San Diego Home Prices Fall 4th Month as Sales Hit Record Low
TL;DR
- San Diego home prices fell 0.85% year-over-year in September 2025—the fourth consecutive monthly decline
- County recorded only 20,504 home sales through September, tracking toward the slowest year on record since 1988
- Just 29% of homes are selling above asking price, down dramatically from 71% in April 2022
- Median single-family home price stands at $975,000, but only 15% of San Diegans can afford it
- Affordability crisis creates opportunities for sellers needing fast, certain transactions outside traditional market
San Diego's housing market is experiencing a historic slowdown that's reshaping how homes are bought and sold across the county. For the fourth consecutive month, home prices have declined, with September 2025 showing a 0.85% year-over-year decrease—a stark contrast to the double-digit appreciation rates seen just three years ago.
More concerning than the price decline is the virtual standstill in transaction volume. With only 20,504 home sales recorded through September, San Diego County is on track for its slowest year since records began in 1988. Even the pandemic-affected years of 2023 (25,317 sales) and 2024 (25,920 sales) saw more activity than the current trajectory.
"Affordability is the biggest constraint in the market right now," notes Lisa Sturtevant, chief economist at Bright MLS. This assessment captures the fundamental challenge facing both buyers and sellers: a median home price of $975,000 that only 15% of San Diego households can afford to purchase.
For homeowners facing urgent situations—whether inheritance, relocation, financial distress, or life transitions—this market dynamic creates unique challenges and opportunities that require understanding beyond traditional real estate strategies.
The Data Behind San Diego's Historic Market Slowdown
Price Decline Accelerates Across Metro Area
San Diego's 0.85% annual price decline in September 2025 places the metro area 15th among 19 major U.S. cities tracked by the Case-Shiller Index. This represents a significant shift from the region's historical position as one of the nation's hottest housing markets.
📊 About the Case-Shiller Index
The S&P CoreLogic Case-Shiller Home Price Index tracks changes in the value of residential real estate across 20 major U.S. metropolitan areas. It's considered the gold standard for measuring housing price trends and is widely used by economists and policymakers.
The median single-family home price of $975,000 reflects a market caught between sky-high valuations and drastically reduced buyer demand. To put this in perspective, the price-to-income ratio has reached 8.7 times the median household income of $112,933—ranking San Diego third worst among 100 major metropolitan areas nationwide, behind only Los Angeles/Orange County and San Jose.
💰 Understanding Price-to-Income Ratio
The price-to-income ratio divides median home price by median household income. A ratio of 8.7x means the typical home costs 8.7 times what the typical household earns annually. Financial experts generally consider ratios above 5x to indicate severe affordability problems.
Transaction Volume Plummets to Record Lows
The numbers tell a stark story of market paralysis:
| Metric | 2025 (Through Sept) | 2024 (Full Year) | 2023 (Full Year) |
|---|---|---|---|
| Total Home Sales | 20,504 | 25,920 | 25,317 |
| September Sales | 2,385 | 2,147 (Sept) | 2,100 (Sept) |
| Market Status | 4th slowest Sept since 1988 | Record low year | Previous record low |
This represents sales volume at approximately two-thirds of the activity seen in 2019, before the pandemic-era market surge. The current pace suggests 2025 will definitively become the slowest sales year in San Diego County's modern recorded history.
Bidding War Collapse: From Frenzy to Freeze
Perhaps no statistic better illustrates the market transformation than the collapse in homes selling above asking price. In September 2025, only 29% of homes sold above their list price—a dramatic reversal from April 2022's peak of 71%.
While this remains above the record low of 14% set in January 2015, the trend shows a market where sellers can no longer count on multiple competing offers to drive prices higher. For homeowners who need certainty and speed rather than maximum price, this shift has profound implications.
What's Driving the Affordability Crisis?
Income Requirements vs. Reality
The mathematics of San Diego homeownership have become nearly impossible for most residents. To afford the mortgage on a median-priced home, a household needs an income of $242,560—more than double the county's median household income of approximately $112,933.
