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Hoping for a drop in San Diego property prices in 2025? Don’t count on it.
Despite economic shifts, San Diego's real estate market is poised for growth, driven by high demand and limited housing supply.
Let’s explore why property prices in this vibrant city are expected to rise in 2025.
We rely on solid, up-to-date data and statistics from multiple credible sources, ensuring our analysis is grounded in reality.
By thoroughly examining this information, we draw our own conclusions, which we share at the end of this blog post. Enjoy the read!
How this content was produced 🔎📝
This article offers thoughtful insights and analysis based on reliable sources, but it should not be considered financial advice. We work hard to research, compile, and analyze data to give you a well-informed perspective. However, as you can guess, our analysis involves subjective choices, such as source selection and methods, and it cannot fully capture the market's complexity. Please, always do your own research, consult professionals, and make decisions based on your own judgment. Any financial risks or losses are your responsibility. Additionally, you should know that we have no affiliation with the sources mentioned, ensuring our analysis is completely impartial.
1) In San Diego, there are only about "0.40 homes" for each person, which is quite limited
Signal strength: strong
The fact that there is around 0.40 home per inhabitant in San Diego indicates a limited housing supply.
When the number of homes is low compared to the population, it often leads to increased competition among buyers, driving prices up. San Diego is a desirable place to live due to its beautiful weather and coastal location, which attracts many people.
Locals know that the city has strict zoning laws and limited land for new construction, making it hard to increase the housing supply. This scarcity, combined with the demand, suggests that housing prices are likely to rise in the coming years.
If the ratio were to increase to 0.60 home per inhabitant, it might indicate a more balanced market, potentially stabilizing prices.
Source: USCensus
2) Redfin considers the San Diego real estate market to be "very competitive."
Signal strength: strong
The fact that Redfin ranks the San Diego real estate market as "very competitive" suggests that there is a high demand for homes in the area.
When a market is labeled as "very competitive," it often means that properties are selling quickly and often above the asking price, which can drive up housing prices. In San Diego, the most competitive properties are single-family homes in coastal areas, particularly in neighborhoods like La Jolla and Pacific Beach.
These areas are highly sought after because they offer beautiful ocean views and a desirable lifestyle, attracting both local buyers and investors. The demand for these properties is fueled by limited inventory and a strong local economy, which can lead to increased prices over time.
If the market were to become "less competitive," with more properties available than buyers, it could signal a potential stabilization or decrease in prices.
Source: Redfin
We created this infographic to show how property prices in San Diego compare to other big cities in California. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
3) San Diego home values have risen by 6.5% since last year, and this trend may persist
Signal strength: strong
The fact that home values in San Diego have already changed by 6.5% since last year is a strong indicator of a rising trend in the housing market. This increase suggests that demand is outpacing supply, which often leads to higher prices.
Currently, the median home price in San Diego is around $1,003,863, which reflects the area's desirability and economic growth. Additionally, the median sales price per square foot is around $703, further emphasizing the premium nature of this market.
These figures indicate that San Diego's real estate market is robust, and if these trends continue, housing prices are likely to keep rising in 2025. For potential investors, this could mean a promising opportunity for appreciation in property value.
However, if the percentage change in home values were to drop significantly, it might signal a shift in the market dynamics, potentially indicating a stabilization or decline in prices.
Source: Redfin
4) Three major websites confidently predict that home prices in San Diego will rise in 2025
Signal strength: strong
There are currently three major websites forecasting a positive growth for home prices in San Diego in 2025, which is a promising indicator for potential investors.
Among these forecasts, Realtor is the most optimistic with a projected increase of 7.30% in home prices, followed by Redfin's forecast of a 4% rise. Meanwhile, Zillow predicts a more modest growth of 2.30% for the same period.
It's important to note that there is a significant gap between the highest and lowest forecasts, which suggests varying levels of confidence among these platforms. While these predictions are useful, they should be considered with caution as they are based on current trends and assumptions.
We will also rely on strong, reliable, and actual data to make a professional judgment. If all three forecasts were to predict a negative growth or a decline in home prices, it would signal a different market outlook.
Sources: ZillowForecasts, RedfinForecasts, RealtorForecasts
Our team designed this infographic to show how competitive the real estate market in San Diego is vs. other major cities in California. It shows the percentage of sales above the list price, a key indicator of market competition.
