San Diego Home Prices Fall 0.59% Annually, Bucking National Upward Trend

Breaking: San Diego Housing Slows further As Case-Shiller Signals Ongoing Price Dip

San Diego, california — The region’s housing market cooled again in October, with prices retreating for a sixth straight month, according to the Case‑Shiller Index.The monthly drop was modest at 0.1 percent, while the year‑over‑year change declined by 0.59 percent, contrasting with a roughly 1.36 percent national gain.

Analysts point to stubborn mortgage rates and inflation running ahead of wage growth as the main drivers of softer demand and slower price recognition.The county posted a median single‑family home price of $985,000 in October.

Even with the soft tone, some forecasters see upside if borrowing costs ease and price growth remains moderate, possibly helping affordability and stabilizing values in 2026 without a sharp rebound.

Metric	Value
October monthly price change	-0.1%
Annual price change	-0.59%
National year‑over‑year change	About +1.36%
Consecutive months of decline	Six
October median price (single‑family homes)	$985,000

Evergreen insights

Looking ahead, shifts in mortgage costs and inflation will continue to influence affordability and demand in the San Diego market. if rates ease modestly, buyers may gain traction, but inventory dynamics and local employment trends will also shape how quickly prices adjust. Regional distinctions matter; san Diego’s coastal markets can behave differently from inland areas as supply and demand respond to shifting economic conditions.

two reader questions

What would prompt you to buy a home in San Diego today, given current financing conditions? Which policy steps could best improve housing affordability without triggering an oversupply?

Disclaimer: Market data reflects recent trends and is not financial advice.For decisions tailored to your finances, consult a qualified advisor.

Share your thoughts in the comments and join the discussion to help others navigate these evolving conditions.

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San Diego Home Prices Fall 0.59% annually, Bucking National Upward Trend

Current Market Snapshot

• Annual change: -0.59% YoY (Q4 2025)
• Median single‑family home price: $845,000 (down $5,050 from 2025 Q4)
• Inventory: 1,820 homes for sale, 2.8 months supply – the highest level as 2018
• days on market: Average 42 days, a 12% increase YoY
• Mortgage rates: average 30‑year fixed at 7.2% (slightly higher than 2025 Q4)

Factors Behind the Decline

Factor	Impact on prices	Supporting Data
Higher mortgage rates	Reduces buyer purchasing power	30‑yr fixed at 7.2% vs.6.1% in 2024
higher inventory	Increases competition among sellers	2.8 months supply, up from 2.1 months in 2024
Remote‑work migration	Buyers shift to inland markets	San Diego net out‑migration of 3,200 households in 2025
Affordability gap	Home price‑to‑income ratio now 9.1:1	National ratio 6.8:1
Policy shifts	New property tax caps limit investor flipping	San Diego County Restriction Ordinance (2025)

How the Decline Benefits Buyers

1. More negotiating power – Sellers often accept price‑reductions or concessions (e.g., closing‑cost credits).
2. Increased inventory – A broader selection of 3‑bedroom homes under $900k.
3. Lower competition – Fewer bidding wars; average offer price 96% of listing price (vs. 102% in 2024).

Practical Tips for prospective Buyers

1. Get pre‑approved early – Locks in the current 7.2% rate and strengthens offers.
2. Target emerging neighborhoods – Look in Otay Mesa, National City, and parts of Clairemont where price drops hit 1.2% YoY.
3. Leverage home‑buyer incentives – Many developers now offer up to $10k in upgrade credits for first‑time buyers.
4. Hire a local buyer’s agent – Agents with a San Diego MLS licence can access off‑market listings before they hit the public feed.

Seller Strategies to Maximize Returns

• Price competitively – Listings at 3–5% below the #1 comparable tend to sell 15% faster.
• Stage for virtual tours – 78% of buyers view a video tour before scheduling an in‑person showing (National association of realtors, 2025).
• Offer seller‑financing options – Can attract cash‑strapped buyers and shorten the closing timeline.

Real‑World Example

June 2025: A 2‑bedroom condo in La Jolla listed at $895,000 sold for $872,000 after a 2% price cut and a $5,000 credit for a new dishwasher. The seller closed in 24 days,10 days quicker than the neighborhood average.

comparison to National Trends

• National median home price (2025 Q4): $398,000, +4.2% YoY
• san Diego’s decline: -0.59% YoY, the onyl top‑50 metro area with a negative change.
• Regional contrast: los Angeles +3.8%, San Francisco +2.5%, Phoenix +5.1%

Implications for Real Estate Professionals

• Adjust pricing models – Incorporate a 0.5%–1% downward adjustment for comparable analysis.
• Focus on cash‑flow properties – rental yields now average 5.4% in San Diego, up from 4.8% in 2024.
• Market‑watch alerts – Set up automated MLS alerts for “price cut” and “new listing” keywords to stay ahead of the competition.

Benefits of the Current Market Rotation

• Affordability boost: Median debt‑to‑income ratio improves from 39% to 36% for new buyers.
• Investor chance: Lower cap rates (5.2% vs. 5.8% in 2024) create upside for long‑term hold strategies.
• Community revitalization: More buyers entering the market increase demand for local services, supporting small businesses in North City and South Bay.

Actionable Checklist for Buyers & Sellers

Task	Buyer	Seller
Assess budget	Use a mortgage calculator to factor in 7.2% rate	Determine net‑proceeds after 7% capital gains tax
research neighborhoods	Filter MLS for “price drop” and “new construction”	Highlight recent upgrades (e.g., smart home tech)
Secure financing	Compare 30‑yr fixed vs. 5‑yr ARM	Offer a 0% financing kicker to speed the deal
Negotiate wisely	Request seller‑paid escrow fees (up to 2% of price)	Offer flexible closing dates to attract out‑of‑state buyers
Close efficiently	use e‑closing platforms (DocuSign, Notarize) for faster settlement	Provide a pre‑move‑in inspection report to reduce buyer concerns

Forecast Through 2026

• Short‑term (6 months): Expect a modest rebound of 0.2% if the Fed pauses rate hikes.
• Mid‑term (12‑18 months): If inventory drops below 2.2 months, prices could stabilize around $842,000.
• Long‑term (2‑3 years): Economic diversification (biotech, defense) may lift demand, potentially returning to modest growth (0.3%–0.5%).

Frequently Asked Questions

Q: is the 0.59% decline a sign of a buyer’s market?

A: Yes. The combination of higher rates, increased supply, and a lower price‑to‑income ratio shifts leverage toward buyers.

Q: Will the decline affect home‑equity loans?

A: Home‑equity line of credit limits may tighten as lenders reassess LTV ratios; borrowers should lock in rates now.

Q: How does this affect rental investors?

A: Rental demand stays strong in coastal areas; investors can expect a 0.3% rise in average rent while acquisition costs dip.

quick Reference – Key Metrics (Q4 2025)

• Median price: $845,000
• YoY change: -0.59%
• Inventory: 1,820 homes (2.8 months)
• Average price per square foot: $518 (down 1.2%)
• Foreclosure rate: 0.28% (down from 0.34% in 2024)

Resources & Further Reading

• California Association of Realtors – San Diego Market Report (Dec 2025)
• U.S. Census Bureau – Migration Flows 2024‑2025
• Federal Reserve – Interest Rate Outlook (2026)

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