As 2025 comes to a close, I wanted to give our investors, partners, and clients my personal perspective on the San Diego real estate market and a brief look back at how the year unfolded.
I track bi-weekly market data directly from the San Diego MLS, and over time, I’ve found that local data, not national headlines, tells the real story. What follows are a few insights that I think are especially relevant for those looking to invest, build, or reposition capital in San Diego.
A “Cautious” Year
This year delivered a mix of good and bad news, dark predictions, and bright expectations. We heard constant speculation about mortgage rates dropping, watched hesitant Federal Reserve moves, and dealt with economic and political uncertainty that affected nearly every market participant.
If I had to summarize the year in one word, it would be “cautious”.
Many buyers and investors spent much of the year on the sidelines, waiting for a major catalyst: a sharp rate drop, a policy shift, or a dramatic market correction. Instead, what we got was incremental change: modest Fed rate reductions, mortgage rates that eased slightly and then stabilized, and a market that proved more resilient than many expected.
Key Housing Variables I Track
Active Listings
I’ve tracked San Diego inventory on and off since 1999, when I first got into real estate. Back then, a “normal” market looked something like this:
- Detached homes: ~3,000–4,500 active listings
- Attached homes: ~2,500–3,000 active listings
That was nearly 25 years ago, when San Diego County’s population was under 2.5 million. Today, we’re well over 3.5 million residents, so you’d think a “normal” inventory level would be double that. Not quite.
As of today, 12/24/2025, we have 2,086 active detached listings and 1,289 active attached listings, not even the “normal” level of inventory with 40% less population!
That’s nearly flat compared to the beginning of the year (2,130 detached and 1,253 attached). Inventory did peak during the week of 7/28/2025, when listings jumped to 3,665 detached and 2,017 attached.
For comparison, during the post-COVID frenzy in early 2023 (week of 4/3/2023), inventory bottomed out at just 1,299 detached and 519 attached. That period was anything but normal, homes were going into escrow before agents could even finish uploading them to the MLS.
Pending Listings & Active-to-Pending (AP) Ratio
I watch pending listings closely, especially:
- Total pending
- Pending in the last 7 days
- The Active-to-Pending (AP) ratio
The AP ratio is one of my favorite short-hand indicators:
- Lower ratio = faster market
- Higher ratio = slower market
In April 2023, the AP ratio was 0.95, meaning there were more homes in escrow than actively listed. That’s how intense the market was.
At the peak of 2025, the ratio reached 2.55, meaning there were two and a half times more homes sitting on the market than in escrow. As we head into year-end, that ratio has eased back below 2 for detached homes — a clear sign of improving market balance.
The attached-home market is still working through excess inventory, with an AP ratio above 3.3, though even there the trend is gradually improving. It also tells you something about the higher demand for higher-priced products in San Diego (detached homes) than for lower-priced attached units.
Sold in the Last 30 Days / Months of Supply
This metric shows how many transactions closed in the past 30 days and translates directly into months of inventory — another key indicator of market health.
- A “normal” market tends to sit around 2 months of supply
- The post-COVID boom hit 1 month or less
- In July 2025, supply peaked at 3.3 months for detached and Nearly 5 months for attached
Since then, conditions have steadily normalized:
- Detached homes: back below 2 months
- Attached homes: just over 3 months
That’s meaningful progress.
| Week of | 4/3/23 | 1/27/25 | 7/28/25 | 12/24/25 |
| Detached | ||||
| Active | 1299 | 2130 | 3665 | 2086 |
| Pending Total | 1361 | 1100 | 1435 | 1072 |
| Pending 7-days | 286 | 289 | 293 | 185 |
| Sold-30 days | 1143 | 796 | 1107 | 1075 |
| AP Ratio | 0.95 | 1.94 | 2.55 | 1.95 |
| Act/Sold – months supply | 1.14 | 2.68 | 3.31 | 1.94 |
| Attached | ||||
| Active | 519 | 1253 | 2017 | 1289 |
| Pending Total | 599 | 479 | 579 | 380 |
| Pending 7-days | 122 | 112 | 101 | 57 |
| Sold-30 days | 478 | 336 | 424 | 387 |
| AP Ratio | 0.87 | 2.62 | 3.48 | 3.39 |
| Act/Sold – months supply | 1.09 | 3.73 | 4.76 | 3.33 |
What Does It All Mean?
To me, this data points to a market returning to something close to functional normalcy.
Buyers are finally accepting reality: mortgage rates are not going back to 3%, and probably not even 4.5%. Rates in the 5–6% range are historically normal — exactly where they were 10–15 years ago.
At the same time, buyers are realizing that San Diego is not headed for a crash. Prices appear sticky. Five years ago, I never would have believed we’d see 2,900-sq-ft homes in San Marcos selling for $1.4M or Escondido hitting $1M average home prices.
Yet here we are. Prices may not grow 5%+ annually for the next few years, but they are not showing any signs of broad declines beyond seasonal or property-specific adjustments.
Sellers, meanwhile, will have to recalibrate expectations. The 2023 mentality — listing 20% above reality and “seeing what happens” — no longer works. Pricing must be realistic. You need a strong local agent (not your cousin who hasn’t sold a home in five years), proper preparation, and professional staging. The market will reward diligence and punish laziness and greed.
What I’m Seeing Among Investors
As I mentioned at the SDCIA panel earlier this month, investors are clearly split into two camps:
- Frozen investors, waiting for a major announcement or macro shift
- Active investors, adapting strategies and moving forward regardless of conditions
The second group isn’t asking whether the market is “good” or “bad.” They’re asking where opportunity exists now — and adjusting accordingly.
Where I see opportunity:
- Land entitlement (especially SB 9, SB 684, SB 1123)
- Small-scale multifamily new construction
- BTR – Build to rent communities
- FHA-financeable workforce housing
- Affordable housing and senior housing
- Commercial-to-residential conversions
- Private money lending and debt fund syndications
These areas are still largely overlooked by investors who remain overly focused on ADUs or “Complete Community” projects.
Looking ahead, I expect even more opportunities once Chairman Powell’s term ends and policy shifts potentially become more pro-growth. Whether or not rates move meaningfully, capital will follow clarity — and regulatory signals matter just as much as interest rates.
Final Thoughts
San Diego is a unique market. Local buyers and investors should not judge it based on national headlines from CNBC or the Wall Street Journal. What’s good or bad for Houston or Phoenix does not translate one-to-one here in San Diego.
The housing shortage in San Diego is systemic. Short of relocating millions of people to El Centro, or building hundreds of thousands of homes almost overnight, supply constraints are here to stay, and we can thank our political leaders for this mess, but also for this opportunity! There are a few places in the world where people are willing to pay almost any price to live — because of climate, geography, lifestyle, and economic opportunity. San Diego is one of those rare places.
I thank God every day that I made the decision to move here in 1997 and call this magic place home for me and my family!
So don’t read the news blindly. Study local data. Talk to people actually building and investing here. Attend real investor meetings. Be disciplined, realistic, and informed.
Invest well. Build well. Live well.
Wishing you and your family a Merry Christmas and a Happy New Year.
— Alex Lisnevsky