Only 15% Can Afford a San Diego Home: What This Means for Sellers

Key Takeaways

• Only 15% of San Diego households can afford a median-priced home—the lowest since NAR began tracking in 1989
• Median home price of $985,092 is 8.7 times higher than median household income of $112,933
• Homeowners must devote 51% of monthly income to mortgage payments, third-highest among 100 metro areas
• Home prices fell for the 4th consecutive month through September 2025, yet affordability remains out of reach
• Cash home sales offer a fast alternative for homeowners facing financial pressure in this constrained market

Introduction: The American Dream Slips Further Away

San Diego's housing market has reached a critical turning point. According to recent data from the California Association of Realtors, only 15% of San Diego County households earn enough income to purchase a median-priced home—a statistic that represents the lowest affordability level since the National Association of Realtors began tracking this metric in 1989.

The numbers paint a stark picture: with median home prices hovering around $985,092 and median household income at $112,933, San Diego's price-to-income ratio has climbed to 8.7 times—nearly double the national average of 5 times. This means that for every dollar earned, San Diegans must stretch nearly nine dollars to afford homeownership.

This affordability crisis doesn't just affect potential buyers—it creates significant challenges for current homeowners who may be struggling with mortgage payments, facing life changes like divorce or inheritance, or simply needing to relocate quickly. Understanding the current market dynamics is essential for making informed decisions about your property.

How San Diego's Affordability Crisis Compares Historically

To truly grasp the severity of today's market, we need historical context. In fall 1997, when San Diego's housing affordability was closest to national levels, the price-to-income ratio stood at 4.3 times, with a median home price of just $177,286 and median household income of $40,981.

The market has experienced several peaks and valleys since then:

• Summer 2004 (Housing Boom Peak): Ratio climbed to 9.7 times
• Spring 2022 (COVID-Era Peak): Hit an all-time high of 10 times
• October 2025 (Current): Stands at 8.7 times, still critically elevated

Housing researcher Andy Walden notes that returning to 1990s affordability levels would require "around a 40% drop in home prices and a 70% rise in incomes"—a scenario that seems highly unlikely in the near term.

What makes the current situation particularly challenging is that San Diego County households must now devote 51% of their monthly income to mortgage principal and interest. This ranks third-highest among 100 major metro areas, behind only Los Angeles/Orange County (62%) and San Jose (53%).

What's Driving the Affordability Crisis?

Price-to-Income Imbalance

The fundamental issue is simple mathematics. When median home prices reach $985,092 but median household income remains at $112,933, the gap becomes insurmountable for most families. This represents a price-to-income ratio of 8.7—far above the historical norm and nearly double the national average of 5 times.

To afford a median-priced home in San Diego, households need an annual income of approximately $242,560, assuming they spend no more than 30% of their income on monthly mortgage payments. This calculation, based on Redfin's analysis, reveals why only 15% of residents can realistically afford to purchase.

Limited Housing Supply

While San Diego has made progress on housing construction—permitting nearly double the homes in 2023-2024 compared to earlier years—the supply still falls short of demand. According to U.S. Census Bureau data and Moody's analysis, San Diego County currently faces a shortfall of approximately 25,200 housing units.

Interestingly, data shows that increased construction does help moderate costs in specific areas. In downtown's 92101 ZIP code, where over 10,000 homes were permitted, rents increased by only 31% between 2018 and 2025. Meanwhile, in Coronado's 92118 ZIP code, where only 133 homes were permitted, rents surged by 75%.

Declining Sales Volume

The affordability crisis has created a market stalemate. Through September 2025, San Diego County recorded only 20,504 home sales—putting 2025 on track to be one of the slowest sales years since record-keeping began in 1988. For context, the previous recent lows were 25,317 sales in 2023 and 25,920 in 2024.

This dramatic slowdown indicates that many potential buyers have been priced out of the market entirely, while sellers face longer listing times and increased price sensitivity.

Market Conditions: A Buyer's Market That Few Can Access

Despite declining prices—San Diego metro home values fell 0.85% year-over-year through September 2025—the market remains fundamentally out of reach for most residents. Chief economists describe the current situation as "affordability is the biggest constraint in the market right now."

