If you're thinking about buying, selling, or just curious about what's happening in our sunny corner of California, you've come to the right place. Let's dive into the current San Diego housing market trends as of mid-May 2025. The quick takeaway? While things are always changing, right now the San Diego housing market is showing a mix of increased inventory but slightly softer prices compared to last year.
Current San Diego Housing Market Trends (Mid-May 2025)
Home Sales
Looking at the numbers for April 2025, we saw that home sales in San Diego County decreased compared to both March 2025 and April 2024. According to the California Association of REALTORS® (C.A.R.), San Diego experienced a significant 22.5% increase in sales from March to April, which seems like a positive jump. However, when we compare to last year (April 2024), there was a 9.4% increase. While the month-over-month increase is substantial, the year-over-year figure suggests a potential cooling trend after a very active month. This could be due to a variety of factors we'll explore.
Home Prices
Now, let's talk about what everyone really wants to know: home prices. In April 2025, the median sold price of an existing single-family home in San Diego County was $1,015,000. This is a decrease of 2.4% compared to March 2025 ($1,040,000) and a larger decrease of 3.1% compared to April 2024 ($1,047,500).
Are Home Prices Dropping in San Diego?
While we've seen a dip in the median home price in San Diego in April 2025 compared to both the previous month and the same time last year, it's important to be careful about saying prices are definitively “dropping.” Real estate markets are complex, and one month of data doesn't necessarily indicate a long-term trend.
However, the data does suggest a potential moderation in price growth we've seen in recent years. Several factors could be contributing to this, including higher mortgage rates giving buyers a bit more negotiating power and an increase in the number of homes available for sale.
Comparison with Current National Median Price
It's always helpful to see how our local market stacks up against the rest of the country. The current national median home price in March 2025 was $403,700, with a year-over-year change of +2.7%. As you can see, the median home price in San Diego ($1,015,000) is significantly higher than the national median. While the national market saw a slight price increase, San Diego experienced a year-over-year decrease in April. This highlights just how unique and often more expensive the Southern California housing market can be.
Housing Supply
Here's where things get interesting. The housing supply in San Diego County has seen a noticeable shift. The Unsold Inventory Index (UII), which measures how many months it would take to sell all the homes currently on the market at the current sales pace, was 2.9 months in April 2025. This is up from 2.2 months in April 2024.
This increase in UII tells us that there are more homes available for sale relative to the number of buyers compared to last year. The total active listings in April also rose year-over-year, marking the 15th consecutive month of annual gain in housing supply and reaching a 66-month high. This means buyers currently have more options to choose from than they have in quite some time.
Is San Diego a Buyer's or Seller's Housing Market?
Given the increase in housing supply and the slight softening of prices, the San Diego housing market is leaning towards a more balanced market compared to the strong seller's market we've experienced in recent years. While it's not definitively a buyer's market yet, buyers are likely finding they have a bit more time to make decisions and potentially more room for negotiation than they did a year ago. Sellers still hold an advantage due to overall demand, but the playing field is becoming a bit more level.
Market Trends
Several key market trends are shaping the San Diego housing market right now:
- Increased Inventory: As mentioned, the number of homes for sale is up, giving buyers more choices and potentially easing some of the intense competition we've seen.
- Price Moderation: While prices aren't plummeting, the rate of price growth has slowed, and we've even seen a slight year-over-year decrease in the median price.
- Slightly Longer Time on Market: Homes are taking a bit longer to sell. The median time on market for a single-family home in San Diego was 18 days in April 2025, up from 12 days in April 2024. This gives buyers more breathing room.
- Sales-Price-to-List-Price Ratio: The statewide sales-price-to-list-price ratio was 100 percent in both April 2025 and April 2024. This suggests that, on average, homes are still selling for their asking price. However, with increasing inventory, we might see this ratio dip slightly in the coming months as buyers gain more leverage.
Here's a quick look at some key San Diego County housing market data:
Metric | April 2025 | March 2025 | April 2024 |
---|---|---|---|
Median Sold Price | $1,015,000 | $1,040,000 | $1,047,500 |
Sales (Year-over-Year Change) | +9.4% | -22.5% | N/A |
Unsold Inventory Index (UII) | 2.9 months | 3.2 months | 2.2 months |
Median Time on Market | 18 days | 17 days | 12 days |
Impact of High Mortgage Rates
One of the biggest factors influencing the current San Diego housing market is the prevalence of high mortgage rates. As of mid-May 2025, the average 30-year fixed mortgage rate is around 6.76%, and the 15-year fixed-rate mortgage is about 5.89%. These rates are significantly higher than what we saw just a few years ago.
These elevated mortgage rates impact the market in several ways:
- Reduced Buyer Affordability: Higher rates increase the monthly cost of a mortgage, making it more difficult for some potential buyers to qualify for a home loan or afford the payments. This can lead to a decrease in buyer demand.
- Hesitation Among Buyers: Some buyers may be waiting on the sidelines, hoping that mortgage rates will come down before they make a purchase.
- Potential Impact on Home Prices: As buyer demand moderates due to affordability concerns, this can put downward pressure on home prices or at least slow down the rate of price appreciation.
