Hello, I’m Trevor Sanders, owner of SD-Loans. I’m grateful for the opportunity to guide you and your family toward homeownership here in beautiful San Diego. Our team delivers tailored mortgage solutions, superior service, and the most competitive interest rates for your unique situation.
Today, I want to walk you through the San Diego mortgage market in 2025, featuring the latest data, trends, and smart tips to help you buy wisely—or refinance strategically.
San Diego Market Snapshot: Prices & Inventory in Mid-2025
Overview: San Diego’s real estate market in mid-2025 continues to demonstrate its resilience with climbing median sale prices, solidifying its status as a competitive environment. However, increasing inventory and slightly longer days on market suggest a gradual shift, offering buyers more options.
1. Median Sale Price Continues Ascent:
- Overall Trend: San Diego largely remains a seller’s market, characterized by persistently rising home values.
- According to Rocket Homes, the median home sold price in San Diego for May 2025 was approximately $888,647, representing a 5.9% increase year-over-year. [Source: Rocket Homes San Diego Market Report] (https://rocket.com/homes/market-reports/ca/san-diego)
- NBC San Diego further illustrates this significant long-term appreciation, reporting that the median home sale in April 2025 hit $990,000, a substantial rise from $630,000 five years prior. [Source: NBC San Diego Housing Market Update] (https://sdhousingmarket.com/news/housing-market-trends-update-prices-in-san-diego-april-2025/)
- Implication: These escalating prices reflect sustained buyer demand despite ongoing affordability challenges and high interest rates.
2. Rising Inventory & Moderate Market Cooling:
- Increased Supply: The market is showing signs of easing inventory, providing more choices for prospective buyers.
- Rocket Homes notes that total housing inventory jumped to 1,116 homes in May 2025, an 8.7% increase from April. [Source: Rocket Homes San Diego Market Report] (https://rocket.com/homes/market-reports/ca/san-diego)
- Longer Days on Market: Homes are taking slightly longer to sell, indicating a less frenzied pace.
- NBC San Diego reported that homes spent an average of 21 days on market in April 2025, which is up six days compared to the previous year. [Source: NBC San Diego Housing Market Update] (https://sdhousingmarket.com/news/housing-market-trends-update-prices-in-san-diego-april-2025/)
- Zillow.com corroborates this trend, stating that the typical home goes pending in about 17 days, while detached homes average around 26 days on market. [Source: Zillow San Diego Housing Market] (https://www.zillow.com/home-values/54296/san-diego-ca/)
- Strategic Advantage: To effectively navigate these evolving market conditions, especially with more options and slightly longer selling times, securing a solid mortgage pre-approval in San Diego is a highly recommended first step for serious buyers.
Interest Rate Environment in San Diego:A Snapshot (July 2025)
Key Takeaways:
- San Diego mortgage rates remain elevated, generally hovering between 6-7% for 30-year fixed loans.
- Rates have shown stability since mid-April, with only minor fluctuations.
- This predictable, albeit higher, rate environment allows for more strategic financial planning.
Current Mortgage Rates (as of July 1-2, 2025):
- 30-Year Fixed:
- Average: Approximately 6.7% – 6.9% APR
- Sources: NerdWallet.com (6.71% APR on July 2, 2025) Link to NerdWallet Mortgage Rates ; Bankrate (approx. 6.94% for California on July 2, 2025) Link to Bankrate California Mortgage Rates
- 15-Year Fixed:
- Average: Approximately 5.7% – 6.5% APR
- Sources: NerdWallet.com (5.772% APR on July 2, 2025) Link to NerdWallet Mortgage Rates ; Bankrate (approx. 6.5% for California on July 2, 2025) Link to Bankrate California Mortgage Rates
Market Commentary:
- “New Normal” Defined: The current rate landscape of 6-7% for 30-year fixed mortgages appears to be the “new normal,” stabilizing at higher levels compared to the historically low rates seen during the COVID-era.
- Stability and Predictability:
- Freddie Mac reports consistent mortgage rates, staying within a narrow 15-basis point range since mid-April. Link to Freddie Mac Mortgage Rates
- Zillow reinforces this, emphasizing a stable but high-rate environment, with 30-year rates trending just above 7% in May. Link to Zillow Mortgage Rates This predictability can be beneficial for those planning home purchases or considering refinance strategies.
San Diego Real Estate: Buyer vs. Seller Market Dynamics (July 2025)
Current Market Snapshot: While San Diego has historically been a strong seller’s market, recent data indicates a gradual shift towards more balanced conditions, offering increased opportunities for buyers.
