San Diego Housing Market 2026: Expert Take on What to Expect

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Why 2026 Matters for the San Diego County Housing Market

Over the past 1-2 years, the San Diego housing market has seen a lower number of sales. San Diego’s housing supply remains structurally constrained due to geographical limitations and strict zoning laws, which keep inventory levels low and impact the overall state of the market. This is due to multiple reasons: lower inventory, homeowners with a 4% or less interest rate not ready to make any changes in their payments, as well as higher interest rates in the 7 and 8% range.

Despite these challenges, the diversified and resilient economy in San Diego helps stabilize the housing market.

Interest rates significantly affect housing affordability and buyer demand in San Diego. San Diego County has over 70 Zip codes. During 2024 and 2025, some zip codes saw an increase in prices, while others saw a decrease. Yet, overall, prices remained steady in 2025. The San Diego housing market has seen home values appreciate in 9 of the last 10 years due to limited supply.

A few weeks into 2026, and the San Diego housing market saw a large spike in buyers submitting their loan applications, as well as homeowners reaching out to discuss placing their properties for sale in the coming weeks/months. The number of homes for sale in San Diego has increased year-over-year, indicating a change in market dynamics and reflecting the current state of the market. January is always a busy time for real estate in San Diego, even if buyers and sellers don’t officially take that next step until February – April.

Where the San Diego Housing Market Stands Today

Average San Diego prices still hover in the upper $900K to $1M range. According to the latest data and metrics from the Zillow Home Value Index and other indexes, the average San Diego home value is $989,768, down 3.4% over the past year.

Yet, San Diego still has neighborhoods that have entry-level single-family homes in the $600K and $700K range. Overall, luxury home prices start just over $2M.

Price per square foot varies significantly by neighborhood and property type, making it important for buyers and sellers to track these metrics to understand value and market momentum at the local level.

A table summarizing key market metrics based on the latest data would include:

• Median sale price: $931,500
• Average rent: $2,995 per month
• Median days on market: 33 days
• Active listings: 3,268 (up 7.77% year-over-year)
  

San Diego Housing Market Pulse

Only about 11% of local households in San Diego can afford a median-priced home, underscoring a significant affordability issue.

Homes are generally staying on the market longer, with median days to pending around 28 to 34 days in early 2026. Some areas are observing a 50% increase in time on market compared to previous years. Entry and mid-level, well-priced homes are still selling in under 30 days.

The sale-to-list price ratio in San Diego is approximately 99%, indicating homes are selling close to their asking price, and competitive offers remain common due to strong demand.

Current 30-year fixed mortgage rates range between 6.0% and 6.8%, with a gradual easing of rates expected throughout 2026.

Buyers are increasingly seeking homes that offer long-term value, including properties with income-generating potential.

A structural supply constraint continues to limit the ability to build new homes in San Diego, contributing to ongoing inventory challenges, so some recent buyers may wonder how soon they can sell a house after purchasing if their plans change.

Expert Predictions for the San Diego County Housing Market in 2026

Mortgage Rates

More sellers will be willing to trade up or downsize, even if their current interest rate is under 4%. Economists project that mortgage rates may decrease toward 5.9% by year-end 2026, which is expected to ease the ‘lock-in effect’ for homeowners currently holding 3% rates. More buyers will jump back into the market, knowing they will have lower payments with rates in the mid to upper 5% range.

As rates drop, entry-level prices will start to see multiple offers as more buyers re-enter the market. Market times will decrease overall.

Market Resilience

The San Diego housing market is projected to remain balanced, with no significant crash expected in 2026. Moderate appreciation of 2% to 4% is forecasted for 2026, and the median home price in San Diego is expected to reach around $1,050,000 by late 2025, reflecting a 3% year-over-year increase. The market is also projected to have a high sales-to-list price ratio of 99%, indicating strong demand.

Inventory forecast

More listings, and more buyers. This will bring a much stronger real estate market to San Diego County than we have seen over the last 2 years. Regular updates and tracking market changes month by month are essential—using the latest data and clarity from a local expert can help you make informed decisions, especially if you’re trying to diagnose why your house isn’t selling and what to do about it.

With tax incentives for both homeowners and investors, and lower rates, we expect a much higher number of sales overall. Sales will spike particularly in the $500K to $1M Range throughout the County.

What This Means for Homebuyers

Is 2026 expected to favor buyers, sellers, or balance?  

We expect more of a balance for the first quarter. Buyers in 2026 will have more inventory to search through, more days on market for negotiation, and decreasing mortgage rates, making it a favorable time for buying. As rates drop and more inventory becomes available, and the lower prices may see a market that is more favorable to the sellers again.

Best timing strategies for buyers?

Don’t wait! Buyers should get pre-approved NOW! This will help buyers avoid multiple offers, while still taking advantage of rates under 6%.

Homes priced at or slightly below market value tend to sell quickly and attract competitive offers, and buyers should understand how much below asking price they can reasonably offer when the right home appears.

If buyers feel “stuck” in a lease, there are options! Properties can easily be re-rented quickly, limiting your tenant buy-out costs.

Buyers are increasingly looking for homes that offer long-term value, including properties with income-generating potential. In an uncertain economy, it’s also important to weigh whether to buy now or wait for a potential recession based on your own financial stability.

Working with a trusted realtor provides clarity and guidance during the search and purchase process, helping you make informed decisions. Be sure to run the numbers with a mortgage calculator to evaluate affordability and protect your investment.

Also, consider the importance of schools in your neighborhood selection, as top-rated schools can drive demand and long-term value.

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What should buyers prepare for financially?

Loans start at No Money Down for VA/ Military families, and 3% or 3.5% for many entry-level and FHA buyers. These lower loan rates give buyers the opportunity to buy now, rather than saving for a 20% down payment.

When you’re ready to purchase, understanding the steps to close is essential for a smooth transaction and recognizing the signs your offer is likely to be accepted. In a balanced market, sellers should be flexible on terms, such as offering rent-backs or covering a buyer’s rate buydown, to facilitate a sale.

What This Means for Home Sellers in San Diego County

Pricing strategies based on expert forecasts:   

We are predicting strong sales, but that does not mean sellers should be increasing their prices as of yet.   Contact your local real estate expert to guide you through the pricing and marketing of your home based on recent sales in your community, including creative ways to market your house for sale beyond the basics.  

When to list in 2026:   

I represent quite a few buyers and sellers in our inland communities.   JAN – April is my favorite time of year, especially for clients who own larger parcels of land.   Everything is GREEN!   The marketing of your home looks more appealing for San Diego County during winter and spring due to all the local rain and morning dew, though broader data on the best and worst times to sell a home can also help tailor your strategy.  

Preparing a home to stand out in changing conditions:  

For some homes, those that are dated or fixer uppers, it is better to sell as is.   There are many savvy buyers looking for homes like this.    Other homes, small upgrades like flooring, paint, a new roof, or updated landscaping, are needed to give your home the competitive edge and a more striking curb appeal, and targeted projects can increase your home’s value by $50,000 to $100,000 when done strategically.  

Expectations around offers, concessions, and timelines: 

Expect more contingent offers as buyers and sellers try to upsize or downsize.    Traditional sales should still be 30 days.  Keep in mind everything is negotiable, including how you handle situations where a buyer requests access to the property before closing!

Whether you’re selling or buying a home in San Diego, it’s essential to work with an expert real estate agent to guide you through each step in the process.