San Diego Housing Market Forecast 2026: Should You Sell Now or Wait for 3-5% Appreciation?

As we enter 2026, San Diego homeowners face a critical decision: should you sell your home now, or wait 12 months for the forecasted 3-5% price appreciation? On the surface, waiting sounds like the smart move. After all, who wouldn't want to capture an extra $30,000 to $50,000 in equity?

But here's the problem most sellers overlook: the math rarely supports waiting. While your home might appreciate by 3-5% over the next year, you'll be paying $5,500 to $7,000 monthly in carrying costs. That's $66,000 to $84,000 over 12 months—far more than the forecasted appreciation gains.

This article provides a comprehensive, data-driven analysis of San Diego's 2026 housing market forecast, including what experts are predicting, the hidden costs of waiting for appreciation, and a decision framework to help you determine whether selling now or waiting makes financial sense for your specific situation.

The 2026 Forecast: What Experts Are Predicting for San Diego

Multiple credible sources have released San Diego housing market forecasts for 2026, and there's surprising consensus: expect moderate, sustainable growth—not the explosive appreciation of 2020-2022, and not a market crash.

Price Appreciation: The 3-5% Consensus

The Cassity Team forecasts that San Diego home prices will appreciate by 3-5% through 2026. Based on the current median price of approximately $1,000,000, this would place the new median price between $1,030,000 and $1,050,000 by year-end 2026.

The National Association of Realtors' Chief Economist Lawrence Yun projects a 4% increase in median home prices for 2026. Local San Diego forecasters anticipate moderate price growth between 2.5% and 9%, with most clustering in the 2-5% range.

Other market analysts predict even more modest growth, with some forecasting just a 1.2% increase as the market reaches bottom and begins recovery. The consensus: 2-5% appreciation is the baseline expectation for 2026.

Mortgage Rates: The 6.1% Prediction

Mortgage rates are expected to decline modestly in 2026, which could stimulate buyer activity. Rates averaged 6.4% in late 2025, with projections indicating a potential decline toward 6.1% in 2026. Some optimistic forecasters suggest rates could approach 6% by Q4 2026 if inflation continues to moderate.

This potential rate decrease matters because even small reductions unlock significant purchasing power. Dropping from 6.5% to 6.1% on an $800,000 loan saves buyers hundreds of dollars monthly, potentially bringing hesitant buyers back into the market.

Inventory: Constrained but Improving

San Diego's inventory levels remain below the balanced market threshold of 6 months supply. As of December 2025, inventory sits at 2.2-3.0 months of supply, with 4,683 active listings countywide. The Unsold Inventory Index in November was 3.2 months, slightly higher than last year's 2.9 months.

Forecasters expect inventory to continue climbing modestly into 2026, but not enough to shift the market dramatically. Most owners still have low-rate mortgages locked in from 2020-2022, creating a "lock-in effect" that constrains new listings.

Central Neighborhoods: The Outperformance Thesis

Not all San Diego neighborhoods are expected to perform equally in 2026. Central urban neighborhoods like North Park, South Park, University Heights, and Golden Hill are forecasted to outpace county-wide averages.

North Park, with a Walk Score of 86 ("very walkable"), continues to attract buyers seeking urban lifestyle amenities. Most errands can be accomplished on foot, and the neighborhood's mixed-use development creates strong demand fundamentals. Tight inventory and strong demand in North Park specifically support the outperformance thesis.

In growth-oriented areas like North Park, South Park, and University Heights, appreciation is expected to outperform citywide averages, offering value opportunities for both owner-occupiers and investors. These neighborhoods benefit from limited supply in the established urban core, walkability premiums, and historical outperformance patterns.

Current Market Reality: The Starting Point Matters

Before evaluating whether to wait for 2026 appreciation, it's critical to understand San Diego's current market conditions as of January 2026.