5) San Diego's "vacancy rate" of 6.5% shows a bustling and competitive market with most spaces filled
Signal strength: moderate
The vacancy rate in San Diego is 6.5%, which is considered very low. This low vacancy rate indicates that the market is highly occupied and competitive, meaning there is strong demand for housing.
When demand is high and supply is limited, it often leads to increased housing prices as more people compete for fewer available properties. In such a market, well-maintained, single-family homes in desirable areas like La Jolla are easily rented.
These properties are attractive to renters due to their proximity to amenities and scenic views, making them a hot commodity. Investors should consider that if the vacancy rate were to rise significantly, it could indicate a shift towards a less competitive market.
In such a scenario, housing prices might not increase as expected.
Sources: NeighborhoodScout, DataUSA, USCensus
6) San Diego boasts a commendable "Livability" score of 75
Signal strength: moderate
The livability score of 75 in San Diego is considered good because it reflects a high quality of life that attracts residents and investors alike.
One reason for this score is the pleasant climate, with mild temperatures year-round, making it an attractive place to live. Additionally, San Diego boasts beautiful beaches and outdoor activities that enhance the lifestyle of its residents. These factors contribute to the city's desirability, which can drive up housing demand.
Another key aspect is the strong local economy, supported by industries such as biotechnology and defense, providing ample job opportunities. This economic stability encourages people to move to the area, further increasing the demand for housing. As demand rises, it's reasonable to expect that housing prices will follow suit.
However, if the livability score were to drop below 60, it might indicate declining conditions that could deter potential buyers and investors.
Source: AreaVibes
This infographic we have made will show you how market values have changed during the last decade in San Diego vs other major places in California. Here, the percentage increase or decrease in market value will help you see long-term trends.
7) In San Diego, about 41% of homes sell for more than their listing price
Signal strength: moderate
In San Diego, around 41% of sales close at a price higher than the listing price, which is a strong indicator of demand. When buyers are willing to pay more than the asking price, it often means that competition among buyers is fierce and they are eager to secure a property.
This kind of market behavior suggests that buyers expect property values to rise in the future, motivating them to act quickly. As demand continues to outpace supply, it puts upward pressure on prices, leading to an increase in overall housing prices.
For someone considering investing in real estate, this trend can be a signal that the market is likely to appreciate in the coming years. However, if the percentage of sales closing above the listing price were to drop significantly, say below 20%, it might indicate a cooling market.
Source: Zillow
8) In San Diego, home prices have risen by an average of 8.2% annually over the past decade
Signal strength: moderate
The fact that home prices in San Diego have appreciated at an average rate of 8.2% over the last decade is noteworthy. This historical trend suggests that there has been consistent demand and growth in the housing market, which can be a positive signal for potential investors.
While a positive 10-year average home value appreciation indicates a history of demand and price growth, it is important to remember that past performance doesn’t guarantee future results. However, it does provide a useful indicator of favorable conditions that might continue to support price increases in the future.
Investors should consider this historical data as one of the many factors when evaluating the potential for future price growth in the San Diego housing market. It is essential to look at other economic indicators and market conditions to make a well-rounded decision.
If the average appreciation rate were to significantly drop below historical levels, it might suggest a different trend and warrant further investigation.
Source: NeighborhoodScout
This infographic designed by our team breaks down the latest livability score in San Diego but also in other big cities in California. It provides a clear view of which locations offer the best overall living conditions, which is a good thing to know if you want to buy real estate.
So, are prices going to climb in San Diego in 2025? Yes, they are!
San Diego's housing market is poised for price increases in 2025 due to several compelling factors.
First, the city has a limited housing supply with only 0.40 homes per person, leading to increased competition among buyers. This scarcity, combined with San Diego's desirable coastal location and strict zoning laws, makes it difficult to expand the housing supply, pushing prices upward.
Additionally, the market is labeled as "very competitive" by Redfin, with 41% of homes selling above the listing price, indicating strong demand. The 6.5% rise in home values over the past year and an average annual increase of 8.2% over the last decade further support the trend of rising prices.
Moreover, forecasts from major websites predict a positive growth in home prices, with Realtor projecting a 7.30% increase. The city's low vacancy rate of 6.5% and a commendable livability score of 75 also contribute to its attractiveness, ensuring continued demand. All these factors combined suggest that housing prices in San Diego are likely to climb in 2025.
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