78% of San Diego Homes Lost Value: What It Means for Sellers
The San Diego housing market has experienced a decisive shift. According to recent analysis by Zillow, 78% of homes in San Diego County have declined in value over the past year, with an average drop of 8.2% from their recent peak valuations. This widespread decline places San Diego 17th nationally among major metropolitan areas for homes losing value.
For homeowners who purchased during the 2021-2023 market surge, this news may feel concerning. However, the complete picture reveals more nuance than the headlines suggest. Understanding these market dynamics is critical whether you're considering selling now or planning for the future.
TL;DR
- 78% of San Diego County homes experienced value declines over the past year
- Average decline from peak: 8.2%, though most long-term owners still have substantial equity
- Median ownership duration: 11 years with 88% appreciation above purchase price
- Sales volumes near 40-year lows with homes taking 41 days to sell (up from 28 days)
- Cash buyers offer certainty and speed in a market where traditional sales face increasing challenges
The Complete Picture: Short-Term Decline, Long-Term Gains
While the 78% statistic sounds alarming, it's essential to understand the context. The Zillow analysis tracked home values through October 2025 compared to each property's peak valuation and original purchase price.
The reality for most San Diego homeowners remains positive: Despite recent declines, the median San Diego homeowner has owned their property for 11 years and has seen an 88% gain above their purchase price. This far exceeds the national average of 67% appreciation over a 9-year median ownership period.
David Ely, a finance professor at San Diego State University, explained to the San Diego Union-Tribune that buyers remain cautious: "People still have a sense that prices are very high and we have to be careful how we are spending our money."
Current Market Conditions: What the Numbers Show
The San Diego real estate market has cooled significantly from its pandemic-era highs:
Price Trends
- September 2025: Median home price fell to $875,000, down 1.7% monthly
- Peak to present: Down 3.2% from June's peak of $903,890
- Year-over-year: October prices down 2.1% compared to last year
Sales Activity
- September 2025: Only 2,385 home sales (fourth-slowest September since 1988)
- Year-to-date: 20,504 sales through September, tracking toward one of the slowest years on record
- Days on market: 41 days average (compared to 28 days last year)
Inventory Levels
- Approximately 6,700-7,000 active listings
- Inventory peaked at 7,403 properties in June 2025
- Significantly higher than 3,600 listings in 2023
Mark Goldman, a loan officer at C2 Financial Corp, told the San Diego Union-Tribune: "The sellers' market is cooling. The needle is moving a bit," though he noted the market hasn't fully shifted to favor buyers.
Why Homes Are Taking Longer to Sell
Multiple factors contribute to the sluggish market despite mortgage rates declining from 7.04% in January to 6.3% by September 2025:
Affordability Remains the Core Challenge
Even with rate improvements, the monthly payment on a median-priced San Diego home still exceeds $4,900 (assuming 20% down). This requires approximately $180,000 for a down payment—a barrier for many potential buyers.
One North County real estate agent characterized current conditions to the Union-Tribune as "brutal," citing widespread buyer hesitation due to economic uncertainty.
Rising Non-Mortgage Costs
Property insurance costs have surged nearly 70% over five years, driven by climate-related disasters and reconstruction expenses. These added costs eat into the monthly savings from lower mortgage rates.
Seller Hesitation
Sellers face their own challenges:
- Smaller buyer pools mean longer marketing periods
- Capital gains tax considerations for profitable sales
- Buyers increasingly demanding repairs or credits during inspection
- Uncertainty about finding their next home in a still-expensive market
Regional Comparison: San Diego in Context
San Diego's 78% decline rate and 8.2% average drop place it in the middle of Southern California's cooling trend:
| Region | Homes with Declining Values | Average Decline from Peak |
|---|---|---|
| Los Angeles-Orange County | 79% | 7.5% |
| San Diego County | 78% | 8.2% |
| Inland Empire | 74% | 6.5% |
| National Average | 53% | 9.7% |
While San Diego's percentage of declining homes exceeds the national average, the magnitude of decline is actually less severe than the national 9.7% average drop.
What This Means for Different Types of Sellers
Recent Buyers (2021-2023)
If you purchased during the market peak, you may be facing negative equity or minimal appreciation. This group faces the toughest decisions:
- Staying put may be the best option if you can afford current payments
- Selling traditionally could result in minimal proceeds after commissions and closing costs
- Cash buyers eliminate agent commissions (typically 5-6%) and offer certainty of closing
Mid-Term Owners (5-10 Years)
Most homeowners in this category still have equity despite recent declines. Your considerations:
- Traditional sale: Possible but expect 41+ days on market and potential inspection negotiations
- Cash sale: Quick closing (often 7-14 days) without repair contingencies
- Timing: Market may continue softening through 2026
Long-Term Owners (10+ Years)
With the median 11-year ownership showing 88% appreciation, most long-term owners have substantial equity cushions:
- Recent 8.2% declines represent a small fraction of total gains
- Cash offers provide certainty and speed for life transitions (retirement, downsizing, relocation)
- Avoiding agent commissions and repair costs maximizes net proceeds
The Cash Home Buyer Advantage in a Cooling Market
As the San Diego market shifts, cash home buyers offer distinct advantages:
Speed and Certainty
Traditional home sales in San Diego now average 41 days on market, but that's just the beginning. Buyers often:
- Request repairs after inspection
- Face financing delays or denial
- Renegotiate based on appraisal gaps
- Back out due to cold feet
Cash buyers typically close in 7-14 days with no financing contingencies, no appraisal requirements, and no last-minute surprises.
