While the costs of buying a house and renting are both astronomical in San Jose, a Trulia report claims that it is still 17% less expensive to purchase a house than to rent in our area. The study covered the largest 100 metros in the US and uses quality-adjust measures so that the comparison is apples-to-apples (it did not compare average rents to average home values, which would have been very biased towards buying).
While 17% seems significant, it was the second lowest figure in the entire study. Honolulu came in at the lowest with 16% and San Francisco was 5th at 24%. This means that it is a tougher call than most metros in the US on whether you should try to buy a home here (assuming you can afford the down payment) or rent. One other tidbit of information is that San Jose has the 8th highest average HOA fees in the country.
To see the full Renting vs. Buying report, click here.