San Diego Home Prices Drop 4th Month: Sell Now or Wait?

• 8 min read • By San Diego Fast Cash Home Buyer

TL;DR

  • San Diego home prices declined 0.85% annually in September 2025, marking the fourth consecutive month of price drops
  • Only 29% of homes now sell above asking price, down dramatically from 71% in April 2022
  • Sales volume through September reached just 20,504 transactions, potentially the slowest year since 1988
  • Sellers facing time pressure, financial constraints, or property issues should consider cash offers for certainty versus waiting for further potential declines

San Diego's housing market is experiencing a notable shift. After years of relentless price increases, the S&P Case-Shiller Index shows home prices fell 0.85% annually in September 2025, representing the fourth straight month of declines[1]. The median home price for single-family homes now stands at $975,000, and the market dynamics have fundamentally changed.

This shift raises a critical question for San Diego homeowners: should you sell now while prices are still relatively high, or wait for the market to potentially rebound? The answer depends on your specific circumstances, timeline, and risk tolerance. Understanding what's driving this market change and how it affects your selling options is essential to making the right decision.

What's Driving San Diego's Price Decline?

The current price softening isn't happening in isolation. Lisa Sturtevant, chief economist at Bright MLS, summarized the core issue: "Affordability is the biggest constraint in the market right now"[1]. Several factors are converging to create this buyer-friendly environment:

Affordability Crisis

San Diego County's median home price now sits at approximately nine times the median income, approaching historic highs[2]. The average household needs to dedicate 51% of monthly income to mortgage principal and interest payments, ranking San Diego as the third most unaffordable metro area among 100 nationwide[2].

Reduced Buyer Competition

The dramatic shift in market dynamics is evident in the numbers. In April 2022, 71% of San Diego homes sold above asking price. By September 2025, that figure plummeted to just 29%[1]. This represents a fundamental change in negotiating power from sellers to buyers.

Historic Sales Slowdown

Through September 2025, San Diego County recorded only 20,504 home sales, putting the market on track for potentially the slowest year since 1988[1]. Fewer transactions mean homes sit longer and sellers face more uncertainty.

Extended Time on Market

San Diego homeowners now wait an average of 40 days to find a buyer, up 10 days (33% longer) from the previous year[3]. This extended timeline creates carrying costs and opportunity costs for sellers.

How Does This Affect Your Home Sale Timeline?

The market shift has direct implications for how long it takes to sell and what price you can expect. Understanding these dynamics helps you plan your sale strategy.

Traditional Sale Timeline in Current Market

In today's San Diego market, a traditional listing typically follows this timeline:

  • Preparation: 2-4 weeks (repairs, staging, photography)
  • Active marketing: 40 days average to find a buyer[3]
  • Escrow period: 30-45 days
  • Total: 3-4 months from decision to close

This timeline assumes everything goes smoothly. Issues with inspections, appraisals, or buyer financing can add weeks or months. If the property doesn't sell in the first 40 days, you may face price reductions and even longer timelines.

Cash Sale Timeline Alternative

Cash buyers operate on a different timeline:

  • Property evaluation: 1-3 days
  • Offer presentation: 1-2 days
  • Acceptance to closing: 7-14 days
  • Total: 2-3 weeks from initial contact to close

The trade-off is typically a lower purchase price (usually 70-85% of market value) in exchange for speed, certainty, and as-is condition acceptance.

Quick Facts: San Diego Housing Market December 2025

Market Metric Current Status Comparison
Price Trend Down 0.85% annually 4th consecutive month of decline
Median Price $975,000 Near historic high
Days on Market 40 days average Up 33% from last year
Above Asking Sales 29% of homes Down from 71% in April 2022
Sales Volume 20,504 through Sept Slowest pace since 1988
Price-to-Income Ratio 9x median income Near historic high

When Does Selling Now Make Sense?

The decision to sell in a declining market isn't purely about price. Consider these scenarios where selling sooner rather than later makes strategic sense:

1. Time-Sensitive Life Changes

If you're facing relocation for work, divorce proceedings, or need to settle an estate, waiting months for optimal pricing may not be practical. A cash sale provides certainty and eliminates the risk of deals falling through due to buyer financing issues.

2. Financial Pressure Situations

Homeowners facing potential foreclosure, mounting property taxes, or unaffordable mortgage payments benefit from quick sales. Even at a lower price point, a cash sale can prevent foreclosure damage to your credit and provide a fresh financial start.

3. Property Condition Challenges

Homes requiring significant repairs, dealing with code violations, or facing structural issues struggle in traditional markets. In a buyer's market where only 29% of homes sell above asking, buyers have leverage to demand repairs or walk away. Cash buyers purchase as-is, eliminating repair negotiations and costs.

4. Declining Market Risk Mitigation

With four consecutive months of price declines, some sellers prioritize certainty over potential future gains. If prices continue falling another 3-5% over the next 6-12 months, selling today at a slight discount to market could yield better net proceeds than waiting for an uncertain rebound.

5. Carrying Cost Concerns

Empty or tenant-occupied properties generate ongoing expenses: mortgage, property taxes, insurance, maintenance, and utilities. If you're waiting months for a traditional sale, these costs accumulate. A cash sale that closes in 2-3 weeks can eliminate months of carrying costs.

