San Diego Housing Market Inventory Shortage Easing in 2025

The San Diego area real estate market has been experiencing an inventory shortage for several years now, and that trend will likely continue throughout 2025 as well.

However, a recent report showed that this market gained a significant amount of inventory over the past year, when measured by active property listings.

San Diego’s Housing Inventory Grew Last Year

As we enter 2025, housing market inventory continues to improve in many cities across the U.S. In fact, some markets have already seen supply levels return to something resembling normal.

According to a January 2025 report from Realtor.com: “inventory is still inching its way back to 2017-2019 levels.”

That same report singled out the San Diego area housing market as one of several that experienced above-average inventory growth over the past year:

“December 2024 saw a 22.0% growth in homes actively for sale compared with the same time last year … Miami (45.4%), San Diego (42.4%), and Denver (41.9%) led the way with the highest active listing growth year over year amongst the top 50 metros in the U.S.”

Most major real estate markets across the state of California currently have more supply (i.e., homes for sale) than they did a year ago. But the San Diego-Chula Vista area topped the list with a 42% year-over-year increase in active listings, according to this report.

How Supply Growth Affects Buyers and Sellers

Housing market inventory growth doesn’t occur in a vacuum. It connects with many other aspects of the real estate market and tends to have a far-reaching ripple effect.

Here’s how San Diego’s supply gains could affect buyers and sellers in 2025:

How It Can Affect Buyers

  • Increased Choices: More homes on the market mean buyers have a wider selection, making it easier to find properties that meet their needs.
  • Less Competitive: Buyers may face fewer bidding wars in 2025, reducing the need for aggressive offer strategies like waiving contingencies.
  • Negotiation Power: While San Diego is still considered a seller’s market, buyers have more leverage to negotiate price reductions, seller concessions, etc.
  • Due Diligence: A larger inventory gives home buyers more time to evaluate options, without the pressure of making on-the-spot decisions.

How It Can Affect Sellers

  • Increased Competition: In 2025, San Diego home sellers might need to price their properties more competitively to attract offers.
  • More Time on Market: Homes may take longer to sell, especially if buyers have many alternatives to choose from in the same area.
  • Reduced Leverage: Higher inventory levels could limit sellers’ ability to demand premium prices, requiring a more conservative strategy.

We won’t necessarily see all of these trends within the San Diego housing market in 2025. But if inventory continues to grow going forward—as it did during 2024—some of these changes could begin to manifest later this year.

It’s Still a Seller’s Market for Now

The inventory gains mentioned above could benefit San Diego home buyers in 2025. Among other things, it could increase the chance of finding a suitable home within budget.

But the San Diego area is still considered to be a seller’s market based on local supply and demand factors. It’s just not as strong of a seller’s market as it was four or five years ago.

The SoCal real estate scene is more buyer-friendly in 2025. But overall, sellers tend to have more negotiating leverage when it comes to sale price, terms, concessions, and repairs.

Savvy home buyers will enter the market with this dynamic in mind, making a strong initial offer to avoid losing out.

San Diego Housing Supply Over the Years

The graphic below shows the “months of supply” measurement for the San Diego metro area (green) and the nation as a whole (red). It’s based on data provided by national real estate brokerage Redfin, as of January 2025.

San Diego housing supply versus national average in early 2025

Definition: “Months of supply” (also known as absorption rate) is a key measure of housing market inventory and activity. It represents the number of months it would take to sell all the homes currently on the market at the current sales pace, if no new listings were added.

  • San Diego housing market supply trends typically follow national patterns.
  • But most of the time, San Diego has less supply than the national average.
  • You can also see how these levels plummeted during the pandemic.
  • Going into 2025, housing supply has improved but is still historically low.
  • The San Diego housing market still has a relative shortage of properties.
  • This imbalance will continue to favor sellers while challenging buyers.

The Bottom Line for Home Buyers in 2025

Overall, this graph (and the corresponding trends) offer some good news for San Diego home buyers. Those who plan to purchase a home in 2025 should have more properties to choose from, compared to those who bought a few years ago.

If housing market inventory continues to grow over the coming months, as expected, buyers could gain some additional negotiating leverage that was lacking in previous years.

According to a December 2024 report from Realtor.com:

“Growth in inventory with single family home starts is expected to grow 13.8% [in 2025] and existing for-sale home inventory is expected to grow by 11.7%…”

Similarly, economists from Freddie Mac recently predicted that lower mortgage rates will bring more homes onto the market in 2025, by easing the mortgage rate “lock-in effect.”

According to a recent forecast from Freddie Mac: “Lower rates and the boost to inventory should lead to slightly higher home sales in 2025.”

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Brandon Cornett

Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author