It’s the question on everyone’s mind. Are San Diego home prices finally about to drop? With affordability stretched and buyer demand soft, it’s easy to feel like a correction is coming. At Team Kolker Wendlandt, we track the numbers in 92127 and beyond so you don’t have to. And right now, only one of the three conditions required for a major San Diego Real Estate Market price correction is present. Here's what the latest August 2025 report reveals.
🔍 The Three Things That Signal a Price Plunge
Home values don’t drop just because rates are high or people “feel” it’s time. According to leading housing economists, it takes all three of the following:
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A surge in inventory (think: too many listings, not enough buyers)
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Distressed sales (foreclosures and short sales flooding the market)
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Weak buyer demand (when rising rates stall activity)
Right now? Only demand is down. San Diego still lacks excess inventory, and distressed sales are virtually nonexistent.
📦 Inventory: More Than Last Year, But Still Low
There are currently 6,365 homes on the market in San Diego County, up 43% from last year but still well below the 20,000+ listings we saw in the 2008 crash. Compare that to 2008: Inventory was over 20,000. Today, it's under 6,400.
While we’ve seen more sellers this year (especially compared to the extreme lows of 2023), inventory is still 11% below pre-COVID norms. So no, we’re not in “glut” territory.
🛒 Buyer Demand: Stuck in the Slow Lane
Rates have been hovering around 7% for nearly three years, and that’s kept buyers cautious. But here’s what’s interesting: pending sales actually ticked up this month, with 1,849 new deals in escrow, up slightly from last year.
Still, that’s 77% lower than the pre-COVID average. Demand is muted, but stable.
If rates dip below 6.5% for a sustained period (and we’re getting close), we may see buyers come off the sidelines fast.
⚠️ Distressed Sales? Not Even Close
This is where the biggest difference lies between now and 2008. Only 0.5% of June sales were foreclosures or short sales. For context, that number was 53% in 2009.
Today’s homeowners have:
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Fixed low-rate mortgages
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Strong equity positions
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Very little financial stress
This is not a market of desperate sellers. It’s a market of patient homeowners with options and that’s keeping pricing relatively sticky.
⏳ Expected Market Time: Slower Than Last Year
It’s currently taking 103 days to sell a home in San Diego County, up from 74 days a year ago. That’s a reflection of both higher inventory and steady-but-soft demand. The market has tilted slightly in buyers’ favor but it’s far from crashing.
💎 Luxury Market: Quiet Momentum
In the $2M+ space, we’re seeing an interesting trend:
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Inventory is up 20% year over year
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Luxury demand is also up 23%
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Market time has dropped from 209 to 156 days in just six weeks
Luxury is moving—especially in the $2–4M range. Strategic pricing and standout design still get attention here.
So… Are Prices About to Plunge?
No. Not unless:
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Inventory doubles or triples
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Foreclosures surge
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Demand collapses
Right now, we have just one piece of that puzzle, low demand. And even that could change quickly if rates fall below 6.5% in the coming weeks.
Our Take
If you’re a buyer, this is a window. You’ve got more homes to choose from and less competition, but that could shift fast if rates drop.
If you’re a seller, pricing, prep, and presentation matter more than ever. With more listings on the market, your home has to shine. Luckily, that’s what we do best, from strategic upgrades to stunning staging.
Curious what this market means for your plans?
Let’s talk numbers, timing, and strategy. Whether you're buying, selling, or just exploring your options, we’ve got the data and the experience to guide you.
📞 Call/Text us: 619-566-8106
📧 Email: TeamKolker@Compass.com
