San Diego Real Estate Market Forecast for 2025: Trends and Predictions

As of December 2024, the San Diego real estate market continues to exhibit robust activity, characterized by rising home prices, increased sales, and persistent inventory challenges. Here's an overview of the current trends and insights:

Home Prices and Sales Activity

The median sale price for homes in San Diego has reached $930,000, marking a 3.1% increase compared to the same period last year. This upward trajectory underscores the sustained demand for housing in the region. Additionally, homes are selling faster, with the average property remaining on the market for approximately 32 days, a notable decrease from 17 days in the previous year.

Inventory Levels

Despite the heightened demand, San Diego faces a limited housing inventory. As of January 31, 2024, there were 1,629 homes available for sale, reflecting the ongoing supply constraints that contribute to the competitive nature of the market.

Market Competitiveness

The San Diego housing market remains highly competitive, scoring 73 out of 100 on Redfin's Compete Score. Homes typically receive multiple offers, often selling for about 1% below list price and going pending within approximately 29 days. Notably, "hot" homes can sell for about 1% above list price and go pending in around 12 days, indicating the swift pace of transactions in desirable areas.

Interest Rates and Buyer Purchasing Power

Recent reductions in mortgage rates have enhanced buyer purchasing power. In September 2024, mortgage rates dropped to 6.2%, the lowest since February 2023, and are anticipated to decrease further. This decline could increase the buying power of typical U.S. buyers by $9,000 if rates fall to 6%, and by $34,000 if they decrease to 5.5%. High-priced areas like San Diego are expected to benefit significantly from these changes, potentially easing affordability challenges for buyers.

Neighborhood Variations

San Diego's diverse neighborhoods exhibit varying trends. Coastal communities such as La Jolla, Pacific Beach, and Coronado remain highly desirable, maintaining strong competition despite the overall market slowdown. Inland neighborhoods may offer more affordable options but are also affected by the general market dynamics.

Market Outlook

Looking ahead, forecasts suggest a stabilization in the market as new construction projects come to fruition, slightly easing the inventory shortage. However, the enduring appeal of San Diego's lifestyle, coupled with its economic and employment opportunities, means demand will remain high. Potential buyers may face less frenzied competition but should not expect a significant dip in prices.

Conclusion

The San Diego real estate market in December 2024 reflects a dynamic environment with rising home prices, limited inventory, and strong buyer demand. Prospective buyers and sellers should stay informed about these trends and consider consulting with local real estate professionals to navigate the complexities of this competitive market effectively.