No Repair Requirements
In a buyer's market, traditional purchasers increasingly demand credits or repairs. Cash buyers purchase properties as-is, eliminating:
- Pre-sale renovation costs
- Contractor scheduling delays
- Uncertainty about what buyers will request
Avoiding Commission Costs
With home values declining, preserving equity becomes critical. Traditional sales typically incur 5-6% in agent commissions. On a $900,000 home, that's $45,000-$54,000. Cash sales eliminate this cost.
Flexibility for Life Transitions
Whether facing foreclosure, divorce, inheritance complications, or job relocation, cash buyers provide flexible solutions when time matters more than maximum price.
Market Outlook: What Experts Predict
The consensus among San Diego housing economists suggests continued softness:
- Prices: Most experts predict modest declines or flat growth through 2026
- Sales volume: Likely to remain near historic lows absent significant economic shifts
- Inventory: Expected to remain elevated compared to 2021-2023 levels
- Affordability: Fundamental challenge unlikely to resolve without major price corrections or income growth
According to the San Diego Union-Tribune's expert panel, "affordability challenges after years of intense price growth, as well as higher mortgage rates, are reasons why the housing market has slowed."
Quick Facts: San Diego Housing Market (November 2025)
| Metric | Current Value | Comparison |
|---|---|---|
| Median Home Price | $875,000 - $930,000 | Down 2-3% year-over-year |
| Average Days on Market | 41 days | Up from 28 days last year |
| September Sales | 2,385 transactions | 4th slowest September since 1988 |
| Active Listings | ~6,700 homes | Up from 5,337 last year |
| Average Mortgage Rate | 6.3% - 6.77% | Down from 7%+ earlier in 2025 |
| Median Ownership Duration | 11 years | 4th longest nationally |
| Average Appreciation | 88% above purchase price | 5th highest nationally |
Frequently Asked Questions
Should I sell my San Diego home now or wait for the market to recover?
This depends on your individual circumstances. If you need to sell due to financial hardship, relocation, or life changes, waiting may not be practical. The market may take years to return to 2022-2023 peak prices. However, if you're a long-term owner with substantial equity, you still have significant gains to work with. Consider whether speed and certainty matter more than potentially getting 5-10% more in an uncertain future market.
How much equity do I need to sell to a cash buyer?
Cash buyers can work with homeowners across equity levels. If you have negative equity or minimal equity, cash buyers may still be able to structure deals that help you avoid foreclosure or exit cleanly. Long-term owners with substantial equity can maximize proceeds by eliminating agent commissions (5-6%) and repair costs while closing quickly.
What's the difference between a cash buyer and an investor/flipper?
Reputable cash home buyers purchase properties for various purposes—some to flip, others to rent, and some to hold long-term. The key difference is speed and certainty of closing. Unlike investors who may still need financing or back out after inspection, legitimate cash buyers have funds ready and close quickly. Always verify proof of funds and work with established local companies with verifiable track records.
Will San Diego home values continue declining?
Most housing economists expect continued softness through 2026. With 78% of homes already down 8.2% from peak and affordability remaining a fundamental challenge, significant price appreciation seems unlikely in the near term. However, San Diego's limited supply and strong job market provide a floor under prices. Expect modest declines or flat growth rather than a 2008-style crash.
How does selling to a cash buyer compare financially to a traditional sale?
The math depends on your situation. Traditional sales might net 5-10% more on paper, but subtract 5-6% agent commissions, 1-2% closing costs, repair expenses, and months of mortgage payments/utilities while listed. Cash sales eliminate these costs and close in days. For many sellers, particularly those needing speed or facing properties needing repairs, cash offers net similar or better proceeds with far less stress.
Conclusion: Making Informed Decisions in a Changing Market
The San Diego housing market has undeniably shifted. With 78% of homes declining 8.2% from recent peaks, sellers face a different landscape than the bidding wars of 2021-2023. Yet for most homeowners—particularly those with 5+ years of ownership—substantial equity remains intact.
The key question isn't whether home values have declined, but what that means for your specific situation. If you need certainty, speed, and simplicity, cash home buyers offer compelling advantages in this transitioning market.
Whether you're facing financial challenges, planning a life transition, or simply want to avoid the complexity of traditional sales in a cooling market, understanding your options empowers better decisions.
Ready to explore your options? Contact San Diego Fast Cash Home Buyer for a no-obligation consultation. We provide transparent assessments, competitive cash offers, and can close in as little as 7 days—giving you certainty in an uncertain market. Learn more about our cash home buying services throughout San Diego County.
Citations
- Home values drop in three-quarters of Southern California - San Diego Union-Tribune, Accessed 2025-11-25
- Why San Diegans aren't jumping to buy homes, even with lower mortgage rates - San Diego Union-Tribune, Accessed 2025-11-25
- 'Sellers' market is cooling': San Diego home price falls for first time this year - San Diego Union-Tribune, Accessed 2025-11-25
- 'This market is brutal right now': San Diego home price down year-over-year, sales near historic lows - San Diego Union-Tribune, Accessed 2025-11-25
- San Diego's homeowners are among nation's oldest - San Diego Union-Tribune, Accessed 2025-11-25
- San Diego home prices have stopped rising. The nation isn't far behind - San Diego Union-Tribune, Accessed 2025-11-25