Navigating San Diego’s Evolving Real Estate Market: A 2026 Outlook for Buyers and Sellers

Jan 2

The national real estate landscape is undergoing a significant transformation. After years of frenzied competition, the market is showing signs of a shift, driven by fluctuating mortgage rates and a renewed focus on affordability. Recent reports from Realtor.com® highlight a nationwide trend where buyers are prioritizing value and space over chasing the hottest markets . For San Diegans, this national shift presents a unique set of challenges and opportunities. While our market has its own distinct dynamics, understanding these broader trends is crucial for anyone looking to make a move in 2026.

This post will break down the key takeaways from recent real estate analyses, explore what they mean for the San Diego market specifically, and offer practical advice to help you navigate your next real estate journey with confidence.

The National Pulse: Value, Rates, and Rising Costs

A recent Realtor.com® analysis identified the top metropolitan areas where homebuyers are getting the most for their money, with cities in Texas like Houston and San Antonio leading the pack . These markets are characterized by a lower price per square foot and larger typical home sizes, a stark contrast to what we see in Southern California. The national median price per square foot stands at $229, while in these high-value cities, it can be as low as $174 .

Meanwhile, mortgage rates have offered a glimmer of hope for buyers. As of late December 2025, the average 30-year fixed rate has fallen to 6.18%, a significant drop from the 6.85% seen a year prior . This decline in borrowing costs is a welcome development, potentially increasing purchasing power for those looking to enter the market in the new year. However, another rising cost is on the horizon: home insurance. Premiums are on the rise, and homeowners are being encouraged to explore all avenues for cost savings, from shopping around to making strategic home improvements .

The San Diego Story: A Market in Transition

So, how does San Diego fit into this national picture? While the “most for your money” cities may seem a world away, the trends of a cooling market and shifting buyer priorities are very much present here.

Recent data from November 2025 paints a clear picture of a market in transition . The median sale price in San Diego was $913,500, a 2.1% decrease from the previous year. The price per square foot also saw a dip, down 4.6% to $665. This is a significant departure from the rapid appreciation we’ve grown accustomed to. Homes are also staying on the market longer, with the median days on market increasing to 41, up from 32 days the year before .

This slowdown is further reflected in the declining number of homes selling above list price and the increase in properties with price reductions. While San Diego remains a competitive market, the frenetic bidding wars of the past have subsided, creating a more balanced environment for buyers.

A Tale of Two Markets: San Diego vs. High-Value Metros

To put San Diego's market into perspective, let's compare it to Houston, one of the top “most for your money” cities .

San Diego’s price per square foot is nearly four times that of Houston, and our median home price is more than double. This highlights the significant affordability challenges that persist in our region. In fact, only 13% of San Diego households can afford to purchase a median-priced home, a sobering statistic that underscores the importance of strategic financial planning .

Expert Analysis: What This Means for You

The current market dynamics present a nuanced landscape for both buyers and sellers in San Diego.

For buyers, the recent dip in mortgage rates, coupled with a less competitive market, creates a window of opportunity. With more inventory to choose from and less pressure to make snap decisions, buyers have more negotiating power than they’ve had in years. The increase in purchasing power, as noted by Realtor.com® economists, means that 2026 could be a promising year for those who have been waiting on the sidelines .

For sellers, the key to success in this new environment is realistic pricing and strategic preparation. The days of simply putting a sign in the yard and watching the offers roll in are behind us. Sellers need to be mindful of the increased inventory and the longer time it may take to sell. A well-presented home, priced competitively from the start, will be crucial for attracting qualified buyers.

Practical Advice for Navigating the 2026 Market

Whether you're buying or selling, here are some practical tips to help you succeed in the year ahead:

For Buyers:

•Get Pre-Approved Early: With rates in flux, locking in a favorable rate with a pre-approval will give you a clear budget and make your offer more competitive.

•Don’t Be Afraid to Negotiate: With more homes on the market and less competition, there is more room for negotiation on price and terms.

•Factor in All Costs: Remember to budget for not only your mortgage but also rising insurance costs and property taxes.

•Think Long-Term: While the market has cooled, San Diego real estate has a strong history of long-term appreciation. Focus on finding a home that meets your needs for years to come.

For Sellers:

•Price it Right from the Start: Overpricing your home in a cooling market can lead to it sitting on the market for an extended period. Work with your real estate agent to determine a competitive and realistic price.

•Invest in Presentation: With more inventory to choose from, first impressions are more important than ever. Consider professional staging and high-quality photography to make your home stand out.

•Be Patient and Flexible: The market is not as fast-paced as it once was. Be prepared for a longer selling process and be open to negotiating with potential buyers.

Your Trusted Partner in San Diego Real Estate

The San Diego real estate market is constantly evolving. Whether you are a first-time homebuyer, a seasoned investor, or looking to sell your property, having an expert guide you through the process is invaluable. Our team is dedicated to providing you with the latest market insights and personalized strategies to help you achieve your real estate goals.

Ready to make your move in 2026? Visit our website for more information and to connect with one of our experienced agents. Let us help you navigate the exciting opportunities in the San Diego real estate market.