That's thanks to Prop 13, which caps the rate of assessed property valuation between sales. The house will be reappraised at the value it sold for, and the owners will pay the full ~1.25% property tax in the future.
Interestingly, the Santa Clara county tax collectors will take several months to reappraise the property, and then they'll send a supplemental tax bill to cover the difference between the $125/month the prior owners were paying and the $2.6k/month the new owners will be paying. It's frustrating they don't just assess taxes correctly from the beginning, but they do things old school over there.