San Diego Housing Market: Trends and Forecast 2025-2026

If you're wondering about the San Diego housing market trends, here's the scoop: While California's housing market is showing signs of cooling off, San Diego remains a relatively strong market. In May 2025, the median sold price for a single-family home in San Diego County was $1,050,000, which is up from $1,025,000 in May 2024. However, home sales have decreased slightly year-over-year. Let's dive into the details and see what's really going on.

San Diego Housing Market Trends: What's Happening in May 2025?

Home Sales in San Diego

The number of homes being sold is a key indicator of the housing market's health. Fewer sales can point to hesitation from buyers, while a surge in sales suggests high demand. So, how did San Diego do in May 2025?

While the median home price in San Diego went up, the number of homes sold actually decreased. This tells us that fewer people bought homes compared to last year, but those who did paid more on average.

• May 2025 Sales: Down 7.3% month-over-month (from April 2025)
• May 2025 Sales: Down 4.6% year-over-year (from May 2024)

Comparison with National Home Sales in the U.S. in May 2025

Nationally, home sales are also down. According to the National Association of Realtors (NAR), there was a 0.7% decrease year-over-year in May 2025. This indicates a general cooling trend in the U.S. housing market, but the drop is significantly less severe than the drop in CA.

Here's a quick look at how San Diego's home sales compare to national trends:

Area	Sales Trend (Year-over-Year)
San Diego	-4.6%
United States	-0.7%

This table makes it clear that San Diego's housing market is experiencing a more significant slowdown in sales compared to the national average.

Home Prices in San Diego

Okay, so sales are down a bit, but what about prices? This is where things get interesting.

• May 2025 Median Price: $1,050,000
• April 2025 Median Price: $1,015,000
• May 2024 Median Price: $1,025,000

These numbers show a few things. First, the median price increased from April to May 2025, indicating a month-over-month rise. Second, the median price in San Diego also increased compared to May 2024, meaning homes are generally more expensive than they were a year ago.

Are Home Prices Dropping?

The short answer is no, not really. While the overall California median home price dipped slightly (-0.9% year-over-year), San Diego's home prices are still on the rise. The California Association of Realtors (C.A.R.) reports that the statewide median home price in May 2025 was $900,170, down from $908,000 in May 2024. This statewide dip is influenced by various factors like higher interest rates and economic uncertainty, but San Diego's housing market seems to be holding its own.

Comparison with Current National Median Price in the U.S.

The national median home price in May 2025 was $422,800, a 1.3% increase year-over-year. San Diego's median home price is significantly higher than the national average. This highlights just how competitive and expensive the San Diego real estate market is.

Here's a comparison table:

Area	Median Home Price (May 2025)	Year-over-Year Change
San Diego	$1,050,000	+2.4%
United States	$422,800	+1.3%

Housing Supply in San Diego

How many homes are actually available for sale? This is what we call “housing supply,” and it plays a big role in setting home prices.

• Unsold Inventory Index (UII) May 2025: 3.4 months
• Unsold Inventory Index (UII) April 2025: 2.9 months
• Unsold Inventory Index (UII) May 2024: 2.4 months

The UII tells us how long it would take to sell all the homes currently on the market at the current sales rate. A higher number means there's more supply. The UII is up in San Diego, indicating that there are more homes available compared to both last month and last year. However, it's still relatively low compared to historical averages, meaning supply is still tight.

• Median Days on Market (May 2025): 18 days
• Median Days on Market (May 2024): 12 days

Homes are staying on the market longer than they did last year, but 18 days is still a very quick turnaround, especially in real estate.

Is San Diego a Buyer's or Seller's Housing Market?

Given these numbers, it's still leaning towards a seller's market in San Diego, though it's becoming more balanced. A seller's market means there are more buyers than homes available, giving sellers the upper hand. While inventory is increasing, it's not enough to dramatically shift the power to buyers just yet.

Market Trends Affecting San Diego Housing

Several factors are influencing the San Diego housing market, both locally and nationally.

Impact of High Mortgage Rates

Mortgage rates play a HUGE role in home affordability. When rates are high, it costs more to borrow money, which can discourage buyers.

• Current 30-year Fixed Mortgage Rate (June 26, 2025): Around 6.77%
• Current 15-year Fixed Mortgage Rate (June 26, 2025): About 5.89%

According to Freddie Mac, these rates have been relatively stable since mid-April 2025, fluctuating within a narrow range. Most experts predict that 30-year fixed mortgage rates will end 2025 between 6.0% and 6.5%.

The fact that mortgage rates are holding steady provides some comfort. Buyers can at least plan knowing that a drastic increase in rates isn't likely in the short term. While high mortgage rates can still affect sales, the stability gives buyers a sense of consistency.

Here's a table summarizing the mortgage rate forecast:

Mortgage Type	Current Rate (June 2025)	Expected Rate (End of 2025)
30-Year Fixed	~6.77%	6.0% – 6.5%
15-Year Fixed	~5.89%	(Rate not projected)

Other Market Trends

• Consumer Sentiment: According to C.A.R., consumer sentiment about buying a home is improving. More people (26% in May 2025) believe it's a good time to buy, which is the highest level since February 2022.
• Listing Activity: New active listings are up year-over-year, giving buyers more choices. However, the growth rate of new listings is slowing down, which could mean that housing supply will plateau in the coming months.
• Sales-Price-to-List-Price Ratio: This ratio was 100% in May 2025, meaning that homes are selling for their asking price on average. This further supports the idea that is still more beneficial for Sellers.

My Thoughts on the San Diego Housing Market

From my perspective, the San Diego housing market is going through a period of adjustment. The red-hot market we saw a few years ago has cooled down, but it's far from a cold market. Prices are still relatively high compared to sales figures. The San Diego market is facing a unique challenge, as inventory constraints in the area, coupled with high interest rates, are making things tougher for potential buyers.

If you're looking to buy in San Diego, be prepared for competition, but also take advantage of the increased inventory. Don't be afraid to negotiate, and work with a real estate agent who knows the local market well.

For sellers, it's still a good time to sell, but it's crucial to price your home competitively and make it appealing to buyers.

Ultimately, I believe the San Diego housing market will remain relatively stable in the coming months, with modest price increases and a gradual increase in inventory. However, keep an eye on those mortgage rates, as they will continue to be a key driver of market activity.

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.

 

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.