This gap has widened dramatically:
- 2014: Required income approximately $95,000
- 2020: Required income approximately $124,000
- 2025: Required income $242,560
The average San Diego County household must now devote 51% of their monthly income to principal and interest payments alone. For someone earning the median household income, housing costs would consume more than 67% of their earnings—far exceeding the 30% threshold that financial advisors consider sustainable.
The K-Shaped Housing Market
📚 What is a K-Shaped Market?
A market where different segments move in opposite directions—like the two arms of the letter "K." In real estate, this means luxury properties continue appreciating while mainstream homes decline in value, creating a widening gap between market tiers.
San Diego's market has split into two distinct tiers, creating what economists call a "K-shaped" recovery pattern:
Upper Market (Homes $2M+)
- 68% of luxury buyers pay cash (NAR Luxury Report 2025)
- International buyers represent 35% of purchases above $3M (SDAR 2025)
- Properties continue selling at strong prices
- La Jolla median: $2.4M (up 6.3% year-over-year)
Mainstream Market (Under $2M)
- Sales volume at historic lows
- Extended time on market (45-75 days vs. 15-30 days in 2021)
- Price compression and declining appreciation
- Pacific Beach median: $1.3M (down 4.3% year-over-year)
This bifurcation means that market statistics often mask very different realities depending on price point, location, and property condition.
Mortgage Rates: Lower, But Not Low Enough
Despite mortgage rates declining to approximately 6.30% in late September 2025—down from peaks above 7%—the cost of borrowing remains elevated compared to the 3-4% rates common from 2020-2021. Combined with high home prices, even "improved" rates haven't unlocked significant buyer demand.
What This Market Means for San Diego Homeowners
Traditional Sales Face Extended Timelines
In today's market, selling through traditional channels means:
- Properties averaging 45-75 days on market
- Lower probability of multiple offers (only 29% sell above asking)
- Buyer inspection contingencies and financing delays
- Uncertain closing timelines that can extend 60-90 days
- Potential for deals to fall through due to financing issues
For homeowners in Pacific Beach, North Park, or other popular neighborhoods, this represents a dramatic shift from the seller's market of 2020-2022, when homes routinely sold within days of listing.
Situations Where Speed and Certainty Matter Most
The current market dynamics create particular challenges for homeowners facing:
Inherited Properties
When multiple heirs need to settle an estate, extended market timelines and uncertain closing dates complicate distribution planning. Properties requiring repairs or updates face additional buyer resistance in today's cautious market. Learn more about our inherited property solutions.
Relocation
Job transfers or life changes often operate on fixed timelines that don't align with 60-90 day traditional sale processes. In a slower market, the risk of carrying two mortgages increases significantly.
Financial Distress
With over 33 foreclosure auctions currently listed in San Diego County, homeowners facing pre-foreclosure have limited time windows to avoid auction. Traditional sales rarely close fast enough when the Notice of Default timeline is running. See our pre-foreclosure assistance.
Divorce Settlements
Property division during divorce requires certain valuations and timelines. In San Diego's current market, with median prices around $930,000-$975,000, delays can significantly impact settlement negotiations and equity distribution. Explore our divorce property solutions.
Property Condition Issues
Homes needing significant repairs face heightened buyer resistance when only 15% of residents can afford median-priced homes. Buyers with limited resources prioritize move-in ready properties.
The Cash Buyer Alternative
Cash home buyers have become an increasingly relevant option in San Diego's challenging market, offering:
- Rapid Closings: 7-14 day timelines vs. 60-90 days for traditional sales
- No Financing Contingencies: Eliminates most common reason for deal failure
- As-Is Purchases: No repairs, staging, or preparations required
- Certainty: Fixed terms not subject to appraisal or lender requirements
It's important to understand the tradeoffs: cash offers typically range 10-30% below traditional market value. This discount reflects the speed, certainty, and convenience provided—essentially a cost for eliminating time, risk, and preparation expenses.
For sellers prioritizing maximum price in a strong market, traditional sales make sense. For those prioritizing speed, certainty, or avoiding repair costs in today's slower market, cash sales offer a viable path forward.
