San Diego, January 27, 2026
The San Diego housing market is grappling with significant affordability issues, with only 1.6% of homes accessible to median-income households. To buy a typical home, families need to earn around $221,900. Lower mortgage rates are driving demand, yet the median home price remains just under $1 million. While builders aim to increase the supply of townhomes, a larger influx of housing is necessary for long-term affordability. Additionally, a significant portion of the housing stock is over 30 years old, highlighting the need for new construction.
San Diego Housing Market Faces Affordability Challenges Amidst Market Shifts
San Diego, California – Recent analyses reveal that only 1.6% of homes in San Diego are affordable for households earning the area’s median income, making it one of the most challenging U.S. housing markets for average earners. To afford a typical home in San Diego, a household must earn approximately $221,900 annually. This affordability issue is part of a broader national trend, where over 75% of homes are unaffordable to the typical U.S. household. In response, local builders and policymakers in San Diego are focusing on constructing more townhomes to provide attainable housing for first-time homebuyers. However, experts warn that a significant increase in housing supply in desirable areas is necessary to improve long-term affordability, even if mortgage rates decline.
In addition to affordability concerns, the San Diego housing market is experiencing notable shifts. Lower mortgage interest rates are expected to attract more buyers, potentially driving home prices higher. With the median home price just under $1 million, reduced rates—from the current average of 6.1% to a potential 5.5%—could exacerbate demand in a market already suffering from low housing inventory. Experts suggest buyers might want to act now before prices rise further due to increasing competition. While lower rates make buying slightly more accessible, many residents still find home ownership out of reach. Sellers, previously reluctant to move due to low fixed rates, may begin entering the market, potentially easing inventory constraints. Real estate professionals advise prospective buyers to focus on securing the right home, even if it means refinancing later—encapsulated in the phrase, “Date the rate, marry the home.”
Furthermore, San Diego’s housing stock is notably older than the national average. The median home sold in San Diego last year was 43 years old, with 71% of homes over 30 years old. This aging housing stock reflects years of sluggish home building that has created a stubborn shortage. Older homes tend to be cheaper, with the median sales price for San Diego homes more than 30 years old at $855,000, compared to $910,000 for homes built in the last five years. This trend underscores the need for new construction to meet the growing demand for housing in the region.
In the multifamily sector, San Diego’s market remains strong and stable. Forecasts show vacancies holding steady at 4.5%, significantly tighter than the national average of 6%. Asking rents are projected to rise 2.5% year over year, indicating robust demand for rental properties. The region’s high cost of single-family home ownership and consistent population growth contribute to the sustained demand for rental housing. However, the delivery of a significant number of new units from 2022 through 2024 has eased the crunch slightly, with the county’s apartment vacancy rate climbing to about 5–6% by mid-2024, the highest level in several years. Despite this increase, a 5% vacancy rate is still indicative of a landlord-favorable market, and much of the excess vacancy is concentrated in brand-new luxury developments in downtown and UTC that are in their lease-up phase.
Overall, while San Diego’s housing market faces significant challenges, including affordability issues and an aging housing stock, there are signs of stabilization and potential opportunities for both buyers and sellers. The market’s evolution will depend on various factors, including interest rates, inventory levels, and economic conditions.
Frequently Asked Questions (FAQ)
What percentage of San Diego homes are affordable for median-income households?
Only 1.6% of San Diego homes are affordable for households earning the area’s median income, making it one of the most challenging U.S. housing markets for average earners.
What is the current median home price in San Diego?
The median home price in San Diego is just under $1 million, with the median sales price for homes more than 30 years old at $855,000, compared to $910,000 for homes built in the last five years.
How old is the typical home in San Diego?
The median home sold in San Diego last year was 43 years old, with 71% of homes over 30 years old, reflecting years of sluggish home building that has created a stubborn shortage.
What is the current vacancy rate in San Diego’s multifamily market?
San Diego’s multifamily market has a vacancy rate of 4.5%, significantly tighter than the national average of 6%, indicating strong demand for rental properties in the region.
How are lower mortgage interest rates affecting the San Diego housing market?
Lower mortgage interest rates are expected to attract more buyers, potentially driving home prices higher. With the median home price just under $1 million, reduced rates—from the current average of 6.1% to a potential 5.5%—could exacerbate demand in a market already suffering from low housing inventory.
Key Features of San Diego’s Housing Market
| Feature | Details |
|---|---|
| Affordability | Only 1.6% of homes are affordable for median-income households; a household must earn approximately $221,900 annually to afford a typical home. |
| Median Home Price | Just under $1 million; homes over 30 years old have a median sales price of $855,000, compared to $910,000 for newer homes. |
| Housing Stock Age | Median home sold is 43 years old; 71% of homes are over 30 years old, indicating an aging housing stock. |
| Multifamily Market Vacancy Rate | 4.5%, significantly lower than the national average of 6%, reflecting strong demand for rental properties. |
| Impact of Lower Mortgage Rates | Expected to attract more buyers, potentially driving home prices higher; reduced rates could exacerbate demand in a market with low housing inventory. |
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