San Diego Home Prices Hit 8.7x Income: The Affordability Crisis

What Does an 8.7x Price-to-Income Ratio Actually Mean?

The price-to-income ratio measures how many years of household income are needed to purchase a median-priced home. Historically, a ratio between 3-4 times income was considered affordable and sustainable. San Diego's current 8.7x ratio means the average household would need to save every dollar earned for nearly nine years to afford a median-priced home—without spending anything on food, transportation, or other expenses.

According to Andy Walden, a housing researcher at Intercontinental Exchange, San Diego County households must now dedicate 51% of their monthly income to mortgage principal and interest. This ranks San Diego third highest among 100 U.S. metros, behind only Los Angeles/Orange County (62%) and San Jose (53%).

"Returning to 1990s affordability would require around a 40% drop in home prices and a 70% rise in incomes," Walden stated in a recent analysis. Neither scenario appears likely in the near term.

How Did We Get Here? A Historical Perspective

San Diego's affordability crisis didn't happen overnight. The gap between home prices and local incomes has been widening for decades, with a few key inflection points:

1997: The Last Time Affordability Was Normal

In 1997, San Diego's price-to-income ratio was 4.3 times—the closest the region has come to matching national averages in recent history. At that time, the median home price was $177,286, and the median household income was $40,981.

2004: The Housing Boom

During the mid-2000s housing boom, San Diego's median home cost 9.7 times the median income—compared to the national ratio of just 4.7 times. This period of speculation and loose lending standards eventually led to the 2008 housing crash.

Spring 2022: Post-Pandemic Peak

The rush for housing during the tail end of the COVID-19 pandemic drove San Diego's price-to-income ratio to 10 times—the highest level on record. Low interest rates, remote work flexibility, and limited inventory created unprecedented demand.

October 2025: Current Crisis

While the ratio has declined slightly from the 2022 peak to 8.7 times, it remains far above sustainable levels and well above the national average of 5 times income.

San Diego Ranks Among Least Affordable Cities Nationally

San Diego's affordability crisis isn't just a local concern—it places the region among the most expensive housing markets in the nation and the world.

According to Oxford Economics data from Q3 2025, San Diego ranks among the five least affordable metros in the U.S., alongside San Jose, San Francisco, Honolulu, and Los Angeles. In these markets, only 17% of households earned enough income to afford their respective housing costs.

Additionally, San Diego was identified as one of four California cities in the top 10 "impossibly unaffordable" cities worldwide in a Chapman University study that analyzed 94 global housing markets.

For starter homes specifically, the picture is even bleaker. San Diego ranks as the third-worst metro area for affordable starter homes, with average mortgage payments consuming 66.2% of a median renter's income.

The Root Cause: Income vs. Lifestyle

San Diego economist Ray Major attributes the crisis primarily to weak regional wages: "The biggest problem...is we don't have the type of jobs here that allow people...to buy a median priced home."

Unlike tech-driven markets such as San Jose and San Francisco, San Diego's economy relies heavily on tourism, hospitality, healthcare, and military-related employment—sectors that typically offer lower compensation than technology or finance.

Genine Wilson, a staffing industry veteran, described the phenomenon as a "sunshine tax" and "beach tax"—workers accepting lower compensation in exchange for San Diego's desirable climate, beaches, and lifestyle amenities.

This dynamic creates a paradox: the very features that make San Diego attractive also make it unaffordable for many who work here.

Neighborhood Price Variations Across San Diego

While the county median home price is $985,092, prices vary dramatically across neighborhoods:

Coastal Premium Communities

La Jolla: The region's most prestigious neighborhood commands median prices around $2.5 million to $3.2 million—more than triple the county median. Homes often sell above asking price after an average of 48 days on the market.

Pacific Beach: With a median price of approximately $1.3 million (up 4.5% year-over-year), Pacific Beach attracts young professionals and retirees seeking beachside living and active nightlife. Multiple offers and quick sales above asking are common.

More Affordable Areas

Working-class neighborhoods like Encanto, Spring Valley, Oceanside, and Chula Vista offer more accessible price points but have also experienced significant appreciation. However, these areas have also seen higher foreclosure filing rates, with approximately 30-50 default notices recorded over the past year in each community.

How the Affordability Crisis Impacts Different Homeowner Situations

The extreme price-to-income ratio creates unique pressures for various homeowner circumstances:

Inherited Properties

Many San Diego residents inherit homes from parents or relatives who purchased decades ago at much lower prices. While the property may have substantial equity, heirs often face challenges:

• Property taxes reassessed at current market value (losing Proposition 13 protections)
• Maintenance costs on older homes
• Capital gains taxes if the property isn't a primary residence
• Probate court requirements that can delay traditional sales

With homes in neighborhoods like La Jolla worth $2.5+ million, the carrying costs can quickly become burdensome for heirs who don't plan to live in the property. Our inherited property solutions are designed to help you navigate these challenges with flexible timelines and probate support.

Divorce Situations

Divorcing couples in San Diego face particularly complex property decisions. A home purchased for $400,000 a decade ago might now be worth $900,000+, representing the couple's primary asset. However:

• Neither party may be able to afford to buy out the other at current valuations
• Refinancing at today's interest rates (around 6-7%) dramatically increases monthly payments
• Selling through traditional channels takes 60-90 days, prolonging a difficult situation
• Market uncertainty makes it hard to plan finances during the transition

For many divorcing San Diego homeowners, a quick cash sale provides certainty and allows both parties to move forward.

