Thinking about buying or selling a home in sunny San Diego? You're probably wondering what the future holds for the San Diego housing market forecast for the next 2 years, 2025 to 2026. The short answer is: experts predict a slight dip followed by modest growth. While some expect prices to continue to be a little rocky, more brighter days are on the horizon thanks to predicted drop in mortgage rates. Let's dive into the details and see what the data tells us!
San Diego Housing Market Forecast for the Next 2 Years – What's Ahead?
Key Takeaways
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.
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:
- 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.
- 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.
- 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.
- 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.
- 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's Happening in the Market Right Now?
Before we look into the future, let's see where we stand today. According to Zillow, as of May 31, 2025, here's a snapshot of the San Diego-Carlsbad housing market:
- Average Home Value: $945,140 (down 0.6% over the past year)
- Homes for Sale: 7,473
- New Listings: 2,896
- Median Sale to List Ratio: 1.000 (homes are selling for about the asking price)
- Median Sale Price: $893,333
- Median List Price: $946,000
- Percent of Sales Over List Price: 40.6%
- Percent of Sales Under List Price: 44.6%
- Median Days to Pending: 17 (how long it takes to get an offer accepted)
This data tells me a few things. While average home values are slightly down, homes are still selling relatively quickly. And although slightly less than half are selling for under the listed price, a big chunk sells for more. This suggests that demand is still pretty strong in certain areas.
San Diego Housing Price Forecast: A Slight Dip Before a Potential Climb
Zillow's forecast offers a more detailed look into the coming months. Here's what they're predicting for the San Diego, CA metropolitan statistical area (MSA):
| Timeframe | Predicted Change |
|---|---|
| By June 30, 2025 | -0.6% |
| By August 31, 2025 | -1.4% |
| May 2025 to May 2026 | -0.9% |
What does this mean? Zillow anticipates that home values in San Diego will likely continue to dip by 0.6% by the end of June 2025. Looking further, they expect the market to dip a further 1.4% by end of August 2025. From there, the forecast is for values to decrease by about -0.9% from May 2025 to May 2026.
How Does San Diego Compare to Other California Cities?
It's always helpful to see how San Diego stacks up against other major California markets. Here's a comparison based on Zillow's forecasts:
| City | Predicted Change by June 30, 2025 | Predicted Change by August 31, 2025 | Predicted Change from May 2025 to May 2026 |
|---|---|---|---|
| Los Angeles | -0.3% | -0.4% | -0.8% |
| San Francisco | -0.8% | -2.4% | -5.5% |
| Riverside | -0.2% | -0.6% | -0.2% |
| Sacramento | -0.5% | -1.4% | -3.1% |
| San Jose | -1.0% | -2.4% | -3.8% |
| Fresno | -0.1% | -0.3% | -0.5% |
| San Diego | -0.6% | -1.4% | -0.9% |
San Diego falls somewhere in the middle of the pack. San Francisco and San Jose are anticipating more significant drops than San Diego. Places like Riverside and Fresno are expected to stay a bit more stable.
What About the National Picture?
What's happening across the nation also impacts our local market. Lawrence Yun, the Chief Economist for the National Association of Realtors (NAR), is optimistic, suggesting that “brighter days may be on the horizon”. Here's a rundown of his key projections:
- Existing Home Sales: Expected to rise 6% in 2025 and accelerate by 11% in 2026.
- New Home Sales: Projected to climb by 10% in 2025 and an additional 5% in 2026.
- Median Home Prices: Forecasted to increase modestly, with a projected rise of 3% in 2025 and 4% in 2026.
- Mortgage Rates: Anticipated to average 6.4% in the second half of 2025 and dip further to 6.1% in 2026.
A national forecast of rising sales and stabilized prices suggests that the current slowdown could be temporary. If mortgage rates do indeed drop, many more buyers could come into the market, boosting demand.
So, Will Home Prices Crash in San Diego?
Based on the data I've seen, a crash seems unlikely. While prices might soften a bit, the overall trend points to moderate adjustments rather than a dramatic collapse. Several elements are in play right now in the market, like limited listing inventory which will keep things more stable.
My San Diego Housing Market Prediction for 2025-2026
Taking everything into account, here's my take on the San Diego housing market forecast for the next 2 years:
- Rest of 2025: Expect a slight cooling period, with home prices potentially dipping a bit further. The market will likely continue to favor buyers to some degree due to increased inventory.
- 2026: As mortgage rates potentially decrease, expect to see increased buyer activity. This could lead to increased competition and modest price increases.
Ultimately, location matters. Some neighborhoods will always be in higher demand than others. Talking to a local real estate expert can give you a clearer picture of what's happening in your specific area of interest.
Disclaimer: Housing market forecasts are never a guarantee. They are based on current data and trends, which can shift over time. Always do your own research and consult with qualified professionals before making any real estate decisions.
Recommended Read:
- San Diego Housing Market: Prices, Trends, Forecast
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- Is San Diego Real Estate a Good Investment?
