Increased Seller Volume and Lower Buyer Demand Yields Reduction in San Diego Median Home Sales Price
For the first time since COVID, San Diego’s median home price has decreased on a year-over-year basis, according to Zillow’s real estate tracker. In September of 2025, the median home price in San Diego County was $920,000, nearly $50,000 lower than it was at the same time last year. The last time home prices were down on an annual basis in San Diego County was in 2019. In the initial six months of 2019, home sales were down 8.4% from the same time in 2018.
According to First Tuesday Journal, prices are expected to decline through 2027 and will likely bottom out in early 2028. Expect downward pressure on prices for all types of property due to a rise in the cost of mortgage funds during the decade ahead. Mortgage rates are edging down now but don’t expect any significant downward movement for the next 5 years.
San Diego Housing Trend Indicators
Following a strong initial recovery from the 2008 recession and financial crisis, there have been indicators of the real estate market slowing over the past 2 years. At roughly 2400 sales per month, the average annual volume of 22,000 sales has remained relatively unchanged since pre-COVID.. This is a huge drop from the 2003 peak of 60,000.
The average monthly sales volume for 2026 is expected to be well below the average for the past decade, with an average monthly volume of 2000 sales for the first six months. Higher interest rates and economic uncertainty will continue to maintain this trend for the remainder of 2025 and in to 2026.
The sales slowdown does not seem to affect only high or low cost areas as some of San Diego’s most visible real estate markets were affected. Imperial Beach is down 38.5% through the first six months, followed by Logan Heights (-26.7%), Rancho Santa Fe (-26.6%) and Solana Beach (-23.9%).
The Millennium Boom
Homeownership in San Diego is still plummeting, continuing a trend since 2005. At 47.6%, San Diego County homeownership is now at it’s lowest point in a decade. Lack of production and inventory post-covid created a disparity in the available volume in San Diego county. First-time homebuyers and turnover homeowner are the driving force behind declining home ownership, giving cash-heavy investors and the few cash buyer-occupants the upper hand.
Median House Price Trend
The median house price in San Diego has had a slight reduction in the past 18 months. Forecasting in to the future, a moderate price adjustment and lowering interest rates may reverse the home ownership trend.
The Real Estate Outlook from Economic Professionals
Despite this perceived sluggishness, there are signs that the real estate market will pick up steam over the next few months, said Chris Thornberg, economist and founding partner of Beacon Economics. A tight housing market, low mortgage interest rates (3.6%), and little indication of economic disruption in the foreseeable future indicate a continuance of the second longest expansion period in U.S. economic history. To those predicting a recession in the coming months, Thornberg has this to say:
Every recession has to be caused by some shock to the system. To date, we have yet to see something that would rise to that level and push the economy off the growth path on which it is currently… By the end of the year, price growth is going to be up again and next year it will be a very healthy number. It is all driven by the fact that these interest rates are low and giving a lot of life to the market.
The Median Home Price in the San Diego Backcountry
Indeed strong sales in Fallbrook, Rancho Bernardo and Ramona indicate that high inventory and more buyers entering the market mark the reverse of the declining trend from the first three quarters of 2025. Red Hawk Realty has listed several new properties for sale in the San Diego backcountry in the last month and continue to field inquiries from sellers on a daily basis. From bug-out cabins in Mount Laguna to 20-acre estates in Cuyamaca, the San Diego backcountry has options for all buyers and interests.
If you are considering selling or purchasing property during 2025 or 2026, now is the time to act. If you would like a free real estate valuation or consultation, please contact Meriah Druliner (760-420-5131; Meriah@Donn.com) or Donn Bree (760-518-6669; Donn@Donn.com).
