As we step into the heart of 2025, San Diego continues to be one of Southern California’s most dynamic and competitive real estate markets. Known for its idyllic coastal lifestyle, economic growth, and strong job market, San Diego remains a top destination for both homebuyers and investors. However, despite its continued popularity, the region is grappling with a growing challenge—how to balance relentless demand with increasing affordability concerns.

Demand Remains Strong Across All Segments

San Diego’s desirability isn’t just a trend—it’s a long-standing reality. With top-tier universities, a booming biotech and tech sector, and military infrastructure fueling employment, buyer interest remains strong. Many are relocating from more expensive coastal cities like San Francisco and Los Angeles in search of a better quality of life with relatively lower costs—though San Diego itself is far from cheap.

In May 2025, median home prices in San Diego County hover near $900,000, with certain coastal and suburban enclaves exceeding $1.2 million. Despite elevated mortgage rates, buyer interest has not waned significantly, particularly among cash buyers and high-net-worth individuals.

Affordability: A Pressing Concern for Middle-Income Buyers

While high demand supports home values, affordability remains a growing concern. The combination of rising home prices and persistent mortgage rates above 6.5% is pricing out many middle-income families. According to recent housing affordability indices, less than 20% of San Diego households can afford the median-priced home using traditional lending criteria.

This affordability gap has widened over the past year due to:

• Limited housing inventory, especially in entry-level segments
• Stagnant wage growth compared to housing costs
• Increased insurance premiums, particularly in wildfire-prone areas

As a result, many first-time homebuyers are opting to delay purchases or move to outer suburban or inland communities where pricing is more accessible.

Inventory Trends and Development Constraints

San Diego’s geographic limitations—bordered by the Pacific Ocean, Mexico, military bases, and preserved open space—significantly limit new construction opportunities. Local zoning regulations and community resistance to high-density housing further constrain inventory growth. In May 2025, active listings increased slightly compared to last year, but remain well below pre-pandemic norms.

This scarcity of inventory, especially in family-friendly neighborhoods and coastal areas, puts upward pressure on prices and drives bidding wars even in a market cooled by higher interest rates.

What’s Next for Buyers and Investors?

For homebuyers, the market remains competitive, but not impossible. Strategic buyers are focusing on:

• Emerging neighborhoods offering long-term value
• Multi-family and ADU-friendly properties to offset housing costs
• Fixer-uppers that present opportunities to build equity over time

Investors continue to see strong rental demand in San Diego, with vacancy rates low and rent prices stable, particularly near employment centers and transit corridors.

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Partner with Local Experts: Amin Vali Real Estate Investment Group

Navigating San Diego’s competitive and complex real estate market requires more than just timing—it requires local expertise, data-driven insight, and strategic guidance.

At Amin Vali Real Estate Investment Group, we specialize in helping buyers, sellers, and investors make confident decisions in all market conditions. Whether you’re looking to purchase your first home, expand your investment portfolio, or sell a high-value property, our team brings deep market knowledge, negotiation strength, and an unwavering commitment to your goals.

Amin Vali .

B.S in Civil Engineering,MBA, Realtor

Cell phone: +1 (949)220-1000

Phone : +1(310)300-0011

Web : www.aminvali.com

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