The market exhibits what analysts call "K-shaped dynamics," where luxury properties continue performing well while mainstream housing segments struggle. This bifurcation delays wealth accumulation opportunities for younger generations and middle-income families.

Some key market indicators include:

• Only 29% of San Diego County homes sold above asking price as of September 2025, down dramatically from 71% in April 2022
• Average 30-year mortgage rates hovering around 6.30% in late September 2025
• Median single-family home price of $975,000 for San Diego County
• Median condo/townhome price of $649,990, requiring an annual income of $163,600

Quick Facts: San Diego Housing Affordability Crisis

What This Means for San Diego Homeowners

Financial Pressure Is Real

While foreclosure rates remain historically low—with roughly 1,000 Notices of Default filed in the past year compared to 1,302 in just one quarter during the 2013 crisis—many homeowners still face significant financial stress. Working-class neighborhoods like Encanto, Spring Valley, Oceanside, and Chula Vista each saw 30-50 default notices over the past year.

The key difference from 2008 is that most San Diego homeowners today have substantial equity, with many holding 50%+ loan-to-value cushions. This equity position presents an opportunity: rather than facing foreclosure, homeowners in distress can access their equity through a quick sale.

When Fast Sale Options Make Sense

Several life situations make traditional home sales challenging in the current market:

Divorce: When dissolving a marriage, spending months on the market while negotiating with an ex-spouse adds unnecessary stress and legal costs. Cash buyers can close in 7-14 days, allowing both parties to move forward quickly.

Inherited Property: If you've inherited a San Diego property you don't plan to occupy, the burden of maintenance, property taxes, and potential repairs can quickly erode your inheritance value. Selling as-is to a cash buyer preserves your equity without additional investment.

Financial Hardship: If you're struggling to make mortgage payments in a market where housing costs consume 51% of median income, waiting for a traditional buyer could risk foreclosure. Cash sales offer a dignified exit that protects your credit.

Relocation: Job transfers or family emergencies don't wait for perfect market timing. Cash buyers work on your timeline, not the market's.

Property Condition: In a market where only 29% of homes sell above asking price, properties needing significant repairs face even steeper challenges. Cash buyers purchase as-is, eliminating repair costs and time.

Understanding Your Options

San Diego homeowners have several paths forward:

1. Traditional Sale: Works best if you have time (3-6 months), your home is in excellent condition, and you can wait for the right buyer in a slow market
2. Cash Home Buyer: Ideal when you need to close quickly (7-14 days), want to avoid repairs and showings, or are facing financial pressure
3. Short Sale (if underwater): For the rare homeowner without equity, though this is uncommon in today's San Diego market
4. Rent It Out: If you can afford to hold the property, San Diego's rental market remains strong, with rents projected to increase 2.5-5% in 2025

The right choice depends on your specific timeline, financial situation, and property condition. In a market where affordability constraints limit the buyer pool, speed and certainty often outweigh maximum price.

How Cash Home Buyers Work in San Diego

Cash home buying companies serve a specific need in constrained markets like San Diego's. Here's how the process typically works:

Step 1: Request an Offer
You contact a cash buyer and provide basic information about your property—address, condition, situation.

Step 2: Property Evaluation
The buyer evaluates your home, often with a simple walkthrough or even remotely for straightforward cases.

Step 3: Cash Offer
You receive a no-obligation cash offer, typically within 24-48 hours. The offer accounts for current market conditions, property condition, and location.

Step 4: Accept or Decline
You have no obligation to accept. Many homeowners request multiple offers to compare.

Step 5: Fast Closing
If you accept, closing can happen in as little as 7 days, or on your preferred timeline up to several weeks if needed.

Step 6: Cash in Hand
You walk away with cash, no repair costs, no agent commissions, and no uncertainty about buyer financing falling through.

Reputable cash buyers in San Diego handle all closing costs, purchase properties as-is, and work flexibly around your schedule. This model works particularly well in markets with affordability constraints because it bypasses the traditional buyer pool that's been priced out. For more details on current market conditions, see our analysis of San Diego home prices falling for the 4th consecutive month.

Frequently Asked Questions

How does San Diego's housing affordability crisis affect home sellers?