1. Continued Seller Advantage, but with Nuances:
- High Demand Persists: San Diego is still recognized as a highly competitive real estate market. Zillow projects San Diego to remain one of the hottest real estate markets in 2025, ranking 19th nationally. [Source: Zillow San Diego Housing Market] (https://www.zillow.com/home-values/54296/san-diego-ca/)
- Affordability Challenges: Despite rising inventory, affordability remains a significant hurdle for many buyers, contributing to the competitive environment. Axios confirms the market’s continued competitiveness, noting that even with rising inventory, affordability remains tight. [Source: Axios] (https://www.axios.com/local/san-diego/2024/03/14/san-diego-real-estate-market-competitive)
- Increasing Inventory: Recent reports indicate a notable increase in housing inventory. This rise in available homes, while not completely shifting to a buyer’s market, is providing more options and some negotiating power to buyers. For example, some sources now indicate San Diego is moving towards a buyer’s market or that inventory is at its highest level since 2019.
2. Opportunities for Skilled Negotiation:
- Shifting Sale-to-List Price Ratios: Data from May indicates a more varied outcome in sale prices, suggesting a move away from solely “above asking” bids.
- In May, 45% of homes sold below asking price, while 32% sold above and 23% sold at asking. (Source: Rocket Homes, May 2025 San Diego Market Report) [Link to Rocket Homes San Diego Report] (https://rocket.com/homes/market-reports/ca/san-diego)
- While this signals a slight shift, strong offers are still crucial. Typical sale-to-list price ratios hover near 99-100%, indicating that homes are generally still selling very close to their asking price. (Source: dawnsellssandiego.com) [Link to dawnsellssandiego.com Sale-to-List Price Ratio Report] (https://sdhousingmarket.com/market-insights/average-sale-to-list-price-percentage-ratio-in-san-diego-county/)
San Diego’s Enduring Affordability Challenges (2025)
Overview: San Diego continues to be one of the least affordable major metropolitan areas in the nation, with high home prices and significant income requirements making homeownership a distant dream for many. While rent growth has slowed, the gap between renting and buying remains substantial.
1. High Income Demands for Homeownership:
- Elevated Mortgage-to-Income Ratios: San Diego ranks among the nation’s least affordable metros. Debt-to-income ratios for homeowners hover around 66.3%, significantly higher than the U.S. average near 36%. [Source: Nasdaq Report on Affordability, May 2025 (San Diego: 77.1% income share to afford median home in May 2025)]
- Income Required to Buy: A mid-priced home in San Diego now demands an annual income of approximately $241,200. This is about $135,000 more per year than the income generally needed to afford renting. [Source: Axios San Diego] (https://www.axios.com/local/san-diego/2024/03/14/san-diego-real-estate-market-competitive)
2. Renting vs. Buying Dynamics:
- Tapering Rent Growth: Despite persistent home price growth, rent increases in San Diego are moderating. Zillow reports the average rent near $3,121/month, with only a 0.4% monthly change as of July 2025, indicating much slower growth compared to home prices. [Source: Zillow San Diego Rental Market Trends] (https://www.zillow.com/rental-manager/market-trends/san-diego-ca/)
- The Rental Premium: While rent growth has slowed, the substantial income required for homeownership means that renting remains a significantly more accessible option for many residents.
3. Pathways to Homeownership: Accessible Loan Programs:
- For prospective buyers struggling with down payments or credit requirements for conventional financing, FHA mortgage loans and VA loans in San Diego may offer more accessible routes to homeownership due to their lower down payment requirements and flexible qualification criteria.
- FHA Loans: Offer lower down payments (as little as 3.5%) and more lenient credit requirements, making them a popular choice for first-time homebuyers. [Source: Community First Mortgage – San Diego FHA Loan Limits 2025] (https://communityfirstmortgage.com/san-diego-county-fha-loan-limits-2025/)
- VA Loans: Provide significant benefits for eligible veterans, service members, and surviving spouses, including no down payment requirements and no private mortgage insurance (PMI). [Source: Veterans United – VA Loan Limits by County] (https://www.veteransunited.com/education/tools/va-loan-limit-calculator/)
San Diego Real Estate: Nuanced Neighborhood & Segment Trends (2025)
Overview: San Diego’s housing market in 2025 exhibits highly varied patterns, with significant differences in growth and competition depending on property type and geographic location. This “pocketed growth” underscores the importance of hyper-local market analysis.
1. Growth Patterns by Number of Bedrooms:
- Larger Homes Leading Appreciation: Data from Rocket Homes reveals a distinct trend where larger homes are seeing the most significant year-over-year price jumps:
- 5+ bedroom homes: Surged by 34.3% YoY
- 4-bedroom homes: Rose by 9.4% YoY
- 3-bedroom homes: Increased by 5.4% YoY
- 2-bedroom homes: Experienced a slight dip of -1.2% YoY
- [Source: Rocket Homes San Diego Market Report (RocketHomes.com/real-estate-market/san-diego-ca/)] (https://rocket.com/homes/market-reports/ca/san-diego)
- Luxury vs. Starter Homes: This data generally aligns with the observation that luxury homes are appreciating at a faster pace, while growth in the starter home segment is more modest.
