The 3rd quarter this year started in the midst of an early summer slowdown. It continued through the sludge of uncertainty fueled by political and economic upheaval. Here’s the stats for San Diego real estate from the 3rd quarter of 2024, along with predictions for the rest of the year. Always hand-written with stats direct from our local MLS.
2025 Q3 Summary
Sales Volume Level: Q3 2025 had 1.0% LESS closed sales than Q3 2024
Inventory Rising: Dropping throughout Q3. Ended Q3 Up 29% from Q3 2024.
Loan Rates DROP: Started Q3 at 6.67%. Ended Q3 at 6.37%
Home Values Dropping: Median price went from $915k to $900k in Q3. Up 1.1% from Q3 2024
Govt./Policy Changes: Fed Fund Rate dropped 0.25 in Q3
Rental Rates Flat: Median Rents Flat year over year with seasonal ups/downs
The Above image is a visual summary of my statistics reference from our local San Diego Association of Realtors.
Click here to View Full Stats from San Diego Association of Realtors
2025 Q3 – Up or Down??
Sales Volume:
Sales Volume dropped in half a few years ago. While we are relatively flat right now year over year (down 1.0%), we must bear in mind that sales actively is still depressed right now, mostly as a result of higher loan rates. Rates have dropped a bit, but we need another 1% to get move-up buyers back into the market. Here’s a great historic chart for sales volume from last year (2025 looks pretty much the same as 2024):
Inventory:
Inventory has been rising for about 2 years now with seasonal ups and downs. New listings are up 39% over last year at this time. Sales are steady, but are not strong enough to eat up the extra inventory. We are currently up 29% with our listing inventory right now over the same month last year.
Attached/condo inventory has been on the rise more so than detached homes. This usually happens near the peak of a market. Lower priced properties start to increase in inventory and decrease in prices while higher priced detached homes will continue to go up in prices for a year or more after condos/lower priced properties have peaked.
Loan Rates:
Home loan rates have slowly but steadily dropped most of 2025. The 30-year fixed MND rate average started 2025 at 7.07%. Rates dipped then rose and have been dipping for the last 4-5 months. The Fed had signaled an upcoming rate cut and then followed through in September with a .25 drop. The markets had already factored this in during the weeks leading up to the Fed meeting.
Will rates continue to come down or is this just a seasonal dip? Most people are expecting another drop of the Federal Funds rate before end of Q4, which I believe will be accompanied by a drop in home loan rates, too.
Home loan rate charts:
Long Term Rate Chart: 1971 – 2024 Short Term Rate Chart: 10/2024 – 10/2025
Govt / Policy Changes:
For the first time in 2025, The Fed just dropped it’s benchmark rate .25%. This was much anticipated by the lending industry which started dropping home loan rates before the announcement. Many expect the Fed to do one more drop in Q4, but that also depends on what economic news is received leading up to the next Fed meeting and the role politicians are able to play. I’m expecting enough bad economic news, lack of inflation and pressure from POTUS, for a single point drop of .25 in Q4.
Home Values:
Median Home Values hit a peak in July and dropped notably in the next 2 months of Q3. Prices peaked in April 2024 for detached homes at $1,090,000. We ended Q3 at $1,020,000, which is down 2.8% year over year.
This is the first time I can remember seeing a year over year decline in detached homes since we had a blip in 2018 and maybe the first 2 months of the pandemic. But I’ve been seeing prices drop for over a year. The median value is not an exact representation of specific home values. For the last year, we’ve seen the upper segments of the markets with a higher percentage of sales, which increases the Median home value without increasing specific home values. From what I’m seeing in the field and when I do specific comparable sales reports for individual homes/neighborhoods, it is clear that prices have dipped 5-10% year over year. This dip has been much more pronounced in the condo market.
Rental Prices:
As most of you know, I’ve been building a property management business the last few years, which is now in full swing. I am currently managing 9-10 units and seeking more. Please think of me the next time you or someone you know wants to rent their home/condo. I consistently pay for myself by minimizing vacancies.
Rental rates saw their first decline in a decade in 2023. We’ve been mostly flat the last year with some seasonal variations (down at the end of the year and peaking in early summer)
Median Rents SD: 2019-Present Median Rents: 2005-2019
What does the future hold? My theories & predictions are below…
Of course, these are just predictions….that said, I think that our market has peaked and the answer to the question I pose in the article title is “down”. The market is down this year. There is definitely still a chance that POTUS will get a bunch of great trade deals done, both major wars end in the next few months and the economy comes roaring for a year or two on the heels of AI tech, but i believe anything above our current values will be a bubble or inflationary. I expect 1 more rate drop from the Fed this year, which will likely be precipitated by “bad” economic news/data, such as the labor statistics we aren’t seeing published because the govt is shutdown. As such, I think home loan rates will slowly edge down around 6% during Q4.
I’m expecting a continued slide for equity, but considering the last 2 months have shown notable losses, I don’t think Q4 will see as drastic a drop in median values. Also, the drop in rates is combatting falling demand a bit. Despite a drop in rates, I’m predicting we will have seasonally normal low demand and low sales numbers, too. Inventory will drop as a seasonal norm but we will likely start 2026 with 25% more inventory than we did this year.
Rents slid down quite a bit in recent months, but the end of the year is always the worst for rental values. The question is, after an early pullback, are we going to see much more of a drop in Q4? I don’t think it will be as notable a drop as in ’23 or ’24. This year, rental rates have been relatively consistent and moving within Seasonal norms. Thus, I am expecting rental rates to drop slowly in Q4 to end the year just about where we started it or down ~ 1%.
Want a free lunch?
Send me a referral that buys/sells/rents and I will buy you lunch every month for the next year in person to say thank you!
I have always appreciated your referrals – they have been the foundation of my business.
Adam Pascu
Broker / Owner
73 Degrees Realty
858-761-1707
ps. feel free to check out my San Diego Green Homes site if you have a passion for living green/sustainably and contact me (cell: 858-761-1707) for a free consult regarding how to green your home.