San Diego Economists Predict Rising Unemployment & $920K Median Home Prices for 2026
Thirteen leading economists and business executives on the San Diego Union-Tribune's Econometer panel released their 2026 forecasts this week, painting a challenging picture for homeowners. The panel predicts unemployment rising to 4.7-5.5% while median home prices climb to $850,000-$975,000—creating a narrow window for sellers before economic headwinds intensify. With San Diego County's unemployment already at 4.6% as of November, the predicted increases could significantly shrink the buyer pool just as home prices remain near historic highs.
The Unemployment Squeeze: Fewer Qualified Buyers Ahead
The expert consensus is clear: unemployment will rise throughout 2026. UC San Diego economists Alan Gin and Austin Neudecker both predict 5.5%, while the panel average sits at approximately 5.1%—up from the current 4.6%. This matters because rising unemployment directly eliminates qualified buyers from the market. When buyers lose jobs or fear layoffs, they postpone home purchases entirely, tightening an already competitive seller's market. The current job market is stuck in "low-hire, low-fire" mode, with professional and business services shedding 6,200 positions and construction down 2,200 jobs annually. For homeowners in Pacific Beach, La Jolla, North Park, and Downtown San Diego—where median prices already exceed $1 million—the shrinking buyer pool could mean extended market times and increased negotiation pressure.
Home Prices: Still High Despite Economic Uncertainty
Despite unemployment concerns, the Econometer panel forecasts median home prices between $850,000 and $975,000, with an average prediction of $920,000—up from October 2025's $875,000 baseline. Scripps Health CEO Chris Van Gorder and USD professor Norm Miller both predict the high end at $975,000. This creates a paradox: prices remain elevated while the buyer pool contracts. Austin Neudecker, partner at Weave Growth, emphasizes that "housing inventory drives transactions, prices and time on market more than interest rates." For sellers, this means current conditions—before unemployment rises further—offer the best combination of pricing power and buyer availability. Cash buyers provide certainty in this environment, eliminating financing contingencies that become riskier when unemployment climbs and lenders tighten standards.
If you're concerned about the market shifting, consider reading our analysis on San Diego's housing reset or check out Pacific Beach market conditions to understand the broader trends affecting home sales.
Frequently Asked Questions
Why should I sell now instead of waiting until 2026?
The Econometer panel predicts unemployment rising from 4.6% to 4.7-5.5% throughout 2026, which will reduce the pool of qualified buyers. Selling now while buyer competition remains stable gives you leverage before economic conditions deteriorate. Cash buyers eliminate the risk of financing fall-throughs that increase when unemployment rises.
Will home prices drop if unemployment increases?
Economists predict median home prices will remain in the $850,000-$975,000 range despite rising unemployment, with an average forecast of $920,000. However, higher unemployment typically extends days on market and reduces buyer competition, making cash offers more attractive as traditional financing becomes harder to secure.
How does rising unemployment affect Pacific Beach and La Jolla home sales?
High-cost neighborhoods like Pacific Beach (median $1.25M) and La Jolla are particularly vulnerable to unemployment-driven buyer pool contraction. When unemployment rises, buyers at the higher price points often exit the market first, as they face stricter lending requirements and larger down payment hurdles. Cash buyers provide a stable exit strategy regardless of economic conditions.