San Diego Housing Market: Trends and Forecast 2025-2026

The San Diego real estate market is showing some interesting movements, and if you’re thinking about buying or selling here, understanding these shifts is key. My take on the San Diego market update is that we’re seeing a market that’s regaining some balance, moving away from the frenzy of a few years ago but still holding its ground. In October 2025, California home sales hit their highest point since February, and while San Diego often follows state trends, we have our own distinct pulse.

We're not in a buyer's or seller's market that's completely lopsided; it feels like we're finding a comfortable middle ground, which can actually be a great situation for many. Let's dive into what the latest data tells us about the San Diego housing market.

San Diego Housing Market Update: What You Need to Know Right Now

Home Sales in San Diego: A Steady Climb

According to the California Association of Realtors (C.A.R.), across California in October 2025, we saw a 4.1% increase in existing, single-family home sales compared to the previous year. This is great news, reflecting a market that’s active and engaged. For Southern California specifically, sales improved by 5.6% year-over-year.

Now, let's zoom into San Diego. According to the data, San Diego County saw a 6.1% increase in sales from October 2024 to October 2025. While this might not sound as dramatic as some other counties, it's a solid upward trend. It tells me that people are still actively looking to buy homes here, and homes are indeed selling. This modest growth suggests a more sustainable pace than the sky-high numbers we saw during the peak of the market. It’s a healthy sign that the market is finding its footing.

Home Prices: Holding Strong, But With Nuances

The statewide median home price saw a slight dip of 0.2% year-over-year in October 2025, settling at $886,960. However, Southern California as a whole experienced a modest 1.1% price uptick. This is where San Diego shows a bit of a different story.

In San Diego County, the median home price in October 2025 was $985,000. This is a 2.5% decrease from October 2024, when the median price was $1,010,000. While this might look concerning at first glance, it’s important to remember that median prices can fluctuate based on the mix of homes sold. If more of the homes sold were in lower-priced neighborhoods or were smaller in size compared to the previous year, it can bring the median down, even if individual home values haven't fallen drastically.

From my perspective, this isn't necessarily a sign of a market crash. It's more of a recalibration. We’re seeing prices stabilize after a period of rapid appreciation. This can actually be beneficial for buyers who were priced out before, and it helps sellers set more realistic expectations. The San Diego real estate market is still a premium market, and while prices might adjust, they are generally robust.

Housing Supply: A Slowing Growth

One of the biggest factors influencing any market is the housing supply. Statewide, the Unsold Inventory Index (UII) was 3.2 months in October 2025, which is slightly up from 3.1 months in October 2024. This indicates that while there are more homes available than last year, the growth in inventory is slowing down.

For Southern California, the UII was 3.3% in October 2025, unchanged from a year ago. In San Diego County, the UII was 2.9%, also essentially unchanged from 2.8% in October 2024. This stability in inventory levels is significant. It means that while sellers aren't facing the intense bidding wars of the past, they also aren't being overwhelmed with choices. For buyers, it means there are homes available, but they need to be prepared and act decisively once they find the right one. We're not drowning in homes for sale, but the tide is definitely not favoring sellers with an overwhelming advantage anymore.

This easing of inventory growth is a good sign for market health. It prevents prices from overheating and allows buyers a bit more breathing room.

Average Days on Market: A Return to Normal

The time it takes for a home to sell is a crucial indicator of market heat. Statewide, the median number of days to sell a single-family home increased to 32 days in October 2025, up from 25 days in October 2024. This shows a slight cooling in the speed of transactions.

In San Diego County, the median time on market in October 2025 was 25 days. This is a step up from 20 days in October 2024. While this indicates homes are staying on the market a bit longer, 25 days is still a relatively quick sale in the grand scheme of things. It’s a sign that the market is returning to more typical cycles, where homes don't vanish within days of listing. For buyers, this gives a little more time to consider their options and for sellers, it means they should price their homes competitively from the start.

Buyer's or Seller's Market? Finding the Balance

So, where does this leave us? Is it a buyer's market or a seller's market in San Diego? Based on the latest trends, I’d say we’re in a much more balanced market.

• Home Sales: Are up, showing consistent buyer interest.
• Home Prices: Have slightly softened year-over-year in San Diego, making them more approachable, but are still at a premium level.
• Housing Supply: Is stable, not excessively high or low.
• Days on Market: Have increased slightly, giving buyers more time to evaluate without the intense pressure of the past.

The statewide sales-price-to-list-price ratio was 98.3% in October 2025, meaning homes are generally selling just below their asking price. This is a stark contrast to when the ratio was well over 99.9%. This shift indicates that while sellers are in a good position, buyers have regained some negotiation power.

From my professional viewpoint, this is actually a positive development. A balanced market is often a more sustainable and healthier one. It means that both buyers and sellers can achieve their goals without facing extreme conditions. Buyers can find properties that meet their needs without dealing with multiple, escalating offers, and sellers can still expect fair market value for their homes.