Financial Distress and Foreclosure Risk

While San Diego's foreclosure rates remain relatively low by historical standards—thanks to strong homeowner equity and a robust economy—certain neighborhoods are experiencing stress. San Diego County currently has approximately 1,006 foreclosure filings, with working-class areas like Encanto (92114), Spring Valley (91977), and Chula Vista (91910, 91911, 91913) seeing elevated default notices.

For homeowners facing foreclosure, time is critical. Traditional sales can take 60-90 days, but foreclosure auctions can occur much faster. Our pre-foreclosure assistance program offers cash sales closing in 7-14 days to help homeowners:

• Avoid foreclosure on their credit report
• Preserve remaining equity
• Prevent the stress and embarrassment of an auction
• Maintain more control over the process

Relocation and Job Changes

Remote work trends have created both opportunities and challenges. Some San Diego homeowners need to relocate quickly for new job opportunities in more affordable markets or to be closer to family. However:

• Listing a home traditionally requires preparation, staging, and showing availability
• The median 25 days on market (up from 20 days in 2024) adds uncertainty
• Carrying two mortgages during a transition creates financial strain
• Repair requests from buyers can delay or derail sales

Traditional Sale vs. Cash Sale: Understanding Your Options

San Diego homeowners have two primary selling paths, each with distinct advantages:

Traditional Sale Timeline and Costs

Timeline: 60-90 days from listing to closing

Process steps:

1. Home preparation and repairs (1-4 weeks)
2. Listing and marketing (ongoing)
3. Showings and open houses (2-6 weeks)
4. Offer negotiations (1-2 weeks)
5. Buyer inspection and requests (1-2 weeks)
6. Buyer financing approval (3-6 weeks)
7. Appraisal and final underwriting (2-3 weeks)
8. Closing (1-2 weeks)

Costs:

• Real estate agent commissions: 5-6% of sale price ($49,000-$59,000 on a $985,000 home)
• Repairs and updates requested by buyers: $5,000-$25,000+
• Staging and preparation: $2,000-$10,000
• Closing costs: 1-3% of sale price
• Carrying costs during sale period: mortgage, insurance, taxes, utilities

Advantages:

• Potentially higher sale price through competitive bidding
• Maximum market exposure
• Traditional financing available to larger buyer pool

Risks:

• Deals can fall through during inspection or financing
• Market conditions can change during the 60-90 day process
• Carrying costs continue until closing
• Buyer financing contingencies create uncertainty

Cash Sale Timeline and Costs

Timeline: 7-14 days from offer to closing

Process steps: (Learn more about our cash home purchase process)

1. Contact cash buyer (same day)
2. Property evaluation (1-3 days)
3. Receive cash offer (1-2 days)
4. Accept offer and schedule closing (same day)
5. Title work and closing preparation (5-10 days)
6. Closing (1 day)

Costs:

• No real estate agent commissions
• No repair costs (sold as-is)
• No staging or preparation
• Buyer typically covers closing costs
• Minimal carrying costs due to quick timeline

Advantages:

• Certainty—no financing contingencies
• Speed—close in 7-14 days
• Sell as-is without repairs or updates
• No showings, open houses, or disruption
• Privacy and discretion
• Avoid foreclosure if facing financial pressure

Considerations:

• Cash offers typically range from 70-85% of retail value
• Trade speed and certainty for potentially lower price
• Best suited for time-sensitive situations

When Does a Cash Sale Make Sense?

While traditional sales can yield higher prices in ideal circumstances, cash sales provide valuable advantages in specific situations:

Quick Facts: San Diego Housing Affordability Crisis

Frequently Asked Questions

Making the Right Decision for Your Situation

San Diego's housing affordability crisis—with the median home price 8.7 times the median income—creates challenges but also opportunities for homeowners. If you're holding property you don't need, facing financial pressure, navigating life changes, or simply want to access your equity quickly, understanding your selling options is crucial.

Traditional sales work well when:

• You have 3-6 months to complete the process
• Your property is in excellent condition
• You can afford carrying costs during the sale period
• You want maximum market exposure
• You're willing to accept the uncertainty of buyer financing

Cash sales work well when:

• You need to close in 7-14 days
• Your property needs significant repairs
• You're facing foreclosure, divorce, or financial pressure
• You want certainty over maximum price
• You prefer privacy and minimal disruption

The key is matching the selling method to your specific circumstances, timeline, and priorities.

Take the Next Step

If you're a San Diego homeowner considering your options, getting information costs nothing and creates no obligation. Whether you ultimately choose a traditional sale or a cash offer, understanding what your property is worth in both scenarios helps you make an informed decision.

A professional cash offer evaluation can be completed in 24-48 hours and provides:

• A no-obligation cash offer for your property as-is
• Clear timeline and closing date
• Explanation of the process and what to expect
• Comparison to potential traditional sale outcomes

In San Diego's challenging housing market, knowledge is power. Understanding your options—and their financial implications—helps you make the best decision for your unique situation.