San Diego, California Housing Market Forecast: 2024 – 2025

In this report: A detailed summary of current housing market trends in the San Diego area with a long-range forecast stretching into early 2025.

Over the past year or so, the San Diego real estate market has posted some of the biggest home-price gains of any U.S. metro area. It’s currently one of the hottest housing markets in America, with buyers competing for scant inventory.

According to a February 2024 report based on the S&P Corelogic Case-Shiller Index:

“San Diego reported the highest year-over-year gain among the 20 cities with an 8.8% increase in December, followed by Los Angeles and Detroit, each with an 8.3% increase.”

Looking forward, housing market forecasts for the San Diego area predict that it will continue to outpace the nation in terms of price growth.

Here are the latest trends and predictions for this Southern California real estate market, extending through 2024 and into 2025.

Strong Home Price Forecast Stretching Into 2025

Home prices in this market have risen significantly over the past year, exceeding the national average for year-over-year home value gains. 

With some of the best beaches, weather and attractions in America, the San Diego area attracts residents from other parts of California and elsewhere across the country. This channels more buyers into the real estate market, increases demand, and puts upward pressure on home prices.

We can see evidence of this in the latest home price trends, and also through recent predictions for the San Diego real estate market.

According to Zillow, the median home value for the San Diego-Carlsbad metro area rose by 8% over the past year (as of March 2024), reaching $902,000. That was one of the largest year-over-year gains of any major market in the U.S. during that timeframe.

Zillow’s forecast for the next 12 months suggested that prices would continue to climb steadily through 2024 and into 2025. Here is their one-year forecast for the San Diego-area housing market:

From January 2024 to January 2025, prices will rise by 6.2%.

Granted, real estate market predictions like these represent an educated guess rather than a sure thing. But other forecasts for the San Diego area seem to agree that home prices will keep climbing for the foreseeable future.

Tight Housing Market Inventory in San Diego

The current inventory situation within the San Diego real estate market can be summed up with a single sentence:

Supply levels have increased from the record lows seen during the pandemic, but they are still very low from a historical standpoint.

This is another important factor that’s driving the positive home price forecasts and predictions for the San Diego-area housing market in 2024 and 2025. After all, supply is one of the two primary drivers of real estate market conditions—the other being demand.

As of early spring 2024, the San Diego-Carlsbad metropolitan area had about a 1.7-month supply of homes for sale. That’s an increase from the pandemic-era lows, when there was less than a 1-month supply, but it’s still well below what’s considered to be a balanced market.

How tight inventory conditions can affect San Diego home buyers:

• Intensified Competition: With fewer homes available, buyers often find themselves competing with multiple other interested parties for the same property. This can lead to bidding wars, driving prices above the initial asking price.
• Limited Choices: A low inventory restricts the range of options buyers have. They may not find homes that match their ideal criteria for location, size, or features. This can force them to make compromises to secure a place.
• Pressured Decisions: The fast-paced nature of a tight market like San Diego means that desirable homes can sell within days. Buyers often feel pressured to make offers quickly, sometimes without adequate time for inspections or careful consideration.
• Seller’s Advantage: Sellers typically have more leverage in these conditions. They are likely to receive multiple offers from buyers, allowing them to be more selective and less likely to negotiate on price or repairs.

Still a Fast-Moving Housing Market

Given the low supply conditions mentioned above, it should come as no surprise that the San Diego real estate market is currently moving at a fast pace.

To measure the overall “speed” of a particular market, housing analysts and economists often use a metric known as the “days on market.” In theory, this is the length of time it would take to sell all homes currently listed for sale, assuming that no new properties came onto the market.

During the first quarter of 2024, the San Diego metro area had a median days on market measurement of around 28 days. That was significantly lower than the national median of 49 days, during that same timeframe.

Predictions for the San Diego housing market suggest that the pace could accelerate further over the coming months, especially if mortgage rates decline further.

Home buyers within the San Diego real estate scene should be prepared to hit the ground running when they enter the market. It also helps to make a swift and strong offer on a house, by using comparable sales data and advice from a market-savvy real estate agent.

Many Homes Selling Above the List Price

Here’s another sign that the San Diego housing market currently favors sellers over buyers.

In February 2024, nearly 40% of homes that were sold in this metro area ended up selling for more than the list price. This kind of thing occurs when multiple home buyers compete for the same property, driving up the final sale price.

