The Big Freeze: Why San Diego’s Housing Market is Stuck in Place
The numbers are in, and they paint a stark picture of a housing market in gridlock. San Diego County recorded just 27,117 home sales in 2025, the third-lowest number since 1988. To put that in perspective, even during the housing crash of 2007, there were more than 33,000 sales. So, what’s going on? Why is a market with so much demand seeing so little activity? The answer, according to a recent San Diego Union-Tribune report, is a complex mix of factors that have created a “big freeze” in our local market .
At the heart of the issue is the “lock-in effect.” Homeowners who were lucky enough to secure a mortgage with a 3% interest rate are understandably reluctant to sell and take on a new loan at today’s higher rates. As one economist put it, “The move-up market kind of died.” This has created a severe inventory shortage, with only about 5,000 homes for sale in December, down from a four-year high of over 7,400 in June. With fewer homes on the market, prices have remained stubbornly high, with a median of $865,500 in December.
But it’s not just about mortgage rates. The report also highlights the impact of capital gains taxes. Many long-time homeowners, particularly baby boomers, are sitting on properties that have appreciated by hundreds of thousands, if not millions, of dollars. The prospect of a massive tax bill is another powerful disincentive to sell, further contributing to the inventory crunch. This combination of factors has created a perfect storm, where both buyers and sellers are stuck on the sidelines.
For buyers, the current market is a frustrating waiting game. High prices and limited options make it incredibly difficult to find a home, let alone afford one. For sellers, the decision to move is a complex financial calculation. While they may be able to get a great price for their current home, the cost of a new one, coupled with a higher mortgage rate and potential tax implications, often makes a move impractical.
The impact of this slowdown is being felt across the real estate industry. With fewer transactions, real estate agents, loan officers, and appraisers are all feeling the pinch. According to the report, roughly half the agents in California did not have a single transaction in the last two years. This is a clear indication of just how frozen our market has become.
So, what’s the solution? There are no easy answers. While mortgage rates have come down from their peak, they are still significantly higher than they were a few years ago. And while there is a desperate need for more housing, new construction has been slow to keep up with demand. The road ahead is uncertain, but one thing is clear: the San Diego housing market is in a state of flux. If you’re thinking about buying or selling in this complex environment, it’s more important than ever to have an experienced guide by your side. Let’s connect and discuss how we can navigate this challenging market together.
Based on reporting from the San Diego Union-Tribune, read the full article here: https://www.sandiegouniontribune.com/2026/02/19/move-up-market-kind-of-died-san-diego-home-sales-last-year-were-among-the-lowest-ever/