While forecasts suggest that mortgage rates might end 2025 somewhere between 6.0% and 6.2%, they are still expected to remain relatively high. This will likely continue to be a significant factor shaping the San Diego housing market for the remainder of the year.
Looking Ahead
The San Diego housing market in mid-May 2025 presents a nuanced picture. We're seeing more homes available for sale, which is a welcome sign for buyers who have been facing limited inventory. While median home prices have experienced a slight dip year-over-year, it's not necessarily indicative of a major price correction. The continued presence of higher mortgage rates will likely play a significant role in keeping price growth in check and potentially leading to a more balanced market.
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.
Right now, the average San Diego-Carlsbad home value sits around $961,467. What's interesting is that homes are still moving relatively quickly, going pending in about 16 days. But what does the future hold? Let's break it down based on some credible forecasts.
A Look at the Short-Term: Mid-2025
According to Zillow's latest forecast, things might cool down a bit in the near future. Here's what they're predicting:
- By the End of May 2025: We could see a decrease of about 0.5% in home values.
- By the End of July 2025: The forecast suggests a further slight decrease, potentially reaching 1.2% lower than current values.
Now, these aren't massive drops, but they do indicate a potential shift in the market. Several factors could be at play here, including interest rates and overall economic conditions.
The Year Ahead: April 2025 to April 2026
Looking at a slightly longer timeframe, from April 2025 to April 2026, the forecast indicates a continued, though moderate, downward trend. Zillow predicts a decrease of around 0.7% in San Diego home values during this period.
How Does San Diego Compare to the Rest of California?
It's always helpful to see how our local market stacks up against other areas in California. Here's a quick comparison of the forecasted changes from April 2025 to April 2026:
California Region | Forecasted Change (Apr '25 – Apr '26) |
---|---|
Los Angeles, CA | -1.2% |
San Francisco, CA | -5.2% |
Riverside, CA | -0.1% |
San Diego, CA | -0.7% |
Sacramento, CA | -3.0% |
San Jose, CA | -3.8% |
Fresno, CA | -0.6% |
As you can see, while most major California markets are also anticipating some level of price decrease, San Diego's projected dip seems relatively moderate compared to places like San Francisco.
Will Home Prices Crash in San Diego? My Opinion.
Based on the data and my understanding of the market, I don't foresee a housing crash in San Diego. A crash typically involves a rapid and significant decline in prices, often fueled by unsustainable lending practices or major economic shocks. While we might see some price softening, the current forecast suggests a more gradual adjustment.
What About Beyond 2026?
It's always tricky to predict too far into the future, but several factors suggest that the long-term outlook for the San Diego housing market remains relatively stable. Our desirable location, strong job market (especially in tech and biotech), and limited housing supply are all factors that tend to support property values over the long run. However, interest rates and broader economic trends will undoubtedly play a significant role. My hunch is that after this period of slight correction, we'll likely see a more stable market, possibly with modest appreciation in the years following 2026.
San Diego-Carlsbad Housing Forecast
Reflects current market demand as of April 2025.
Homes are selling in around 16 days on average.
Active listings available as of April 2025.
New listings added in April 2025.
Sales price data as of March 2025.
Expected growth from April 2025 to April 2026.
“The San Diego-Carlsbad housing market remains strong, with increasing home values and steady demand as we look ahead.”
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 December 2024, the median rent for all bedroom counts and property types in San Diego, CA is $2,900. This is +53% higher than the national average.
The monthly rent for an apartment in San Diego, CA is $2,695. A 1-bedroom apartment in San Diego, CA costs about $2,460 on average, while a 2-bedroom apartment is $3,321. Houses for rent in San Diego, CA are more expensive, with an average monthly cost of $4,000.
Rent prices for all bedroom counts and property types in San Diego, CA have decreased by 3% in the last month and have increased by 2% 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 48% of the housing units, highlighting a balanced mix of homeowners in the area.
Affordable and Expensive Neighborhoods
San Diego's neighborhoods offer a range of rental prices, making it accessible for various budgets:
The Most Affordable Neighborhoods:
- Bay Park: The average rent in Bay Park is $2,135 per month.
- University Heights: In University Heights, the average rent is around $2,200 per month.
- North Park: North Park offers an average rent of approximately $2,273 per month.
The Most Expensive Neighborhoods:
- Carmel Valley: Carmel Valley is one of the more expensive neighborhoods, with an average rent of $2,942 per month.
- Mission Valley East: In Mission Valley East, the average rent can go for $2,894 per month.
- Mission Beach: Mission Beach has an average rent of $2,850 per month.
Popular Neighborhoods
Some neighborhoods in San Diego are particularly popular among renters:
- Mission Beach: Mission Beach tops the list with 1,115 listings, making it a sought-after area for renters.
- Pacific Beach: Pacific Beach is also a popular choice, offering 760 listings for prospective renters.
- Ocean Beach: Ocean Beach features 295 places for rent, making it a vibrant neighborhood for renters.
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.
Recommended Read:
- Is San Diego’s Housing Getting Very Expensive: Experts Predict
- San Diego Housing Market Booms With 9.4% Growth: Expert Predictions
- San Diego Housing Market Predictions: Soaring and Expensive!
- San Diego Housing Market Predictions: Prices Skyrocket 11.4%; What's Next?
- Is San Diego Real Estate a Good Investment?