A Tale of Two Californias: Why the Bay Area Is Defying the National Housing Market
California's housing market is telling two very different stories right now. While most of the country is seeing a cooldown, with buyers gaining the upper hand and securing discounts, the Bay Area is defying the trend. A recent analysis based on Redfin data reveals a fascinating split: in cities like San Francisco and San Jose, buyers are still paying significant premiums above the asking price, a stark contrast to the discounts seen elsewhere in the state and nation .
As your San Diego real estate experts, we're diving into this data to explain what's happening and what it means for our local market.
The Great Divide: Bay Area vs. Everyone Else
In 2025, only four U.S. cities saw buyers routinely paying more than the list price for homes. Three of them were in the Bay Area:
•San Francisco: Buyers paid an average of 3.8% above asking price.
•San Jose: Buyers paid an average of 2.3% above asking price.
•Oakland: Buyers paid an average of 1.3% above asking price.
In stark contrast, markets that boomed during the pandemic are now seeing the biggest corrections. In Austin, Texas, buyers are getting an average discount of 7.1%, while in parts of Florida, discounts are as high as 9.3% .
"It’s still so rare to get a home for less than its listed price, which I think just speaks to the resiliency of California," said Redfin’s chief economist, Daryl Fairweather .
This data shatters the narrative that everyone was fleeing California for states like Texas and Florida. While some did move, the economic engines of the Bay Area have proven incredibly powerful and resilient.
What's Driving the Bay Area Boom?
Two key factors are fueling the Bay Area's unique market strength:
1.The AI Boom: The explosion in artificial intelligence has created a new wave of wealth and high-paying jobs, driving intense demand for housing.
2.Return to Office: As more companies call their employees back to the office, the demand for homes within a reasonable commute has surged.
This, combined with the region's chronic housing shortage, has created a fiercely competitive market where bidding wars are still the norm.
Looking at the market snapshot for 2025, San Francisco homes sold for 3.8% above list price, while San Jose came in at 2.3% above asking. In contrast, Los Angeles homes sold for 1.9% below list price, Riverside saw discounts of 3.1%, and Austin, Texas experienced the steepest discounts at 7.1% below asking price.
The San Diego Perspective
Where does San Diego fit into this picture? Our market is charting a middle course. We are not seeing the extreme premiums of the Bay Area, nor are we seeing the significant discounts of markets like Riverside or Austin. The Los Angeles metro, with an average sale price 1.9% below list, is a closer comparable.
This reflects San Diego's more balanced and stable market. While we have a strong and diverse economy, we are not currently experiencing a singular, explosive boom on the scale of the AI frenzy in the Bay Area. At the same time, our incredible quality of life and consistent demand prevent the larger price corrections seen in other regions.
For Buyers: The takeaway is that San Diego offers a more rational market. You may not face the same level of intense bidding wars as in San Francisco, but you also shouldn't expect steep discounts. It's a market that rewards preparation and strategic offers.
For Sellers: The resilience of California's prime markets is good news. It shows that in desirable areas, value holds strong. Pricing your home correctly is still key, but you can be confident that there are qualified buyers who recognize the long-term value of owning a home in San Diego.
The California Association of Realtors is optimistic about 2026, predicting a "healthier, more balanced market" ahead as mortgage rates stabilize . We believe San Diego is perfectly positioned to thrive in this new environment.
Have questions about how to navigate San Diego's unique market conditions? Contact us for a personalized strategy session.
Based on reporting from SFGate and Redfin, read the full article here: https://www.sfgate.com/realestate/article/california-homebuying-21329572.php
References
[1] Graff, A. (2026, February 4). California's housing market is splitting in two. SFGATE.