News Summary
The San Diego County housing market struggles with affordability issues despite a minor dip in mortgage rates. High home prices and stagnant wages have made it difficult for many buyers. While mortgage rates for a 30-year fixed mortgage have decreased slightly, the overall sales activity remains sluggish. Experts predict a potential uptick in sales if inventory increases and sellers adjust their price expectations. However, economic uncertainty continues to make buyers wary, further complicating the market dynamics.
San Diego – The housing market in San Diego County is facing significant affordability challenges, despite a slight decrease in mortgage rates. Experts indicate that issues surrounding affordability are more pressing than the new mortgage interest rates. The rise in home prices since the pandemic has not been matched by wage increases, making payment levels more difficult for many buyers, regardless of current mortgage costs.
As of Thursday, the average rate for a 30-year fixed mortgage was reported at 6.3%, a slight reduction from the peak of 7.04% in mid-January 2025 but still higher than the 6.12% recorded last October. This marginal decrease in interest rates is viewed by experts as likely inadequate to invigorate the sluggish sales activity, which is currently at record lows.
According to predictions, an uptick in sales is expected to follow an increase in home inventory and changes in sellers’ price expectations. The ongoing high home prices combined with rising insurance rates are seen as barriers that hinder renters transitioning to homeownership, significantly impacting overall demand in the housing market.
Statistics show that approximately 80% of San Diego homeowners with mortgages currently have rates below 6%, many of whom are locked into rates between 3% and 4%. This has contributed to a reluctance among these homeowners to sell their properties unless mortgage rates fall below 5.5%. A substantial portion of California homeowners, around 66%, share similar circumstances, creating a standoff in the market.
Economic uncertainty coupled with rising unemployment rates is also influencing potential buyers, causing them to be more cautious when considering taking on debt. These trends are compounded by the fact that even a modest drop in interest rates might not significantly enhance home affordability for many working-class residents in the San Diego area.
Recent data highlight a slight downturn in the housing market, with home prices decreasing by 0.31% in June and experiencing a 0.61% drop over the past year. This decline represents a notable shift, as home prices are no longer keeping pace with inflation. The median home price in San Diego reached $990,000 in April 2025, a substantial increase from the $630,000 median shared five years earlier during the pandemic.
Additionally, homes are remaining on the market for longer periods of time, averaging 21 days in April 2025, contrasting with shorter timeframes observed in the previous year. This suggests that nearly half of the sellers in San Diego have recently lowered their prices due to a growing inventory and diminishing buyer demand, further indicating the sluggishness of the market.
Despite ongoing signs of a cool down in the housing market, experts have noted that the situation has not yet reached a recessionary level, as defaults and short sales have not emerged. The Federal Reserve’s current strategy regarding interest rates is affected by projected inflation, which is compounded by higher tariffs, ultimately influencing buyer affordability and market predictions.
In conclusion, while the recent drop in mortgage rates may provide some relief, the fundamental issues of high home prices, stagnant wage growth, and economic uncertainty continue to challenge the housing market in San Diego. The combination of these factors suggests that a more comprehensive reassessment of market conditions may be needed to reignite buyer interest and address affordability issues effectively.
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Additional Resources
- San Diego Union-Tribune: Mortgage Rates and Housing Market
- Times of San Diego: Home Market Transformation
- Norada Real Estate: San Diego Market Blog
- Business Insider: Housing Market Trends
- NBC San Diego: Housing Market Cooling
- Wikipedia: San Diego
- Google Search: San Diego housing market
- Encyclopedia Britannica: San Diego
- Google Scholar: San Diego housing market
- Google News: San Diego housing market
Author: STAFF HERE SAN DIEGO WRITER
SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