When the “sold-above-list-price” metric rises above 20%, it indicates a fairly competitive real estate scene. When it climbs above 30%, you’re looking at a seller’s market where home buyers face even more competition—and often higher prices.

In conclusion: the San Diego-area real estate market continues to experience a relative shortage of properties for sale, when compared to the number of buyers seeking them. Because of this, predictions for the San Diego housing market envision rising home prices well into 2025.

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About the San Diego-Carlsbad Metro Area

We created the following guide for home buyers who are new to the San Diego metro area, as well as those who plan to move there in the near future.

• Designation: San Diego-Carlsbad, CA Metropolitan Statistical Area (MSA)
• Major Cities: San Diego, Chula Vista, Carlsbad, Oceanside, Escondido
• Population: About 3.3 million residents across the metro area, as of 2024

San Diego is the second-largest metropolitan area in California, after Los Angeles, and the eighth-largest in the United States.

As for its geography, the San Diego area stands out for several reasons. It includes everything from coastline to mountains to the Anza-Borrego Desert. Its borders include the Pacific Ocean to the west, Mexico to the south, and inland mountain ranges to the east.

Economy

San Diego’s economy is driven by a broad range of industries. These include biotechnology, healthcare, tourism, defense, and telecommunications. The presence of major research institutions and military installations contributes to the region’s economic vitality.

According to the Employment Development Department (EDD) of California, major employers in San Diego County include Collins Aerospace, General Dynamics, Kaiser Permanente, Naval Station San Diego, Scripps Health, SeaWorld, Sharp HealthCare, the University Of California, and the 32nd St. Naval Station.

Education

The San Diego metropolitan area is home to several esteemed educational institutions. These include the University of California, San Diego (UCSD), San Diego State University (SDSU), and University of San Diego (USD).

Additionally, the region boasts a strong network of public and private K-12 schools, offering families a range of educational options.

Housing Market

As mentioned above, the San Diego-Carlsbad housing market is known for its competitive nature and relatively high prices. Home buyers should be prepared for tight inventory and fierce bidding wars, particularly in desirable neighborhoods close to the coast.

As of spring 2024, the median home value for the San Diego area was about $600,000 higher than the national median.

Transportation

Major interstates like the 5, 8, and 15, facilitate travel throughout the region. But all three can become heavily congested during peak commuting hours, especially the I-5. Public transportation options include buses, trolleys, and commuter trains.

This metro area is served by several airports, including the primary San Diego International Airport (SAN) and the general aviation hub McClellan-Palomar Airport (CLD) in Carlsbad.

Cost of Living

While San Diego-Carlsbad offers a high quality of life, it also comes with a relatively high cost of living. Prospective home buyers should budget accordingly for housing expenses, as well as other necessities such as groceries, utilities, and healthcare.

According to a 2023 report from SmartAsset, the San Diego metro area ranked as the second most expensive metro in the nation, after San Francisco. To quote their report:

“San Diego-Chula Vista-Carlsbad jumped up four spots in this year’s rankings after the cost of annual living expenses increased by a whopping 21.32%, according to MIT. As a result, a single person must now earn $79,324 after taxes to live comfortably in that part of California.”

Climate and Weather

The San Diego area enjoys a Mediterranean-style climate with warm, dry summers and mild winters. Average temperatures range from the upper 60s (F) in winter to the mid-70s (F) in summer. Rainfall is limited and usually occurs from December to March.

While San Diego-Carlsbad experiences relatively stable weather patterns year-round, residents should be mindful of occasional heatwaves, wildfires, and coastal fog.

Overall, this area offers some of the best weather and most beautiful scenery of any city in the U.S. That’s partly why the San Diego real estate market is so competitive, with positive price forecasts stretching into 2025.

Recreation and Attractions

There’s no shortage of places to go and things to do in the San Diego area. This area offers an abundance of recreational and entertainment options for residents of all ages. And the beaches are just the beginning.

Popular local attractions include SeaWorld, the San Diego Zoo, Balboa Park, Legoland, La Jolla Cove, Coronado Beach, the Gaslamp Quarter, Old Town, and the Torrey Pines State Natural Reserve, to name but a few.

Disclaimer: This report contains predictions for the San Diego real estate market provided by third parties not associated with the publisher. While the Home Buying Institute works hard to provide useful commentary, we do not make guarantees about future housing market conditions, which are notoriously difficult to predict.