San Diego Housing Market Sees Significant Price Reductions and Surge in Listings as Sellers Adapt to New Realities

San Diego’s housing market is going through some significant shifts.

Homeowners are now more inclined to list their properties for sale, but many are doing so at reduced prices.

This marks a noticeable departure from the higher listing prices seen in previous years, signaling that the market might be slowing down.

A Drop in Prices and an Increase in Listings

As of early March 2025, the median listing price in San Diego dropped by 4.8% compared to the previous year.

Alongside this price reduction, active listings in the city surged by 63.8%.

This trend suggests that homeowners are choosing to sell, even if it means accepting lower offers than in recent years.

While there were initial concerns that federal layoffs could have a significant impact on housing markets in metro areas with a high federal presence like San Diego, the city hasn’t yet shown any major repercussions tied to those job cuts.

National and Regional Housing Trends

The shift in San Diego’s housing market mirrors national trends.

Nationally, there has been a 27.8% increase in housing inventory, with homes taking an average of four extra days to sell compared to the previous year.

This slower pace is being attributed to the higher number of listings now available.

Realtor.com also points out that the upcoming week of April 13 is projected to be the optimal time for sellers to list their homes, thanks to a seasonal boost in buyer demand and reduced competition from other sellers.

San Diego Ranks Among the Top Housing Markets

Recently, San Diego was recognized as one of the hottest housing markets in the country.

It ranked 19th overall, even ahead of Los Angeles and San Francisco, according to Zillow.

This reflects a broader pattern across California, where the supply of homes listed for sale has surged.

In fact, California’s listings rose by 44% in February 2025 compared to the same time last year, according to Realtor.com’s economic research team, which is significantly higher than the national average of 28%.

California’s Housing Market Faces Supply and Demand Shifts

This surge in listings in California is not just a San Diego phenomenon but part of a larger statewide trend.

Rising inventory is often a sign that price growth might slow down, as the balance between supply and demand shifts.

More options for buyers mean sellers might need to lower their prices or make other concessions to close a deal.

Nick Gerli, the CEO of real estate data startup Reventure App, points out that five out of the top 11 U.S. cities for inventory growth are in California, including San Diego.

Active listings in the city have risen by 61% compared to last year, and Gerli believes this could lead to slower home price growth in the coming months. “It’s realistic to expect prices to flatten or even dip slightly by the end of the year, particularly in certain markets,” he says.

Affordability Challenges in the State’s Housing Market

Some California markets, including San Diego, may have reached an “affordability wall” when it comes to home prices.

In February 2025, the median listing price for homes in San Diego was over $948,000, a price far beyond the reach of many local families.

With a median household income of about $104,000 in the area, purchasing a home at these prices is becoming increasingly difficult for many residents.

Despite these affordability challenges, Gerli notes that the surge in inventory is happening from a position of severe shortage in California.

Even with the rise in listings, only 0.6% of the state’s homes are currently on the market, which is still significantly lower than pre-pandemic levels.

The Road Ahead for California’s Housing Market

Gerli doesn’t expect a dramatic price crash in California, but rather a more gradual market reset.

This reset will likely be supported by strong economic fundamentals, such as low unemployment rates and low mortgage default rates.

California’s housing market is still facing an overall shortage, but the recent uptick in inventory suggests that the balance may slowly be shifting over the next year.

While prices may cool, the market is unlikely to experience a sudden collapse.

Instead, it seems more likely that we’ll see a steady, long-term adjustment.

As for San Diego, homeowners who are eager to sell might find that the upcoming months bring favorable conditions for doing so.

However, with prices starting to stabilize and inventory on the rise, buyers will have more options to choose from—changing the dynamics of one of California’s most sought-after markets.