Home buyers in California often have to deal with low supply levels within their local…
A Guide to Buying a Home in San Diego in 2025
Are you thinking about buying a home in San Diego in 2025? If so, you probably have questions about the local real estate market, home prices, and similar topics. This guide will bring you up to speed on all of these topics, and more.
Buying a Home in San Diego in 2025: Five Things to Know
Economists are forecasting that San Diego home prices will continue to rise in 2025, as they have for the past couple of years. Inventory levels, meanwhile, have increased a bit over the past year but remain low from a historical standpoint.
These are just a few of the trends you should know about when buying a home in San Diego in 2025. So let’s take a closer look at what’s happening in this real estate market.
1. Home prices will probably continue rising in 2025.
A pair of forecasts issued at the end of 2024 suggest that home values across the San Diego-Carlsbad metro area will rise during 2025. That’s a continuation of the status quo, since prices in this market rose steadily throughout 2024 as well.
According to Zillow, the median home value for the San Diego area rose by 4.7% during 2024. Looking forward, their analysts predict an additional gain of around 2.5% in 2025.
The research team from Realtor.com issued a more bullish forecast for this market, predicting that San Diego home prices would climb by 9% during 2025. They also predicted a big increase in home sales.
The Realtor.com projection seems a bit high based on current market conditions in the area, while the Zillow forecast seems a tad conservative. If we take an average of the two (5.75%), we might have a fairly accurate outlook for San Diego home prices in 2025.
Ultimately, however, we have to take these market predictions for what they are — an educated guess. No one can predict future real estate trends with complete accuracy.
The takeaway: Most economists expect home prices in the San Diego metro area to continue climbing in 2025, due to strong demand and low inventory.
2. Demand is strongest at the lower end of the price spectrum.
Sales data collected over the past several months show that, in San Diego, most real estate activity was occurring at the lower end of the spectrum. In other words, there’s more demand for cheaper homes in this market and therefore more competition.
This is a common feature of pricey real estate markets like San Diego, Los Angeles, and the Bay Area. And it stands to reason. There’s usually a higher number of people who can afford cheaper homes, and fewer who can afford to buy at the top of the market.
The takeaway: If you’re buying a relatively low-priced home in San Diego in 2025, you should be prepared for competition. There’s a lot more demand in the “starter home” price range.
3. Tight inventory conditions will continue to challenge buyers.
The total number of active real estate listings across San Diego County has increased a bit over the past year, giving buyers more options.
A summer 2024 Realtor.com report stated:
The inventory of homes for sale increased in all 50 of the largest metros compared with last year. Metros that saw the most inventory growth included Tampa (+90.1%), San Diego (+80.4%), and Orlando (+76.9%).
That’s the good news. The bad news is that there still aren’t enough homes on the market to meet the demand from buyers. So the San Diego real estate market continues to suffer from a lopsided supply-and-demand situation.
According to a December 2024 report from the California Association of Realtors (C.A.R.), San Diego County had a 2.9-month supply of homes for sale. This means it would take 2.9 months to sell all the homes currently listed for sale, assuming no new listings came onto the market.
That’s a bit higher than the 2.5-months of supply a year earlier, which means inventory grew during 2024. But it’s still a fairly low level of supply, and lower than the statewide average.
The takeaway: In 2025, San Diego-area home buyers should be prepared to deal with tight inventory conditions, by using the time-tested strategies outlined in this guide.
4. Mortgage rates are expected to decline a bit in 2025.
Mortgage rates have been somewhat volatile during 2024, which makes it hard to predict what will happen in 2025. Some forecasters expect the average rate for a 30-year fixed home loan to decline over the coming months.
For example, a December 2024 press release from the mortgage buyer Fannie Mae stated: “Average mortgage rates will decline modestly but remain above 6 percent, with likely bouts of volatility.”
Similarly, economists from Wells Fargo projected that mortgage rates are likely to fall to around 6.3% in 2025.
At the end of 2024, mortgage rates were hovering around 6.85% for a 30-year fixed. So these predictions suggest that San Diego home buyers could get a break next year, when it comes to interest rates.
Bear in mind, the above numbers are just averages. Individual rates vary based on a variety of factors, including the type of loan you use, your credit score, etc. Please contact us if you would like to receive a rate quote for a mortgage loan.
5. Higher loan limits have been set for FHA and conventional loans.
Here’s some good news for those planning to buy a home in San Diego in 2025.
Federal housing officials have increased the loan limits for both FHA and conventional mortgage loans. This means San Diego home buyers could have more properties to choose from without venturing into “jumbo” mortgage territory.
This change was made in response to home price gains that occurred nationwide during 2024.
FHA and conventional (conforming) loan limits will go up to $1,077,550 in 2025, for a single-family home purchase. Multifamily properties like duplexes and triplexes have higher limits.
Have questions? Bridgepoint Funding serves the entire San Diego metro area and offers all major loan options including FHA, conventional, and VA. Please contact us with your financing questions!
6. San Diego will continue to be a seller’s market in 2025.
While the San Diego housing market has become a bit more buyer-friendly over the past year, it still favors sellers due to the tight inventory conditions mentioned above.
As it states on the Realtor.com website: “San Diego, CA is a seller’s market in December 2024, which means that there are more people looking to buy than there are homes available.”
We expect this dynamic to continue into 2025 as well, due to a lack of new home construction and other factors. Home buyers should understand that, in most markets, sellers have more negotiating leverage.
The Bottom Line for Home Buyers
The general outlook for the San Diego real estate market in 2025 can be summed up in four words — more of the same. Home buyers will still have to contend with limited inventory and stiff competition, along with the prospect of rising prices.
But a potential drop in mortgage rates could improve affordability across the region. We will continue to monitor these trends and provide additional reports to keep you informed.
Disclaimer: This article contains predictions and forecasts provided by third parties not associated with our company. We have presented them here as an educational service to our readers.
