It’s time to take a closer look at the real estate market trends that will shape San Diego this year, and lay out my 2025 Predictions!
Mass Exit from California? There’s been a lot of talk about people leaving California, but the data tells a different story—San Diego’s population continues to grow, fueled largely by transplants from Northern California and Los Angeles. This migration pattern has been a key factor in the market’s stability and growth, and we expect this trend to persist throughout 2025.
San Diego’s Market Ranking & Demand According to Zillow, San Diego has been ranked as the 19th hottest market for 2025. This ranking is largely driven by strong demand coupled with a persistent inventory shortage. With more people choosing to call San Diego home and limited housing supply, home values are likely to continue their upward trajectory.
Predicted Home Price Appreciation While national home price appreciation is expected to be around 3-4%, San Diego historically outpaces many other markets, including those in the Midwest. Based on current trends and expert analysis, a 5.5% appreciation in home values is a realistic expectation for 2025. This growth rate indicates a stable yet thriving market—strong but not as extreme as the double-digit increases seen in previous years.
Mortgage Rate Outlook Interest rates remain a crucial factor in the housing market. While initial projections were optimistic about rates decreasing quickly, the reality is that the Federal Reserve is taking a cautious approach. Analysts anticipate that mortgage rates will gradually decrease throughout the year, potentially dropping to the mid-6% range by mid-year and possibly breaking into the high-5% range by the end of 2025. This steady decline should help boost buyer confidence and encourage more market activity.
Sales Volume & Inventory Growth One of the biggest shifts we expect this year is an increase in the number of homes sold. Based on market indicators and on-the-ground insights, a 25% rise in home sales seems likely. Buyers are becoming more comfortable with current mortgage rates and recognizing that while rates may drop, waiting indefinitely isn’t always the best strategy.
Additionally, inventory levels are projected to increase to around four months of supply. While this might seem like a significant jump, it’s important to remember that we’ve been at historic inventory lows for the past three years. Compared to pre-pandemic levels from 2015-2018, this increase represents a return to a more balanced and healthy market, ensuring steady appreciation without the unsustainable spikes of previous years.
Final Thoughts San Diego’s real estate market is positioned for steady growth in 2025. I’m projecting home values to rise around 5.5%, mortgage rates gradually declining into the low 6’s, and inventory levels to increase, the market appears to be moving towards a healthier balance. For buyers, sellers, and investors, this presents opportunities to navigate the market with confidence.
If you have any questions about buying, selling, investing, or developing in San Diego, feel free to reach out to me or anyone on the True Local team. We’re here to help you make informed decisions in this dynamic market!