San Diego Real Estate Market Update – October 2025

Inventory is dwindling… What does that mean? 

As we head into the final stretch of the year, the San Diego real estate market continues to show some compelling trends that are shaping buyer and seller behavior. Let's break down what's been happening, what to expect, and how to best position yourself whether you're buying or selling.

Inventory Is Shrinking – is that Driving the Market?

Over the past 2 months, more homes are coming off the market than going on. This ongoing inventory slowdown is a key factor in price stability — and even potential price growth.

Earlier in the year (February through July), inventory climbed steadily, but sales remained relatively flat. Fast forward to the past two months, and inventory has dropped by nearly 25%, according to recent data. This imbalance between supply and demand is pushing the market toward an equilibrium, but until we get there, it’s likely that prices will either hold steady or continue to rise.

Are Prices Really Going Up?

Yes — at least in many parts of the county. Contrary to the belief that home prices must be coming down, San Diego County has seen an average price increase of 1.1% this year.

That said, the market varies depending on location:

• Coastal areas like Carlsbad and Oceanside have seen notable appreciation.
• Inland areas such as Escondido and Ramona have experienced slight value decreases.

So while the average tells one story, your specific neighborhood might be telling another.

The Buyer Demand Is Real — and Local Migration Is Fueling It

Despite the narrative that "everyone is leaving California," we’re not seeing that in San Diego County. In fact, buyer demand here remains strong — and much of it is coming from within the state. People from Los Angeles, the Bay Area, and other high-cost markets are choosing to relocate to San Diego for better weather, affordability, and lifestyle.

Redfin data shows 4.8 times more people are searching for homes in San Diego than San Diegans looking elsewhere. That level of interest bodes well for continued demand.

All Eyes on Interest Rates

As always, interest rates are a huge factor to watch. The upcoming Fed meeting at the end of October is expected to bring a quarter-point rate cut, potentially pushing the Federal rate below 4%. This would translate to mortgage rates dropping closer to 6%, a significant improvement over the 7–7.25% range earlier this year.

Lower rates = higher demand. Higher demand + lower inventory = a recipe for upward price pressure!

Seller Tip of the Month: Preparation Pays

Sellers, it’s all about presentation. We recently helped a client prepare their home for market by doing a few strategic updates — repainting, replacing carpet, staging, and minor repairs. Originally planning to list at $799K, we ultimately listed at $850K — and sold for $865K.

The key takeaway? Smart preparation equals strong ROI. Work with professionals who understand what small improvements can make a big difference in your final sale price.

Buyer Tip of the Month: Stay Active Through the Holidays

Buyers, don’t hit the pause button just because the holidays are approaching. Many buyers take a step back this time of year, which means less competition and more opportunity for those who stay in the game.

We’ve seen savvy investors make some of their best deals in Q4. So:

• Stay pre-approved.
• Keep browsing listings.
• Partner with an expert who can help you recognize a good deal when you see one.

Final Thoughts

San Diego continues to be a safe and stable market for both homebuyers and investors. With buyer demand holding steady, inventory tightening, and interest rates expected to drop, we anticipate a strong close to 2025 — and positive momentum into 2026.

As always, if you have questions about your specific neighborhood or need help navigating your next move, reach out to any of us on the True Local Team. We’re here to help you succeed.