San Diego Housing Market Cools: What 41 Days on Market Means for Sellers

The San Diego housing market is experiencing a notable shift as we close out 2025. After years of rapid sales and soaring prices, homes are now taking significantly longer to sell, and prices are showing their first meaningful decline in recent memory. For homeowners considering selling, understanding these changes is crucial to making informed decisions about timing, pricing, and sales strategy.

After experiencing one of the most competitive real estate markets in the country, San Diego is showing clear signs of cooling. According to recent data from Redfin, the median home sale price in San Diego has declined to $930,000, representing a 2.1% decrease compared to last year. More significantly, the time it takes to sell a home has increased by 46%, with properties now spending an average of 41 days on the market compared to just 28 days in 2024.

For context, San Diego County's median home price reached $985,000 in October 2025, down from $1,010,000 in October 2024—a 2.5% decline that confirms the broader cooling trend. This market recalibration affects different neighborhoods differently, with coastal areas like La Jolla maintaining premium pricing while other neighborhoods see more significant adjustments.

What does this mean for homeowners? Whether you're planning to sell soon or just watching the market, these changes signal a fundamental shift in how homes are bought and sold in America's Finest City.

Understanding the Numbers: What the Data Reveals

Median Price Decline: Context Matters

The 2.1% year-over-year decline in median home prices might seem modest, but it represents a significant psychological shift in a market that has seen nearly uninterrupted appreciation for years. At $930,000, San Diego homes remain expensive by national standards, but the downward trend indicates that buyer demand has moderated.

According to the California Association of Realtors, only 13% of San Diego County households could afford to purchase the median-priced home in the third quarter of 2025. This affordability crisis continues to constrain demand, even as prices begin to soften.

The median price per square foot has declined 3.6% year-over-year to $674, suggesting that price pressures are widespread rather than concentrated in specific property types or neighborhoods.

Days on Market: The New Reality

Perhaps the most telling statistic is the 46% increase in days on market. When homes lingered for just 28 days last year, sellers enjoyed multiple offers and above-asking prices. Now, with an average of 41 days on market, the balance of power has shifted.

This extended timeline reflects several factors:

• Increased Inventory: Housing supply has grown 47% year-over-year, giving buyers more options and reducing urgency. With 3.2 months of inventory available, buyers can take their time evaluating properties.
• Buyer Caution: Economic uncertainty and mortgage rates hovering around 6.3% have made buyers more selective. They're conducting thorough inspections, requesting repairs, and negotiating terms more aggressively.
• Realistic Expectations: The days of waiving inspections and offering significantly above asking price are largely over. Buyers expect fair pricing and are willing to walk away if terms don't meet their standards.

Price Reductions: A Market Correction

The fact that 34% of listings now have price reductions—up 2.9 percentage points from last year—tells a critical story about seller expectations versus market reality. Many sellers are initially listing at prices that reflect the heated market of 2023-2024, only to discover that today's buyers won't pay those premiums.

Data shows that 49% of homes in San Diego sold below their original list price as of March 2025, a dramatic shift from the seller's market where properties routinely sold above asking. The average sale-to-list price ratio has declined to 98.7%, down 0.38 points year-over-year.

Neighborhood-Level Analysis: Where the Impact Hits Hardest

The market cooling isn't uniform across San Diego County. Understanding neighborhood-level dynamics is essential for sellers pricing their properties.

Coastal Premium Neighborhoods

La Jolla continues to command premium prices, with median values around $2.5 million—actually up 5% from the previous year. The luxury coastal market remains relatively insulated due to limited inventory and wealthy buyer demographics less sensitive to mortgage rate fluctuations. Premium locations still sell in under 20 days when properly priced.

Pacific Beach and Ocean Beach show a mixed picture. While these neighborhoods produced only a small fraction of new housing supply, their appeal to renters and young professionals keeps demand steady. Two-bedroom rentals in Pacific Beach average $3,500 per month, supporting property values.

Urban Core Neighborhoods

North Park, Downtown, Bankers Hill, and Hillcrest have seen the highest concentration of new housing development following zoning changes that allowed higher-density construction. This increased supply has put moderate downward pressure on prices, though these walkable neighborhoods remain attractive to millennials and professionals.

One-bedroom units in North Park average $2,650 per month for rentals, reflecting strong demand for urban living with access to boutique dining and nightlife.

Mid-Tier Suburban Areas

Middle-market neighborhoods are experiencing the most significant impacts, with properties taking 30-40 days to sell compared to premium areas. Price reductions are more common here, as sellers adjust to new market realities.

