San Jose Advances Housing Incentives with Pilot Program for Middle-Income Units

San Jose, California, United States — February 26, 2026

San Jose housing initiatives include a new pilot program converting units in a downtown high-rise to serve middle-income earners, aiming to address affordability challenges in Silicon Valley.

Background

San Jose faces significant housing affordability pressures as one of the world's least affordable cities for first-time homebuyers, driven by high demand from the tech sector and limited supply. City policies focus on incentives for developers to increase middle- and lower-income housing options through tax reductions, inclusionary adjustments, and conversion programs in existing structures.

What Happened

The San Jose City Council adopted measures to ease housing development requirements, including a pilot converting nearly 200 units at a downtown high-rise for middle-income residents. Updates to inclusionary housing policy offer developers flexibility, such as setting aside 7% of units for households at 50% of area median income instead of higher previous thresholds.

Why It Matters

These San Jose housing efforts target workforce retention by making living costs more manageable for middle-income families in a region where median family income in Santa Clara County stands at $195,000. Increased supply could ease rental pressures, support economic stability, and contribute to broader regional housing goals amid ongoing tech industry transitions.

Official Response

City officials indicated the incentives aim to boost construction and conversions while balancing developer feasibility with community needs for accessible housing.

What Happens Next

Implementation of the pilot and policy changes will proceed with monitoring of unit conversions and developer participation. Further evaluations may inform expansions or adjustments to housing strategies in upcoming council sessions.