San Diego Home Prices Drop 4 Months Straight: What It Means for Homeowners

The Numbers Tell a Sobering Story

Price Declines Accelerate

San Diego's median single-family home price currently stands at $975,000 as of September 2025. Neighborhoods like Pacific Beach and La Jolla have seen similar trends. While this figure remains staggering by national standards, the trajectory concerns many homeowners. The region now ranks 15th among 19 major U.S. cities tracked by the S&P Case-Shiller Index—a dramatic fall from being one of the fastest-growing markets just months earlier.

Nicholas Godec, managing director at S&P Dow Jones Indices, put it bluntly: "With mortgage rates stubbornly elevated and affordability at multi-decade lows, the market appears to be settling into a new equilibrium" of minimal price growth or outright decline in some areas.

Sales Volume Hits Historic Lows

Perhaps more concerning than price declines is the collapse in transaction volume. Through September 2025, only 20,504 homes sold in San Diego County—putting the year on pace to become one of the slowest since comprehensive record-keeping began in 1988.

This isn't just a seasonal slowdown. Homes are sitting on the market longer, with the median days on market climbing to 25 days in October 2025, up from 20 days the previous year. In some segments, like downtown San Diego condos, the average days on market has surged to 61 days—a nearly 97% increase. Buyers in areas like North Park are now taking their time to negotiate.

The Affordability Crisis Deepens

Lisa Sturtevant, chief economist at Bright MLS, identified the root cause: "Affordability is the biggest constraint in the market right now." The numbers back up her assessment:

• Only 15% of San Diego residents can afford a median-priced home
• Mortgage rates averaged 6.30% in late September 2025, with current rates still hovering around 6.7%
• A $900,000 mortgage now costs nearly $5,800 per month, compared to about $3,794 when rates were at 3%

This affordability squeeze has created what economists call a "K-shaped market"—luxury properties above $2 million continue selling briskly (with 68% of buyers paying cash), while mid-range homes struggle to find buyers. For more context on San Diego's affordability challenges, see our analysis of why only 15% of San Diegans can afford a home.

What This Market Shift Means for You as a Seller

Pricing Expectations Must Change

The days of multiple offers and bidding wars have largely disappeared for most sellers. With only 29% of homes now selling above asking price, overpricing your property can be costly. Homes that linger on the market develop a stigma, often forcing deeper price cuts down the line.

If you need to sell—whether due to job relocation, financial pressure, divorce, or inheritance—understanding current market realities is essential. The market won't wait for your number. It will only pay what buyers can afford at today's interest rates.

Time on Market Matters More Than Ever

Every additional day your home sits unsold carries costs: mortgage payments, property taxes, insurance, utilities, and maintenance. In a declining market, time also means potential price erosion. What seems like a small monthly decline of 0.85% annually translates to meaningful dollars on a $975,000 home.

For sellers who need certainty—those facing foreclosure, dealing with inherited property, or relocating for work—the traditional listing process feels increasingly risky. Can you afford to wait 41 days (the current San Diego average) or longer? What if the buyer's financing falls through? What if the appraisal comes in low?

The Appraisal Gap Problem

In a declining market, appraisal issues become more common. Here's why: when you accept a financed offer, the lender orders an appraisal to confirm the home's value supports the loan amount. If prices are falling, appraisers increasingly use recent lower-priced comparables.

When the appraisal comes in below the purchase price, three things can happen:

1. The buyer brings more cash to close (unlikely in this affordability-constrained market)
2. You reduce your price to match the appraisal
3. The deal falls apart, and you start over

None of these outcomes favor sellers who need certainty.

Why Cash Offers Make Sense in This Market

Speed and Certainty

Cash transactions eliminate the most common reasons deals fall apart: financing denials, appraisal gaps, and lengthy underwriting processes. While traditional financed sales take 30-45 days (or longer), cash purchases can close in as little as 7-14 days.

In 2024, cash transactions represented nearly 39% of all single-family home and condo sales nationwide—the highest share since 2013. This trend reflects both the challenges of obtaining financing in a high-rate environment and the value buyers place on transaction certainty.

No Appraisal Contingency

Cash buyers typically waive the appraisal contingency entirely. Why? Because they're not answering to a lender. This eliminates the appraisal gap problem that's torpedoing an increasing number of financed deals in declining markets.

For sellers, this means the agreed-upon price is the actual closing price—no last-minute renegotiations or deal collapses due to low appraisals.

Sell As-Is Without Repairs

In a slower market, financed buyers become more selective and demanding. Inspection contingencies often lead to lengthy repair negotiations or additional price reductions. Cash buyers, particularly those who specialize in as-is purchases, accept properties in their current condition.

This is especially valuable for sellers dealing with:

• Older homes needing significant updates
• Properties with deferred maintenance
• Inherited homes requiring extensive work
• Homes that don't meet lender standards (foundation issues, old electrical, etc.)

Fewer Contingencies Overall

Beyond financing and appraisals, cash offers typically include fewer contingencies overall—no loan approval timeline, no lender requirements, no bank underwriting delays. This simplicity reduces the chances something will derail your sale.

How to Sell Quickly in This Changing Market

Get a Realistic Assessment

Before listing or considering a cash offer, understand what your home is actually worth in today's market—not last year's market, not your neighbor's sale six months ago. Recent comparable sales and current active listings provide the most relevant data.

Consider Your Timeline and Priorities

Ask yourself:

• How quickly do I need to sell?
• Can I afford repairs and updates to maximize value?
• Am I willing to risk appraisal issues and financing fall-throughs?
• What's more important: potentially getting top dollar or certainty of close?

Your answers will guide whether a traditional listing or cash offer makes more sense.

Evaluate Cash Offers Carefully

Not all cash buyers are the same. Reputable cash home buyers:

• Provide no-obligation offers with transparent pricing
• Close on your timeline (often 7-14 days, but flexible)
• Cover typical closing costs
• Don't charge commissions or fees
• Have verifiable proof of funds
• Maintain clear communication throughout the process

Traditional Sale vs. Cash Offer: Running the Numbers

Consider a $975,000 home (San Diego's median price):

The difference may be smaller than you think—and that's before accounting for the risks of deals falling through in traditional sales, requiring you to start over at even lower prices.

Quick Facts

Frequently Asked Questions

Conclusion

San Diego's housing market has shifted decisively. Four consecutive months of price declines, collapsing sales volume, and severe affordability constraints signal a new reality for sellers. The frenzied bidding wars and easy sales of recent years have given way to a more challenging environment requiring strategic thinking.

For homeowners who need to sell—whether due to financial pressure, life changes, or simply a desire for certainty—understanding your options matters more than ever. Traditional listings may still work for pristine properties in prime locations with patient sellers. But for many, the speed, certainty, and simplicity of cash offers provide a compelling alternative.

The market won't wait. Prices that seem acceptable today may look optimistic six months from now. If you're considering selling your San Diego home, explore our cash offer services or review common questions to get a clear assessment of your options now.

Ready to explore a fast cash offer for your San Diego home? Contact San Diego Fast Cash Home Buyer for a no-obligation consultation. We provide fair, transparent offers and can close in as little as 7-14 days—on your timeline, with zero hassle.