housing shortage it’s ever experienced — and there’s no relief on the horizon.

So that’s our first reasonable prediction for the San Jose real estate market through 2023 and into 2024. The tight supply conditions that home buyers are grappling with right now will likely persist for the foreseeable future.

2. A fast-paced real estate market

Moving on to prediction #2. Because of the low supply situation mentioned above, the San Jose real estate scene will continue to move at a fast pace. The typical selling time for homes in the area is currently well below the national average, and that will probably continue in 2024 as well.

Housing analysts use the median “days on market” (DOM) to measure the overall speed or pace of a particular real estate market. A higher DOM figure indicates a slower market, and vice versa.

During 2022, when a nationwide real estate cooling trend was taking effect, the median DOM for the San Jose area increased sharply. In other words, the local housing market slowed down. Suddenly, it was taken a lot longer for homes to sell on average.

The median number of days on market rose from about 10 days at the start of 2022, to a high of nearly 40 days by the end of that year. But since the start of 2023, the median DOM has plummeted once again, indicating a general acceleration within the San Jose real estate market.

Of course, these trends are directly related. The accelerating sales pace is largely influenced by declining inventory levels all across the South Bay region. Despite some inevitable fluctuations, the local real estate scene will continue to be fast paced in 2024 as well.

3. Steadily rising home prices

Our last forecast has to do with home prices in San Jose and across Santa Clara County. After declining for most of the past year, home values in the area have begun to turn north again.

Zillow, Realtor.com, and the California Association of Realtors have all reported rising prices within the San Jose real estate market over the past couple of months.

Since the start of this year, the percentage of homes selling above the original list price has risen sharply. This means that home buyers are (once again) engaging in multiple-offer scenarios and bidding wars. Over time, this will likely raise the median home value in San Jose — possibly surpassing the record high reached during the summer of 2022.

When this article was published, the median home value for the city of San Jose was around $1.3 million. The median price for Santa Clara County was well over $1.4 million. Both of those medians have risen over the past couple of months.

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