The affordability crisis creates a smaller pool of qualified buyers, which can extend time on market and increase price sensitivity. However, homeowners with equity can leverage cash buyers who aren't constrained by traditional financing requirements. With only 15% of residents able to afford a median-priced home, sellers benefit from options that don't depend on buyer mortgage approval.

What percentage of San Diego residents can afford to buy a home in 2025?

Only 15% of San Diego County households can afford to purchase a median-priced home, according to the California Association of Realtors. This represents the lowest affordability level since the National Association of Realtors began tracking this metric in 1989.

How long does it take to sell a house to a cash buyer in San Diego?

Most reputable cash home buyers in San Diego can close in 7-14 days, though the timeline is flexible based on your needs. Some sellers close in as little as one week for urgent situations, while others prefer 3-4 weeks to coordinate their move.

Are San Diego home prices falling in 2025?

Yes, San Diego metro area home prices declined 0.85% year-over-year through September 2025, marking the fourth consecutive month of price declines. However, despite this modest decrease, affordability remains at historic lows because the price-to-income ratio of 8.7 times is still nearly double the national average.

What income do you need to afford a median-priced San Diego home?

You need an annual household income of approximately $242,560 to afford the median-priced home of $985,092, assuming you spend no more than 30% of your income on mortgage payments. This explains why only 15% of San Diego households qualify for homeownership.

Should I wait for prices to fall further before selling my San Diego home?

This depends on your individual circumstances. While prices have declined for four consecutive months, housing researcher Andy Walden estimates that returning to 1990s affordability would require "around a 40% drop in home prices and a 70% rise in incomes"—an unlikely scenario. If you're facing financial pressure, divorce, inheritance complications, or need to relocate, waiting for dramatic price changes could be riskier than securing a certain sale now.

Do cash home buyers in San Diego charge fees or commissions?

Reputable cash buyers typically do not charge fees or commissions. They make their offer based on current market value minus their costs and profit margin, and handle all closing costs. You should receive a net proceeds estimate upfront with no hidden fees. Always ask for a clear breakdown of costs before accepting any offer.

What areas of San Diego are most affected by the affordability crisis?

The affordability crisis affects all of San Diego County, but working-class neighborhoods and suburbs on the periphery show the most stress, with areas like Encanto, Spring Valley, Oceanside, and Chula Vista logging higher foreclosure filings. Coastal neighborhoods have stronger demand but even lower affordability rates due to premium pricing.

Conclusion: Navigating San Diego's Housing Market with Clarity

San Diego's housing affordability crisis—with only 15% of residents able to afford a median-priced home—represents more than just statistics. For homeowners facing financial pressure, major life changes, or simply needing to move on their own timeline, these market constraints create real challenges.

The good news is that options exist beyond the traditional sale process. In a market where buyer financing constraints slow transactions and limit the qualified buyer pool, cash home buyers offer speed, certainty, and flexibility. Whether you're dealing with divorce, inheritance, financial hardship, or simply need to relocate quickly, understanding your options empowers better decisions.

If you're considering selling your San Diego home and want to explore your options—including a no-obligation cash offer—reach out to San Diego Fast Cash Home Buyer. We purchase homes throughout San Diego County in any condition, close on your timeline, and provide transparent offers with no hidden fees.

The housing market may be challenging, but your path forward doesn't have to be. Let's discuss how we can help you achieve your goals in this complex market.

Get a free, no-obligation cash offer today. Contact us or fill out our online form to get started.

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Citations

1. The American Dream Is Now Month to Month - Voice of San Diego, Accessed 2025-12-06
2. How Much San Diego Home Prices Are Outpacing Wages - San Diego Union-Tribune, Accessed 2025-12-06
3. San Diego Sees Stable Home Affordability at 13% - CBS8 San Diego, Accessed 2025-12-06
4. Just 13% of Residents Able to Afford Median-Priced Homes - Times of San Diego, Accessed 2025-12-06
5. Affordability is the Biggest Constraint: San Diego Home Prices Fall for 4th Month - San Diego Union-Tribune, Accessed 2025-12-06
6. Rents Rise Slower Where More Homes Are Permitted - KPBS, Accessed 2025-12-06
7. San Diego Housing Indicators - Firsttuesday Journal, Accessed 2025-12-06
8. Foreclosure Filings in San Diego 2025 March - Dawn Sells San Diego, Accessed 2025-12-06