What's Driving the Slowdown?

Mortgage Rate Dynamics

Mortgage rates remain the single biggest factor constraining buyer demand. While rates have declined from a high of 7.04% in January 2025 to approximately 6.3% currently, they remain significantly elevated compared to the 3-4% rates many existing homeowners enjoy.

This creates a "lock-in effect": homeowners with low mortgage rates are reluctant to sell and take on higher borrowing costs. As a result, just 1.6% of San Diego homes changed hands in the first nine months of 2025, continuing the very low turnover rate trend. Some analysts expect rates to gradually trend toward 5.5-6% by late 2026, but significant volatility remains possible.

Affordability Constraints

With only 13% of San Diego households able to afford the median-priced home, the pool of qualified buyers remains limited. Even as prices soften slightly, the combination of high home values and elevated mortgage rates keeps homeownership out of reach for many working families.

The average home value in San Diego was $1,027,000 in mid-2025, requiring substantial income and down payment reserves. For high-cost areas, the conforming loan limit is $1,077,550, pushing many buyers into jumbo loan territory with stricter qualification requirements.

Economic Uncertainty

Broader economic concerns continue to weigh on buyer sentiment. Inflation, job market uncertainties, and global economic conditions make potential buyers hesitant to commit to major financial decisions. Many are choosing to delay home purchases until they have greater clarity about economic direction.

Strategic Options for San Diego Homeowners

If you're considering selling in this evolved market, you have several strategic paths forward. The right choice depends on your timeline, financial situation, and tolerance for uncertainty.

Option 1: Traditional Sale with Adjusted Expectations

If you're not in a hurry and want to maximize sale price, the traditional route remains viable—with important adjustments:

• Competitive Pricing: Gone are the days of testing the market with aspirational pricing. Properties need to be priced competitively from day one based on recent comparable sales. Overpricing leads to extended market time and eventual price reductions that stigmatize the listing.
• Professional Preparation: Pre-inspection, addressing deferred maintenance, and professional staging are no longer optional. Online presentation matters enormously, as buyers make initial decisions based on photos and virtual tours.
• Extended Timeline: Plan for 45-75 days on market rather than the 15-30 days of previous years. This requires financial planning for carrying costs including mortgage, utilities, insurance, and taxes during the marketing period.
• Negotiation Flexibility: Expect buyers to request repairs, closing cost credits, and favorable terms. The willingness to negotiate can mean the difference between a successful sale and a stale listing.

Option 2: Price Reduction Strategy

If your home has been on the market for several weeks without strong offers, a strategic price reduction may be necessary. The data shows that 34% of current listings have already reduced prices—you're not alone in making this adjustment.

Timing matters: a meaningful reduction (3-5% or more) within the first 30 days often generates renewed interest and can actually result in a higher net price than allowing the property to languish with gradual small reductions.

Option 3: Cash Sale for Speed and Certainty

For homeowners who need certainty, speed, or want to avoid the traditional sale process, cash buyers offer a compelling alternative. In May 2025, 27% of home sales were made with cash, indicating significant market presence.

While cash offers typically come at a modest discount to retail value, the time savings, certainty, and eliminated costs often result in comparable or better net proceeds, especially when factoring in carrying costs and opportunity costs of a 41+ day marketing period.

Market Outlook: What's Next for San Diego?

Looking ahead to 2026, several factors will influence market direction:

• Interest Rate Trajectory: If rates decline toward 5.5-6% as some forecasters predict, buyer demand could strengthen modestly. However, significant volatility is expected.
• Inventory Levels: With supply up 47% year-over-year, continued inventory growth would maintain downward pressure on prices and support balanced market conditions.
• Economic Conditions: Broader economic stability or uncertainty will directly impact buyer confidence and purchasing decisions.
• Seasonal Patterns: Spring 2026 could bring renewed activity as inventory typically builds for the annual homebuyer season. However, flat buyer demand may limit seasonal bounce.

Most analysts expect San Diego's market to remain stable rather than experiencing dramatic price declines. The fundamental factors of limited developable land, strong employment, and desirable climate continue to support long-term value. However, the rapid appreciation of recent years is unlikely to return soon.

According to industry analysis, "San Diego's housing market remains stable and strong—with no signs of a price crash." The current trend suggests prices may experience modest declines through 2026-2027 before stabilizing, but catastrophic drops are not anticipated.

Quick Facts: San Diego Housing Market December 2025

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