The Surprising Truth About Today's Housing Market: A San Diego Perspective

If you've been following the real estate market, you've likely noticed a shift in the air. The frenzied open houses of the past have given way to a more subdued atmosphere, with negotiations and buyer incentives making a comeback. A recent article from TheStreet.com, titled "Redfin drops surprising take on the housing market" [1], delves into this new reality, and the insights are particularly relevant for us here in San Diego. As your local real estate expert, I want to break down what these national trends mean for our unique market.

Cash is Still King, and Down Payments are Soaring

The article, which analyzes a recent Redfin report, reveals a surprising truth: despite a cooling market and slightly lower mortgage rates (around 6.3%), cash is still king. In August, a staggering 29% of home purchases across the country were all cash deals. This figure has barely budged from a year ago, even when mortgage rates were in the high 7% range. This indicates that affluent buyers are still very much in the driver's seat.

Furthermore, the typical down payment has reached a record high of $70,000, which is about 19% of the purchase price, the highest it has been since 2013. In fact, down payments are rising three times faster than home prices. This "wealth divide" is a significant factor in today's market, where buyers with substantial cash reserves or significant equity from a previous home have a distinct advantage.

A Slow Thaw, Not a Sudden Surge

While the market is showing signs of a slow thaw, with more builder completions and a slight dip in mortgage rates, the recovery is not a sudden surge. Inventory remains tight, as many homeowners are reluctant to give up their ultra low mortgage rates from the pandemic era. This "lock in effect" keeps the supply of homes for sale artificially low, which in turn keeps prices relatively stable. The article rightly points out that the market recovery is likely to be a gradual process, with a true recovery window expected to form in late 2025 and into 2026.

What This Means for the San Diego Market

In a high cost market like San Diego, these national trends are amplified. The "wealth divide" is even more pronounced here, where the median home price is significantly higher than the national average. We see a large number of cash buyers and buyers with substantial down payments, making it challenging for first time homebuyers and those with less cash on hand to compete.

The "lock in effect" is also a major factor in our local market. San Diego has a chronic shortage of housing, and the reluctance of homeowners to sell only exacerbates this problem. This is why, despite a cooling market, we are not seeing a significant drop in home prices. The demand for housing in San Diego remains strong, driven by our desirable lifestyle, strong job market, and limited supply.

Practical Advice for Buyers and Sellers

For Sellers: The current market still favors sellers due to low inventory. However, it's crucial to be realistic about pricing and be prepared for negotiations. The days of multiple, no contingency offers are largely behind us. A well priced home will still attract significant interest, but you may need to be more flexible with terms. If you receive a cash offer, it's important to weigh its certainty against potentially higher offers with financing.

For Buyers: The San Diego market is challenging, but not impossible. The key is to be prepared. This means getting fully pre approved for a mortgage, having a clear understanding of your budget, and being ready to act decisively when you find the right home. While competing with cash offers can be tough, a strong offer with a substantial down payment and a quick closing can still be very attractive to sellers. Don't be discouraged by the headlines. With the right strategy and a knowledgeable agent on your side, you can still achieve your homeownership goals.

Your Trusted San Diego Real Estate Advisor

The San Diego real estate market is complex and ever changing. Understanding the nuances of the current landscape is essential for making informed decisions. My team and I are dedicated to providing you with the latest market insights and expert guidance to help you navigate this challenging but rewarding market.

Whether you're a first time homebuyer, a seasoned investor, or looking to sell your property, we are here to help you achieve your real estate dreams. Visit our website or contact us today to learn more about how we can put our expertise to work for you.

References

[1] TheStreet.com. (2025, October 19). Redfin drops surprising take on the housing market. Retrieved from https://www.thestreet.com/real-estate/redfin-drops-surprising-take-on-the-housing-market