2. Regional Price Variance & Disparity:
- Location Matters Significantly: Market insights from Norada Real Estate and Dawn Sell’s team underscore how widely pricing and competition differ across San Diego County:
- Entry-level areas: Neighborhoods like National City experienced a notable price drop of approximately 15%. [Source: Dawn Sells San Diego Housing Market Forecast (dawnsellssandiego.com)] (https://www.dawnsellssandiego.com/blog/san-diego-county-single-family-housing-market-spring-2025-trends-and-forecast)
- Upscale areas: Conversely, affluent communities such as Poway saw significant appreciation, rising approximately 32%. [Source: Dawn Sells San Diego Housing Market Forecast (dawnsellssandiego.com)] (https://www.dawnsellssandiego.com/blog/san-diego-county-single-family-housing-market-spring-2025-trends-and-forecast)
- Broader Market: Most other neighborhoods generally observed single-digit growth.
- [General Market Insights: Norada Real Estate Investments] (https://www.noradarealestate.com/blog/tag/san-diego/)
- Implication: This strong regional variance emphasizes that a successful real estate strategy in San Diego requires deep knowledge of specific sub-markets, as conditions can be dramatically different from one area to another.
San Diego Real Estate: Forecast for the Rest of 2025
Outlook: The latter half of 2025 in San Diego is anticipated to bring a potential uptick in sales volume and a slight easing of mortgage rates, creating a more dynamic, and possibly more accessible, environment for buyers.
1. Anticipated Rise in Sales Volume:
- Projected Growth: Norada Real Estate predicts a 9% jump in home sales for 2025 across California, a trend likely to be mirrored in San Diego. This increase is expected to be fueled by continued job growth and a stabilizing market. [Source: Norada Real Estate – California Housing Market Forecast] (https://www.noradarealestate.com/blog/california-housing-market/)
- Increased Buyer Opportunities: As housing inventory continues to increase in San Diego, this rise in sales volume suggests buyers may find more favorable opportunities and potentially less intense competition compared to recent years.
2. Mortgage Rates Likely to Cool Slightly:
- Expert Forecasts: Experts in the San Diego housing market forecast 30-year fixed mortgage rates to ease to the 6%–6.5% range by year-end 2025. [Source: San Diego Housing Market Update – May 2025 (sdhousingmarket.com)] (https://sdhousingmarket.com/news/housing-market-trends-update-prices-in-san-diego-may-2025/)
- Impact on Buyers and Homeowners:
- Reduced Payments: A downward trend in rates would directly reduce monthly mortgage payments, improving affordability for prospective buyers.
- Refinance Opportunities: This cooling could also stimulate refinance activity for existing homeowners who secured loans with higher interest rates (e.g., in the 7%–8% range). If you fall into this group, it would be prudent to actively explore your refinancing options, including potentially jumbo loan possibilities, as rates soften.
Mortgage Tips for San Diego Buyers & Refinancers
- Get Pre-Approved Early
With competition intensifying, a strong pre-approval letter is your ticket to being taken seriously. - Focus on Total Cost
Compare APR, fees, and rate—not just monthly payments. Even a small difference in APR can save you thousands. - Explore Specialized Programs
We offer FHA loans, VA loans, conventional home loans, jumbo, and non-QM loans. Let’s find the best fit for your goals. - Lock Your Rate Strategically
If you’re closing in 30–45 days, a lock can protect you from increases. If your timeline is longer, ask about float-down options. - Keep Your Credit Strong
Avoid new debt, stay current on payments, and dispute any errors on your credit report. Even small improvements can unlock better rates. - Consider Refinancing If You Bought Early in 2020s
If your current mortgage is 7–8%, dropping to 6% may justify a refinance—especially if you’ve built up equity. - Work With a Local Expert
San Diego is a complex and fast-moving market. A local mortgage broker with neighborhood insights and lending expertise can give you a critical edge.
Final Thoughts with Trevor
In 2025, San Diego remains high-cost but slightly more accessible. With rising inventory, slower price growth, and projected rate dips, opportunities await informed buyers and strategic refinancers. Still, competition remains fierce—so your success depends on preparation, clarity, and timing.
At SD-Loans, my commitment is to help you navigate with confidence—providing customized guidance, timely insights, and effective strategies. Together, we can plan your next move, whether it’s buying your first home, scaling up, or refinancing for savings.
📞 Call/Text: 619-855-5061
Keys In Hand, New Chapter Unlocked
Let’s make 2025 the year you take smart action in the San Diego housing market.
