San Diego Housing Market Forecast for the Next 2 Years: 2025-2026

Thinking about buying or selling a home in San Diego? You’re not alone! The San Diego housing market forecast is a hot topic for anyone looking to make a move in this beautiful corner of California. So, here’s the short answer: while we aren't expecting a massive crash, it's likely the San Diego housing market will continue to see moderate growth through 2025, with prices likely to continue to rise. Let's dive into the details, shall we?

San Diego Housing Market Forecast for the Next 2 Years: Will Prices Rise or Fall?

Why is the San Diego-Carlsbad Housing Market So Important?

First, let's acknowledge why the San Diego-Carlsbad housing market is so significant within California. San Diego isn't just another city; it's a major economic hub with a diverse population, beautiful weather, and a strong job market, particularly in tech and the military. This makes it a highly desirable place to live, which of course fuels demand for housing.

As a lifelong Californian, I've seen firsthand how the San Diego market can influence the real estate trends across the state. What happens here often sets a tone for other areas. This city’s attractiveness and economic stability mean that even small shifts in the market can have a ripple effect across the region.

Current San Diego Market Snapshot

Okay, let's get down to the numbers. Right now, the average home value in the San Diego-Carlsbad area is sitting at a hefty $935,237. That's a pretty significant jump of 4.3% over the past year. Homes are moving relatively quickly, going to pending in about 27 days, which indicates a solid demand and is a sign that even though the prices are high, buyers are still eager to buy.

Here’s a breakdown of other key data as of late December 2024:

• For Sale Inventory: 5,973 homes
• New Listings: 1,622 homes
• Median Sale to List Ratio: 0.999 (meaning homes are selling very close to their asking price)
• Median Sale Price: $878,333
• Median List Price: $927,667
• Percent of Sales Over List Price: 37.4%
• Percent of Sales Under List Price: 47.7%

What these numbers tell me is that the market isn't exactly red-hot, but it’s certainly not cold either. There's still a good amount of competition, with a significant percentage of homes selling above their asking price, but at the same time, a large chunk sells below the asking price which signifies that there are both price pressure and sellers willing to negotiate.

San Diego Housing Forecast: 2025 in Detail

Now for the predictions. Zillow, a credible real estate data source, has provided a forecast for the San Diego market, and it’s crucial to understand what it means for you. Here's a look at their home value predictions, presented in a slightly easier format:

Essentially, this forecast indicates that San Diego home values are expected to see steady, incremental growth throughout 2025. We're not talking about a boom or bust, but rather a consistent upward trend. What this means to me is that you should not expect to see any major dip in the market.

How Does San Diego Compare to Other California Markets?

It's helpful to look at how San Diego's predictions stack up against other major California markets. Here's the predicted growth from Zillow through December 2025 for some of these key areas:

As you can see, San Diego's forecast is on the higher end compared to other cities like Los Angeles and San Francisco. In fact, San Francisco is predicted to stagnate and have a flat growth. This tells me that the San Diego area continues to be a more attractive option for buyers as compared to these areas. Sacramento also seems to be weaker as compared to San Diego and Riverside. What's interesting though is that Riverside is forecasted to grow almost the same rate as San Diego which means both areas might be having some kind of similarities in demand.

Will Home Prices Drop in San Diego? Will There Be a Crash?

This is the million-dollar question, isn't it? Based on the data and my understanding of the market, a significant drop or crash in San Diego home prices seems unlikely in 2025. The forecasts from credible sources like Zillow do not point to any major correction in the market.

Here’s why:

• Strong Demand: San Diego continues to be a desirable place to live. The economic prospects combined with quality of life will always have demand for housing.
• Limited Inventory: While we have a few thousand homes on the market, the supply isn’t enough to significantly undercut prices. It's not that the supply is very low, but it is not enough to satisfy the demand that exists in this market.
• Incremental Growth: The predicted growth for San Diego is measured and not explosive, meaning the market is less likely to be overvalued and then have a correction.

Of course, I can't predict the future with 100% certainty. Economic shifts and unforeseen circumstances can always change things. I've seen how quickly things can turn around, but as of now, the data suggests that this market will stay fairly stable with some upward trend in value.

A Possible Look Into Forecast for 2026

While there is no specific credible data for the 2026 forecast, here’s my take. I believe that we'll likely see a continued moderate growth trend in San Diego housing prices into 2026, but probably at a similar or even a slightly slower pace. The market will probably continue to be healthy, especially if demand for homes stays high and interest rates eventually stabilize or even come down. I don't see any factors that suggest a significant change in trajectory at this point. It will all depend on a host of factors, like job growth, economic climate and more.

What’s Driving the Growth of the San Diego Housing Market?

The San Diego housing market has several key drivers that facilitate its robust performance:

1. Thriving Economy: San Diego's diverse economy, rooted in technology, defense, tourism, and healthcare, continues to draw new residents. The area boasts a low unemployment rate, which feeds directly into the demand for housing.
2. Job Growth and Stability: Continuous job creation in sectors like biotechnology and telecommunications contributes to a strong labor market, where employees often seek permanent housing solutions close to employment hubs.
3. Desirable Lifestyle: San Diego is renowned not just for its beautiful beaches but also for its natural parks, cultural attractions, and excellent schools. These factors enhance its appeal as a prime location, attracting families and professionals alike.
4. Low Housing Inventory: The fundamental supply-demand imbalance persists, with many would-be sellers hesitant to list their homes due to current market volatility. This limited inventory in San Diego further exacerbates competition among buyers, pushing home prices upward.
5. Population: Population growth and shifts in demographics can also impact the housing market. The San Diego area has been a desirable location for many years due to its weather, lifestyle, and job opportunities. A large population and new residents moving into the area can create a higher demand for homes, leading to an increase in housing prices.

What Does This All Mean for You?

If you are looking to buy, this market will likely be competitive, but with careful research and some patience you should be able to get a place at the price you want. It’s important to be prepared with pre-approval, have good financials, and work with a knowledgeable real estate agent. I believe that for long term buyers, it's still a good time to buy.

If you're thinking of selling, the data shows that the market favors you. Homes are still selling relatively quickly and at prices close to the asking price or even above it. I would advise you to consider whether it makes sense for you to sell and where you intend to move to.

In either scenario, it would be great to get advice from professionals such as agents, mortgage brokers, or financial planners.

My Final Thoughts

The San Diego housing market forecast points towards steady, moderate growth, rather than a boom or bust. While I do not expect any significant drop in the housing market prices, it’s essential to stay informed, work with professionals, and make sound financial decisions. This is a great area to live and will continue to be so for the foreseeable future.