Neighborhood-Specific Market Conditions
Coastal Communities: Pacific Beach and La Jolla
Pacific Beach
- Median price: $1.3M (down 4.3% year-over-year)
- Extended market times despite continued demand
- Properties still receiving multiple offers on well-priced listings
- Condo market particularly affected by affordability constraints
La Jolla
- Median price: $2.4M (up 6.3% year-over-year)
- Luxury segment continues performing well
- Cash buyers dominating high-end transactions
- Bifurcation even within neighborhood between luxury and mainstream properties
Urban Core: North Park and Downtown
North Park: Millennial buyers drawn to urban amenities. One-bedroom rentals averaging $2,650/month. Home prices maintain elevation despite overall market softness. First-time buyer affordability remains severe constraint.
Downtown San Diego: Condo market facing particular pressure. HOA fees compounding affordability challenges. Investor interest remains for cash-flowing properties.
Mid-County: Point Loma and Clairemont
These established neighborhoods continue attracting families but face the same affordability headwinds. Longer market times for properties needing updates. Strong demand for turnkey homes priced competitively. Inherited properties common in these mature neighborhoods.
What Experts Predict for San Diego's Market
Short-Term Outlook (Next 6-12 Months)
Economists and real estate analysts project:
- Continued Price Softness: Further modest declines likely as affordability constraints persist
- Low Transaction Volume: 2025's record-low sales unlikely to rebound quickly
- Stable Luxury Market: High-end properties ($2M+) continuing to perform independently
- Seasonal Variations Muted: Traditional spring/summer selling season impact may be minimal
Long-Term Factors (2026-2027)
Several structural factors will influence San Diego's market trajectory:
- Supply Constraints: Limited new construction continues restricting inventory, providing price floor
- Demographic Demand: Population growth and job creation maintain underlying demand pressure
- Affordability Crisis Resolution: Without significant income growth or price corrections, market paralysis could persist
- Interest Rate Sensitivity: Any mortgage rate improvements could rapidly unlock pent-up buyer demand
The New Normal
Many analysts suggest San Diego is transitioning from the extreme seller's market of 2020-2022 to a more balanced market with:
- Modest annual appreciation (3-6% vs. double-digits)
- Increased inventory providing buyer choice
- More negotiation leverage for buyers
- Longer, more traditional transaction timelines
This represents a healthier market dynamic long-term, even if the adjustment period feels painful for sellers who remember multiple-offer bidding wars.
Quick Facts: San Diego Housing Market 2025
| Fact Category | Details |
|---|---|
| Median Home Price | $975,000 (single-family homes, September 2025) |
| Price Change | -0.85% year-over-year (fourth consecutive monthly decline) |
| Sales Volume | 20,504 homes through September (slowest since 1988) |
| Above-Asking Sales | 29% (down from 71% in April 2022) |
| Affordability | Only 15% of San Diegans can afford median-priced home |
| Required Income | $242,560 to afford median home (vs. $112,933 median income) |
| Price-to-Income Ratio | 8.7x (3rd worst among 100 major metros) |
| Housing Cost Burden | 51% of monthly income for average household |
| Days on Market | 45-75 days (vs. 15-30 days in 2021) |
| Mortgage Rate | 6.30% (30-year fixed, September 2025) |
| Foreclosure Activity | 33 upcoming auctions in San Diego County |
| Market Ranking | 15th of 19 major metros in Case-Shiller Index |
Frequently Asked Questions
Why are San Diego home prices falling despite limited inventory?
While San Diego does have limited housing inventory relative to demand, the affordability crisis has effectively sidelined potential buyers. With only 15% of San Diego households able to afford the median-priced home of $975,000, and income requirements of $242,560 far exceeding the county's median household income of $112,933, there simply aren't enough qualified buyers to sustain previous price levels. Even with mortgage rates declining to 6.30%, the combination of high prices and elevated borrowing costs has created what economist Lisa Sturtevant calls the market's "biggest constraint."
How long will it take to sell a home in San Diego in 2025?
The current market sees properties averaging 45-75 days on market before accepting an offer, compared to 15-30 days during the 2020-2022 seller's market. However, this is just the time to contract—adding in inspection periods, financing contingencies, and closing typically extends the total timeline to 60-90 days from listing to closing. Properties in desirable locations like Pacific Beach or La Jolla may sell faster, while homes needing repairs or in less sought-after areas can take significantly longer. For homeowners needing faster sales, cash buyers can typically close in 7-14 days.