Looking Ahead: What the Trends Suggest

As we move through the end of 2025 and into 2026, I anticipate these trends to continue. Mortgage rates have been a bit volatile, playing a role in buyer confidence. However, the underlying demand for housing in desirable areas like San Diego remains strong. The current San Diego market update suggests a period of steady activity, offering opportunities for those who are well-prepared and have a clear strategy.

San Diego Housing Market Forecast 2025: What's Next for Home Prices?

Now, let's dive right in: what's the San Diego housing market forecast looking like? Based on the latest data, it seems we might see a slight dip in home values in the coming months. Experts predict a slight dip in home values in the near future, but a “crash” is unlikely.

The San Diego-Carlsbad average home value is currently $941,517, showing a 1.6% decrease over the past year, with homes going pending in roughly 19 days. Let's dive deeper into what's influencing this forecast and what it could mean for you.

What the Experts are Saying:

Zillow's latest forecasts provide some insights into the coming months:

Timeframe	Predicted Change in Home Values
July 2025	-0.7%
September 2025	-2.1%
June 2025 – June 2026	-1.5%

This suggests a gradual cooling off of the San Diego housing market over the next year, but not a drastic decline.

How Does San Diego Compare?

Let's see how San Diego's housing market forecast stacks up against other major California metros:

Region	Predicted Change by July 2025	Predicted Change by September 2025	Predicted Change June '25 – June '26
Los Angeles, CA	-0.4%	-0.9%	-1.3%
San Francisco, CA	-1%	-3.2%	-6.1%
Riverside, CA	-0.5%	-1.3%	-0.9%
Sacramento, CA	-0.7%	-2.1%	-3.7%
San Jose, CA	-1%	-2.6%	-4%
Fresno, CA	-0.3%	-1%	-1.2%
Bakersfield, CA	-0.3%	-0.8%	-0.1%
San Diego, CA	-0.7%	-2.1%	-1.5%

As you can see, San Diego's projected decline is similar to other major California cities, suggesting a statewide trend towards slightly lower home values. San Francisco is seeing a more significant projected decline.

Nationwide Trends: What's Happening Across the US?

Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR), is quite optimistic for the future:

• Existing Home Sales: He expects a 6% rise in 2025 and a whopping 11% jump in 2026. That would be a great recovery!
• New Home Sales: Projected to increase by 10% in 2025 and 5% more in 2026. This will help with the low housing supply.
• Median Home Prices: Forecasted to rise by 3% in 2025 and 4% in 2026.
• Mortgage Rates: Expected to average 6.4% in the second half of 2025 and potentially drop to 6.1% in 2026. He calls low mortgage rates the “magic bullet” to increasing market activity.

So, Will Home Prices Crash in San Diego?

Based on the data and expert opinions, a housing market crash in San Diego seems unlikely. While Zillow predicts some moderate price softening in the short term, the overall market seems to be stabilizing. Demand remains relatively high, and experts are predicting positive growth over the long-term. Mortgage rates may come down in the future, which historically has pushed home prices up and made it easier for people to buy houses.

My Take:

I believe the San Diego housing market will likely experience a gentle correction rather than a crash. The area remains highly desirable. If mortgage rates drop as predicted, we could see a resurgence in buyer activity. If you're looking at buying, now might be a good time to get in while prices are slightly down. And for sellers, understanding these trends can help you price your home competitively.

Looking Ahead to 2026

Following the trends outlined by NAR, a reasonable forecast for the San Diego housing market in 2026 would be a period of moderate growth. We could see an increase in home sales and a continued, although slower, rise in median home prices assuming mortgage rates hold steady or decline as predicted. I expect housing inventory to start playing catch up with demand.

 

Why is Housing So Expensive in San Diego?

San Diego's allure is undeniable. Pristine beaches, perfect weather, and a vibrant city life make it a dream destination for many. But this paradise comes at a price, particularly when it comes to real estate. Let's delve into the factors driving San Diego's expensive housing market:

Limited Supply, High Demand

• Geography: Nestled between the Pacific Ocean and mountains, San Diego has limited developable land. This scarcity creates a competitive seller's market, pushing prices upwards.
• Desirable Location: San Diego's climate, job opportunities, and outdoor activities attract residents and retirees alike, placing constant pressure on a finite housing stock.

