San Jose Is Building Its New Subway Straight Through Its Cheapest Neighborhoods

Daniel Zubizarreta is CFO of The City Fish, a seafood restaurant on East Santa Clara Street across from a planned entrance to San Jose's future downtown BART station. He has spent recent years watching foot traffic in his stretch of downtown thin out ahead of construction that has not fully started yet.

"People are going to take alternative routes, they'll be going down the other blocks."

That is the corridor's present tense. A few miles west, homes in Willow Glen sold for a median $1.9 million in March 2026, in a neighborhood with no BART station within walking distance and none planned. Rose Garden closed June 2026 at a median $1,958,207, also with no line running anywhere near it. San Jose's most expensive residential ground has almost nothing to do with the six-mile subway project meant to remake how people move through the city.

If you are comparing San Jose neighborhoods right now, that gap deserves more attention than the citywide median gets. The market is not pricing future transit access as a premium. It is pricing construction disruption as a discount, and established neighborhood character as a premium, and right now those two forces point in the same direction: away from the tunnel.

The Median Everyone Quotes, and the Average That Contradicts It

Ask what a home costs in San Jose and most people repeat the citywide median: $1.5 million over the three months ending June 2026, essentially flat against the same stretch a year earlier. That number travels well because it is simple.

But the average sale price told a different story over the same recent window: $1.32 million, down 11.9% year over year. A median holding roughly steady while an average drops by double digits usually points to one thing. The mix of homes changing hands has shifted, with fewer of the highest-priced sales pulling the average upward the way they used to. Something is different about which parts of San Jose are actually transacting, and the tunnel corridor is one of the reasons why.

Two of the City's Priciest Neighborhoods Have No Transit Line Coming

Willow Glen and Rose Garden sit west and north of downtown, both walkable, both shaded by mature trees, neither anywhere near the BART alignment. Willow Glen's spine is Lincoln Avenue, lined with restaurants and a small local movie theater, built up mostly between 1885 and 1955. Rose Garden sits closer to The Alameda, its identity tied to the municipal rose garden it is named for and a similar stock of mid-century homes.

Willow Glen's median sale price was $1.9 million in March 2026, down 6.1% from the year before, moving in an average of 10 days. Rose Garden posted a median of $1,958,207 in June 2026, up 0.4% year over year, also selling quickly. Naglee Park, next to San Jose State University and built out with older Victorian and Craftsman homes, has recently listed near $1,974,000, in the same range.

None of these neighborhoods are getting a station. Their premium is not a bet on future transit. It is payment for what already exists: walkability, tree canopy, a consistent architectural feel from block to block, and schools regarded well by local standards. Buyers here are paying for the present, not for 2037.

What the Corridor Itself Trades For

Compare that to the neighborhoods the tunnel actually passes through or near. Central San Jose, close to the downtown core the subway is meant to serve, has recently listed near $950,000. San Pedro Square, arguably the most walkable pocket of downtown today, has recently listed near $829,999. Both sit well under the citywide median, in some cases at less than half of what Willow Glen commands a few miles away.

If proximity to a future subway line were driving price today, this table would run the other way. It does not. The corridor is trading at a discount to the neighborhoods that will never see a train pass under them.

A Decade of Construction Before Any Train Runs

Here is why. VTA's own updates put construction finishing around 2036, with train service targeted to begin the following spring, according to the agency's chief megaprojects officer. The project covers roughly six miles and four stations, running from a maintenance yard near Santa Clara through Diridon Station and a Downtown San Jose station, before curving toward the future 28th Street/Little Portugal station near Five Wounds Church. The agency's most recent public figure puts the cost at $12.2 billion.

Most of that distance runs through a tunnel VTA is boring with one of the largest machines of its kind, chosen specifically to avoid tearing up the street above it. That single design decision is a large part of why Zubizarreta's restaurant is still standing. But the tunnel still needs staging yards, ventilation shafts, and emergency exits at street level, and those require land the agency does not already own.

Who Is Already Paying the Cost

That land acquisition has produced a string of eminent domain fights that shape the corridor's current reality more than any future train can. Monarch Truck Center operated for 35 years at 195 North 30th Street before VTA claimed the site in 2024 for a construction staging need. The company relocated to 1015 Timothy Drive and took VTA to court over compensation, in a dispute that reached a jury trial set for March 2026, after VTA valued the business's relevant losses at zero dollars, according to the company's attorney.

A few blocks over, the owner of Silicon Valley Granite was ordered to vacate a longtime location on North 30th Street, with any inventory left behind ruled abandoned rather than compensable. Near the future downtown station, the owner of Enso Nightclub accepted $25,000 to relocate a business he had run for over a decade, and a neighboring bakery faced the same choice. None of this shows up in a median sale price. All of it shows up in what it actually costs to own property along a route that has not opened yet and will not open for years.

The Neighborhood Deciding Its Own Shape Right Now

The clearest test case sits behind the Five Wounds Portuguese National Parish, founded in 1914 and still the anchor of San Jose's Little Portugal neighborhood, home to the Goulart Portuguese Sausage Company and the Portuguese Band of San Jose. The city's draft update to the Five Wounds Urban Village Plan, built around the future 28th Street/Little Portugal station, would raise the allowed building height behind the church from 120 feet to 270 feet and lift density from 95 to 250 dwelling units per acre. Public comment on the draft runs through early October 2026.

Separately, VTA has already committed $4.14 million toward planning a rail trail along the old Union Pacific right of way through the same neighborhood, a project residents first proposed back in 1999. Both efforts describe the same half-mile radius around the coming station, and both are still being negotiated rather than settled. That is the corridor in one sentence: its long-term shape is still being written block by block, while its short-term reality is construction trucks and legal filings.

What This Means If You're Comparing Neighborhoods

If you are weighing San Jose neighborhoods against each other right now, the tunnel is not a reason to chase discounted homes near the alignment expecting a quick payoff. The stations will not open until the back half of the next decade, and the neighborhoods around them are still absorbing the disruption that comes before any benefit does. It is also not a reason to write those areas off long term. Urban villages like Five Wounds are being planned specifically to capture demand once the line opens, and the density changes moving through city review right now will shape what gets built there for decades.

For a buyer weighing Willow Glen against somewhere closer to the future line, the honest framing is this: you are choosing between paying today for character that already exists, or accepting years of construction friction for access that is still a decade out. Neither choice is wrong. Only one of them is currently reflected in the price.

A Few Direct Questions

Will home values near the new BART stations rise once they open? Transit access has often supported long-term demand near other Bay Area BART stations, and San Jose's own planning work for Five Wounds anticipates that same effect near 28th Street/Little Portugal. That effect, if it plays out here, is tied to a station opening that is not expected until spring 2037 at the earliest.

Should I avoid buying anywhere near the tunnel corridor right now? Not necessarily. The disruption is concentrated at specific staging sites and station footprints, not spread evenly across every parcel within a mile of the route. What matters most is site specific: whether a particular property sits inside an active acquisition zone or simply nearby.

Where does the tunnel actually run? The alignment runs from a maintenance yard near Santa Clara, under Interstate 880 and the Caltrain tracks, through Diridon Station, along Santa Clara Street to a Downtown San Jose station, then northeast to the future 28th Street/Little Portugal station near Five Wounds Church.

If you're comparing San Jose neighborhoods and trying to figure out what a listing price actually reflects, walkability, school pipeline, or a subway line still years from opening, that's the kind of read I put together with buyers and sellers every week. Reach out to Amy Martinez. Let's Connect.