Should I wait to sell until the San Diego market improves?
This depends entirely on your individual circumstances. If you can afford to wait and don't need immediate liquidity, waiting for better market conditions could maximize your sale price. However, consider that economists predict continued price softness and low transaction volume through 2025-2026, with no guarantee of when or if we'll return to the seller's market conditions of 2020-2022. If you're facing foreclosure, divorce, inheritance settlement, relocation, or other time-sensitive situations, waiting may not be realistic. Additionally, carrying costs (mortgage, taxes, insurance, maintenance) while waiting can quickly erode any potential price gains.
What's the difference between selling to a cash buyer vs. a traditional buyer?
Traditional Buyer (through MLS):
- Timeline: 60-90 days from listing to closing
- Potential price: Closer to market value (but only 29% sell above asking)
- Requirements: Repairs, staging, showings, inspections
- Risk: Deals can fall through due to financing, appraisal, or inspection issues
- Costs: Agent commissions (typically 5-6%), repairs, holding costs during sale process
Cash Buyer:
- Timeline: 7-14 days from offer to closing
- Potential price: Typically 10-30% below market value
- Requirements: Sell as-is, no repairs or preparations needed
- Risk: Minimal—no financing contingencies to fail
- Costs: No agent commissions, but lower sale price
The right choice depends on whether you prioritize maximum price (traditional) or speed and certainty (cash buyer).
How does the affordability crisis affect different San Diego neighborhoods?
The affordability crisis impacts San Diego's neighborhoods unevenly, creating what economists call a "K-shaped" market. Luxury areas like La Jolla (median $2.4M) continue seeing price appreciation of 6.3% year-over-year, with 68% of buyers paying cash. Meanwhile, more affordable coastal areas like Pacific Beach ($1.3M median) have seen prices decline 4.3%. Mid-market neighborhoods in Point Loma, Clairemont, and North Park face the greatest affordability pressure, as these historically middle-class areas now require incomes far exceeding regional medians. Properties needing updates face particular buyer resistance, while turnkey homes in desirable school districts still command premium prices.
What happens if I inherit a property in San Diego's current market?
Inheriting property in San Diego's current market presents unique challenges. With median prices at $975,000 and sales taking 60-90 days through traditional channels, settling estates becomes complex when multiple heirs are involved or when the property requires repairs. California's probate process can extend timelines further. Many inherited properties—particularly in established neighborhoods like Point Loma, Clairemont, or older areas of Pacific Beach—need updating to appeal to today's cautious buyers. Estate executors often choose cash sales to: (1) close quickly and distribute proceeds to heirs, (2) avoid repair costs that estates may not have liquidity to cover, and (3) eliminate ongoing carrying costs (property taxes, insurance, utilities, maintenance) while the property sits on market. California law provides a 3-day cancellation right on cash home purchases, ensuring heirs have time to review all terms.
Conclusion
San Diego's housing market in 2025 represents a historic inflection point—the fourth consecutive month of price declines, the slowest sales year since records began in 1988, and an affordability crisis that has effectively locked out 85% of county residents from homeownership.
For homeowners navigating this market, understanding your options matters more than ever. Traditional sales offer the potential for maximum price but require time, preparation, and tolerance for uncertainty. Cash sales provide speed and certainty at a discounted price point—a tradeoff that makes sense for many facing inheritance, relocation, financial distress, divorce, or properties needing significant repairs.
The data is clear: San Diego's market has fundamentally shifted from the frenzy of 2020-2022. Whether you're in Pacific Beach, La Jolla, North Park, or anywhere across San Diego County, success in today's market requires realistic expectations, clear priorities, and often, creative solutions that match your specific timeline and circumstances.
If you're facing a time-sensitive situation or wondering whether a cash sale might fit your needs, understanding your options costs nothing. San Diego Fast Cash Home Buyer provides free, no-obligation consultations with complete transparency about the process, pricing, and your California consumer rights—including the mandatory 3-day cancellation period.
Your home. Your timeline. Your decision. In a market this complex, having choices matters.
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