Economic Factors

• Strong Local Economy: San Diego boasts a diverse and thriving economy, fueled by a strong tourism industry, a growing tech sector, and a robust military presence. The economy grew in 2021, adding over $11 billion to its gross regional product (GRP) compared to pre-pandemic levels. In 2022, the San Diego metro area's real gross domestic product (GDP) was $257.34 billion, a significant increase from the previous year's $250.06 billion. According to the UCLA Anderson March Economic Outlook, San Diego County is expected to grow 2.7% in 2023. This economic strength translates to job growth and attracts professionals with higher salaries who can afford premium housing.
• Low Interest Rates (Historically): Over the past decade, interest rates have hovered near historic lows. This has significantly reduced the monthly mortgage payment for a fixed-rate loan, making homeownership more affordable for many buyers. For example, in 2016, the average 30-year fixed mortgage rate was around 3.5%. By 2 2021, that number had dipped below 3%, making it significantly cheaper to finance a home purchase. This easy access to cheap credit fueled a surge in buyer demand, which in turn drove up housing prices. While interest rates have risen in 2024, they remain historically affordable compared to long-term averages. However, even with slightly higher rates, the overall impact on affordability is mitigated by wage growth and a strong local economy.

Regulations and Taxes

• Development Restrictions: San Diego, like many coastal cities in California, faces challenges in balancing growth with environmental protection. Strict zoning regulations, lengthy permitting processes, and environmental impact reviews can significantly slow down or even halt new housing developments. This can stifle the ability to increase housing supply to meet the growing demand, putting upward pressure on prices. Additionally, citizen groups and environmental concerns can further complicate the development process. While these regulations are important for safeguarding the natural beauty and character of San Diego, they can also contribute to the limited housing inventory and high costs.
• Property Taxes: California has relatively high property taxes, with an average effective rate of 0.73% in 2023 according to the California Tax Foundation. This means that for a home valued at $1 million, the annual property tax bill would be around $7,300. High property taxes can impact affordability, particularly for first-time homebuyers or those on fixed incomes. However, these taxes also contribute to the overall perceived value of San Diego real estate. Property taxes are a major source of revenue for local governments, which use these funds to finance essential services like schools, roads, and public safety. Additionally, high property taxes can discourage speculation and absentee ownership, potentially leading to a more stable housing market.

National Trends

Nationwide Housing Market: While San Diego stands out, it's part of a larger national trend of rising housing costs. Investor activity and a national shortage of affordable housing contribute to the overall market dynamic.

The “Sunshine Tax”

San Diegans often jokingly refer to the high cost of living as the “sunshine tax.” While it might be a sardonic term, it reflects the reality that many people are willing to pay a premium to live in such a desirable location with a high quality of life.

How is the Rental Housing Market Doing in San Diego?

The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes.

The rental market will continue to grow as the city grows an estimated 500,000 population by 2050, adding tens of thousands each year. The median rent in San Diego is $2700. The rent you’d receive on single-family San Diego rental properties would, of course, be much higher.

Renters vs. Owners in San Diego

San Diego's property rental market is influenced by several factors, including the local economy, job opportunities, and the overall demand for housing. It's a city known for its mix of urban and suburban neighborhoods, each with its own rental and ownership dynamics.

San Diego had a diverse housing landscape with a mix of renters and property owners.

• Renters: San Diego has a significant population of renters, comprising individuals and families who lease residential properties. This includes apartments, condominiums, townhouses, and single-family homes. The exact percentage of renters relative to property owners can vary by neighborhood and demographic factors.
• Owners: San Diego also has a substantial number of property owners. These are individuals or entities who own residential properties and may either live in their properties or lease them out to renters. Property owners contribute to the diversity of the city's housing options.

Size of the Rental Market

The size of the San Diego property rental market is substantial, with a wide range of rental properties available to residents. This market includes apartments, houses, and various types of housing units. The exact size of the rental market can fluctuate based on factors like population growth, economic conditions, and housing development trends.

Real estate agencies, rental platforms, and government agencies often track and report on the status of the rental market, offering detailed insights into its size and dynamics.

For the most up-to-date and specific information regarding the current state of the San Diego property rental market, including the number of renters and property owners, it's recommended to refer to the latest reports and data from sources like local real estate associations, government housing agencies, and real estate websites.

San Diego's property rental market is an essential component of the city's real estate landscape, offering a wide range of housing options to its diverse population.

San Diego Apartment Rent Prices

As of July 2025, the median rent for all bedroom counts and property types in San Diego, CA is $2,800. This is +44% higher than the national average.

The monthly rent for an apartment in San Diego, CA is $2,499. A 1-bedroom apartment in San Diego, CA costs about $2,295 on average, while a 2-bedroom apartment is $2,928. Houses for rent in San Diego, CA are more expensive, with an average monthly cost of $4,150.

Rent prices for all bedroom counts and property types in San Diego, CA have remained the same in the last month and have decreased by 5% in the last year.

Housing Units and Occupancy

In terms of occupied housing units, San Diego has the following distribution:

• Renter-occupied Households: Renter-occupied households make up 53% of the housing units in San Diego, indicating a significant presence of renters in the city.
• Owner-occupied Households: Owner-occupied households account for 47% of the housing units, highlighting a balanced mix of homeowners in the area.

These insights provide a snapshot of the current rental market in San Diego. Rental prices have seen some fluctuations in recent months, with variations in different apartment types. The city offers a range of neighborhoods to suit different budgets and preferences, with a balanced mix of renters and homeowners.