When Does Waiting Make Sense?

Conversely, some situations favor patience and traditional sales:

  • No Time Pressure: If you don't have urgent relocation or financial needs, you can weather market fluctuations and potentially wait for better pricing.
  • Well-Maintained Property: Homes in excellent condition with desirable features still attract buyers even in softer markets. If your property stands out, you may sell at or above asking despite market trends.
  • Ability to Make Improvements: Strategic upgrades to kitchens, bathrooms, or curb appeal can help your property compete when 71% of homes aren't selling above asking.
  • Market Rebound Belief: If you believe San Diego's market will rebound within your timeline (based on local job growth, limited inventory, or other factors), waiting could yield better results.

Frequently Asked Questions

How long will San Diego home prices continue falling?

No one can predict market bottoms with certainty. The current decline reflects affordability constraints as prices hit 9x median income. Historically, San Diego markets have corrected when affordability reaches extreme levels, then stabilized as buyers return. Most economists expect stabilization in 2026, but continued declines into early 2026 are possible.

Will I get a fair price from a cash buyer in this market?

Cash buyers typically offer 70-85% of estimated market value. In a declining market, the "discount" needs context: if your home would sit 40+ days on market, incur $5,000+ in carrying costs, require $15,000 in repairs buyers would demand, and risk further price declines, a cash offer at 80% of today's value might net similar proceeds with far less risk and hassle.

Should I wait until spring 2026 when the market typically improves?

Seasonal patterns exist, but they don't override fundamental affordability issues. Spring 2026 may bring more buyers, but if prices decline another 2-4% before then, you could end up in the same net position. Calculate your carrying costs, assess your risk tolerance for further declines, and make decisions based on your specific situation rather than seasonal generalizations.

How does the 40-day average time on market affect my sale?

The 40-day average means half of homes sell faster and half take longer. Well-priced homes in desirable areas may sell in 20-30 days. Overpriced or challenging properties could sit 60-90+ days. Each week on market typically costs $2,000-4,000 in mortgage, taxes, insurance, and utilities for a median-priced San Diego home.

What's the biggest mistake sellers make in declining markets?

Overpricing based on past peak values. In a market where only 29% of homes sell above asking, buyers have choices and time to negotiate. Sellers who price at last year's levels often chase the market down with multiple price reductions, ending up at lower net prices than if they'd priced competitively from the start.

Can I get multiple cash offers to compare?

Yes. Reputable cash buyers provide no-obligation offers you can compare against traditional market estimates and other cash buyers. Get 2-3 cash offers and a comparative market analysis from a real estate agent to fully understand your options. This gives you negotiating leverage and a clear picture of the trade-offs between speed and maximum price.

Making Your Decision: A Framework

Use this decision framework to evaluate your specific situation:

Step 1: Calculate Your Timeline Flexibility

  • Do you need to close within 30 days? Consider cash offers.
  • Can you wait 3-4 months? Traditional listing is viable.
  • No specific deadline? You have maximum flexibility.

Step 2: Assess Property Condition

  • Excellent condition: Traditional sale likely maximizes value.
  • Needs repairs: Calculate repair costs vs. as-is cash offers.
  • Major issues: Cash sale often nets better results.

Step 3: Evaluate Market Risk Tolerance

  • Risk-averse: Cash offer provides certainty.
  • Willing to gamble: Traditional sale could yield more.
  • Concerned about further declines: Factor potential 2-5% additional drops into calculations.

Step 4: Calculate Carrying Costs

  • Multiply monthly costs (mortgage + tax + insurance + utilities) by estimated sale timeline
  • Add estimated repair/preparation costs
  • Compare total costs against the price difference between cash and traditional sale

Step 5: Consider Life Circumstances

  • Relocation, divorce, estate settlement, financial distress: Favor speed and certainty
  • No pressure: Favor maximizing price through traditional channels

Conclusion

San Diego's housing market is experiencing a significant shift after four consecutive months of price declines. The dramatic drop in homes selling above asking price (from 71% to 29%) and extended time on market (40 days, up 33%) signal a new reality for sellers.

Whether selling now or waiting makes sense depends entirely on your circumstances. Homeowners with time pressure, property condition challenges, or risk aversion may find cash offers provide better net outcomes when accounting for carrying costs and further potential declines. Those with flexibility, excellent properties, and risk tolerance may benefit from traditional sales.

The key is making an informed decision based on data, not emotion or hope. Get multiple opinions, calculate real costs, and choose the path that aligns with your specific needs and timeline.

Ready to explore your options?

Get a no-obligation cash offer to compare against traditional sale estimates. Understanding all your alternatives empowers you to make the best decision for your situation.

Citations

  1. [1] San Diego Union-Tribune - San Diego home prices fall for 4th consecutive month - Published December 1, 2025
  2. [2] San Diego Union-Tribune - San Diego home prices outpacing wages - Published November 28, 2025
  3. [3] CBS 8 San Diego - San Diego housing market shifts to buyer-friendly - Published November 30, 2025