Will Home Prices Drop in San Diego in 2025?

San Diego’s housing market has been a hot topic for years, with buyers and sellers wondering what’s next. As we step into 2025, many are asking: Will San Diego home prices drop in 2025? Let’s take a deep dive into the San Diego housing market 2025, analyzing expert forecasts, economic factors, and potential trends.

Latest San Diego Housing Market Stats

San Diego Market Round-up

Weekly pending sales jumped above 500 for the first time since July 2024, indicating increased buyer activity.

Metric	Feb 21-27	Previous 4-Week Avg	% Change	Feb 14-20
New Listings	683	632	+8.07%	629
New Pending Sales	512	446	+14.93%	433
New Sales	398	326	+21.99%	352
Active Inventory	4,844	4,563	+6.17%	4,718
30-Year Fixed Mortgage Rate	6.74%	6.98%	-3.47%	6.89%

(Source: SDAR and Mortgage News Daily Data)

Key Takeaways:

New listings jumped higher, and pending sales saw a promising spike in activity.
Interest rates are moving lower, which could support demand in the coming months.
Market conditions still favor buyers with strong financial positioning, as affordability remains a key concern.

Market Trends & Predictions

Short-Term Outlook (Next 3 Months – April 2025)

Home values will likely increase over January, but they may not reach the $890K peak of last April.

Mid-Year Outlook (6 Months – July 2025)

Home prices could peak earlier in the year than in 2024.
Month-over-month price declines may begin as early as April/May, though they are expected to be subtle.

Long-Term Outlook (12 Months – January 2026)

Q3 and Q4 2025 will be slower, with rising inventory and longer marketing times.
Home values could be lower in January 2026 compared to the start of 2025.

Will San Diego Home Prices Drop in 2025?

The 2025 San Diego housing market outlook remains uncertain, with multiple factors influencing home values. While home prices soared in recent years due to low inventory and high demand, the market is beginning to stabilize.

Experts suggest that while a housing market crash is unlikely, San Diego home prices may experience a slight decline or moderate growth slowdown rather than a dramatic drop.

What Happens to House Prices When Interest Rates Go Down?

When interest rates drop, borrowing becomes more affordable, often leading to an increase in home prices due to higher demand. Lower rates could reignite competition, pushing prices back up.

Conclusion: What’s Next for San Diego Home Buyers and Sellers?

The San Diego housing market in 2025 will likely see stabilization rather than a dramatic drop in prices. Whether you’re buying or selling, understanding market trends and working with an experienced real estate agent is crucial.