San Diego Real Estate Update

After years of rapid-fire sales and ultra-low inventory, San Diego’s real estate market has shifted into a more balanced, buyer-friendly pace. The number of homes available has grown significantly—up 62% compared to last year—creating an opportunity for buyers not seen since 2019. With fewer multiple-offer situations and longer market times, today’s buyers have choices and time to reflect on each home choice for the first time in years!

Home values remain resilient, with the Freddie Mac Home Price Index reporting a 5% year-over-year price increase in San Diego County. And while buyer demand has been subdued, history tells us that won’t last long.

What’s Next for the Market?

Right now, the market is experiencing what the picture above reflects: the calm before the storm. The biggest driver of change will be mortgage rates. As of today, rates have improved from February’s peak of 7.13% to 6.70%, as Kip Davis reports below. But the real shift will come when they drop closer to 6% or below.

A rate drop of just 1% translates to significantly higher purchasing power. For example, a buyer targeting a $5,000 monthly payment at 7% could afford a $940,000 home, but at 6%, that budget increases to $1,042,500.

When rates hit this threshold, the flood of pent-up demand will be unleashed. Bidding wars will return, entry-level homes will see intense competition, and home values will rise accordingly. And I expect this because for the last 22 years, I've navigated San Diego's real estate market and experienced it first hand. It happen in 2024, when for 47 days between August 20 and October 3, rates dropped below 6.5% and we saw a signficant impact on demand. Rates jumped again at the end of September and remained elevated though the end of 2024, tampering demand.

Key Market Trends to Watch:

Active inventory is rising, but still 23% below the pre-pandemic average.
Buyer demand remains low—today’s pending sales are 76% lower than pre-COVID levels. This IS pent up demand!
Market time has slowed—homes are taking 70 days to sell, the longest time recorded for mid-March since tracking began in 2012.
Mortgage rate improvements will drive demand—buyers on the sidelines will re-enter the market when rates hit 6%.

What Does This Mean for Buyers and Sellers?

If you’ve been considering buying a home, now is the time to act. Once rates decline, competition will intensify, and today’s more balanced conditions will be a thing of the past.

For sellers, pricing strategically remains the key. While buyers currently have more options, correctly positioning your home in the market can lead to strong offers—especially before the next wave of buyer demand arrives.

Want to discuss how these market trends impact your real estate goals? Let’s connect!

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Noel Wheeler

REALTOR

619-890-2877

DRE#01373389