The 4th quarter this year started fairly active in October, but quickly cooled down like an alligator in winter. Here’s the stats for San Diego real estate for 2025, along with predictions for next year. Always hand-written with stats direct from our local MLS.
2025 Summary
Sales Volume Down a Bit: 2025 had 1.7% LESS closed sales than 2024
Inventory Up & Down: Up strong & Down strong to end Down 0.2%
Loan Rates DROP: Started Q1 at 7.07%. Ended Q4 at 6.20%
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 – Year in Review
Sales Volume:
Sales Volume dropped in half a few years ago in response to the rise in loan rates. Since then we’ve seen minor seasonal changes. In 2025, we saw a small overall drop in sales going Down 1.7% from 2024. While this is a small difference year over year, we must bear in mind that sales actively is still depressed right now overall. Rates dropped a bit in 2025, 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, but 2025 was almost flat in the end with sharp seasonal ups and downs. Inventory went up steadily until it peaked mid-summer and then dropped just as quickly as it rose. New listings in 2025 were up 15-20% over 2024, but new listings really dipped the 2nd half of the year. Sales picked up a tad bit as rates dropped until the last 2 months of the year when inventory dropped and so did sales. We ended the year with inventory Down 0.2% over 1 year ago.
Loan Rates:
Home loan rates peaked in October of 2023. 2024 was a wild ride with a lot of ups and downs, but 2025 saw a pretty steady drop in rates. We started 2025 at 7.07% and ended at 6.20%.
Will rates continue to come down in 2026? What will Fed Policy be?
Home loan rate charts:
Long Term Rate Chart: 1971 – 2024 Short Term Rate Chart: 10/2024 – 10/2025
Govt / Policy Changes:
In 2025, The Fed just dropped it’s benchmark rate on 3 separate occasions, .25% each time for a total of .75% over the year. All 3 of the drops came in the 4th quarter of the year. This was much anticipated by the lending industry which started dropping home loan rates before the announcements. With political pressure mounting on the Fed, along with Jerome Powell’s impeding exit, are we bound to see a rate drop soon?
Home Values:
Median Home Values hit a peak in July and dropped notably in the next 2 months of Q3. However, median values ticked back up in November and December oddly. Is that a sign of what’s to come in Q1 of 2026?
Here’s the rub, though….actual home values have dropped noticeably to anyone in the field over the last 2 years. Condos saw some of the most notable drops in equity dipping around 10-15% since peaking in the late spring of 2024. Homes have dropped more like 5-10% on average. What’s been happening is that sales numbers are skewing towards the upper half of prices, which brings the median up, despite the fact that individual home & condo values have dropped.
I’m estimating that individual home values dropped 5-10% in San Diego in 2025.
Rental Prices:
As most of you know, I’ve built a property management business over the last few years, which is now in full swing. I am currently managing 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 2 years with some seasonal variations (down at the end of the year and peaking in early summer)
Median Rents SD: 2019-2025 Median Rents: 2025
What does the future hold? My theories & predictions are below…
Of course, these are just predictions…and things are VERY hard to predict right now….that said, I think that our market has peaked and that we will be chasing it down for a few years. I believe we will see a small 2-3% upswing in home values in the spring, but then I expect we will end down 2-3%. Median values will probably show a 2-3% rise in 2025 despite actual values dropping.
I think that home loan rates will continue to drop in anticipation of a more Trump Friendly Fed Chair being picked. The expectation is that whomever Trump picks will be more aggressive about dropping the Fed Funds rate. The Fed has also begun buying back mortgage backed securities again (quantitative easing), which is inflationary. Loan rates are likely to drop close to 5.5% mid-2026 but I don’t expect them to go much lower. Rates need to get down to 5% or lower to really get move-up buyers off the fence that are sitting on a 3% loan.
With a rate drop expected and the Fed “printing money” again, there will be upward pressure on prices given the increase of liquidity in the market. All that being said, I think the job market and economy will see downward pressure and wages will not keep up with inflation. Affordability will remain low, keeping buyer demand subdued.
Inventory is likely to remain low but I do expect a small increase in 2026. We’ll see seasonal norms where listings build the first half of the year and start to drop the 2nd half.
This year, rental rates have been relatively consistent and moving within Seasonal norms. They ended the year exactly where they started. I am expecting rental rates to do about the same in 2026, but end a little bit down this year, under 2%.
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.