Median Home Prices: Where We Stand Today

San Diego's current median home price varies by source and property type. Redfin reports that in November 2025, San Diego home prices were down 2.1% compared to last year, selling for a median price of $914K. However, San Diego County saw a 1.5% increase from November 2024 to November 2025, with the median price reaching about $990,000 according to other sources.

By property type, single-family home prices are up 3.0% year-over-year to a median of $1,050,000, while condo prices have softened slightly to $660,000. Zillow's data shows the typical home value at $950,012.

The variation reflects different methodologies and whether sources measure the city of San Diego or the broader San Diego County metro area. For forecasting purposes, the consensus baseline is approximately $914K to $990K for the general market entering 2026.

Days on Market Extended, Price Reductions Common

The market has shifted from the ultra-competitive seller's market of 2021-2022 to more balanced conditions. Most homes are going under contract in 43-49 days, with Days on Market increasing 19.4% for detached homes and 32.4% for attached homes compared to the previous year.

Over 20% of listings had price cuts in October 2025, indicating buyers have more negotiating power than in previous years. This matters because you're starting from a position where many sellers are already reducing prices to attract offers—not the strong seller's market that supports aggressive appreciation forecasts.

Sales Volume Tracking to Multi-Decade Lows

Buyer activity remains subdued. The combination of high prices, elevated mortgage rates, and increased home insurance costs (California homeowners experienced a 27% year-over-year increase in premiums) continues to constrain demand.

This matters for appreciation forecasts because sustained price growth requires buyer demand to absorb inventory. Starting 2026 from a position of extended days on market and price reductions means the 3-5% appreciation forecast isn't guaranteed—it depends on conditions improving substantially.

The Math That Changes Everything: Carrying Costs vs. Appreciation

Here's where most "wait for appreciation" strategies fall apart: homeowners focus on gross price appreciation without calculating net proceeds after carrying costs.

Let's run the actual numbers using a typical San Diego home valued at $900,000.

Scenario 1: 3% Appreciation Over 12 Months

• Starting home value: $900,000
• 3% appreciation: $27,000
• Home value in 12 months: $927,000

Sounds great, right? Now let's calculate carrying costs.

Monthly Carrying Costs Breakdown

For a $900,000 San Diego home with a typical mortgage:

• Mortgage payment (principal + interest): $4,500-$5,000/month (assuming 20% down, 6.5% rate)
• Property taxes: $940/month (San Diego County averages approximately 1.25% annually)
• Homeowners insurance: $190-$250/month (averaging $1,565 annually, though premiums are rising rapidly)
• Utilities (water, electric, gas, trash): $300-$350/month
• Maintenance and repairs: $300/month (industry standard 1% annually)

Total monthly carrying costs: $5,500-$7,000

The 12-Month Calculation

• Total carrying costs over 12 months: $66,000-$84,000
• Appreciation gained: $27,000
• NET LOSS from waiting: -$39,000 to -$57,000

You're paying $66,000-$84,000 to capture $27,000 in appreciation. That's a 145-210% loss on the decision to wait.

Scenario 2: Even at 5% Appreciation, You Lose Money

Let's assume the optimistic end of the forecast range:

• 5% appreciation on $900,000: $45,000
• 12-month carrying costs: $66,000-$84,000
• NET LOSS from waiting: -$21,000 to -$39,000

Even in the best-case appreciation scenario, you're still losing money by waiting—unless your carrying costs are substantially lower than average or you achieve appreciation above 7-9%.

When Does Waiting Make Financial Sense?

The math only works if:

1. You own your home outright (no mortgage payment)
2. Appreciation exceeds 7-9% (not the forecasted 3-5%)
3. You can rent out the property for more than carrying costs
4. You have extremely low holding costs (paid-off home in low-tax area)

For the typical San Diego homeowner with a mortgage, property taxes, and insurance, waiting 12 months for forecasted appreciation is financially irrational.

Central Neighborhoods: Does Higher Appreciation Change the Calculus?

If you own a home in North Park, South Park, University Heights, or Golden Hill—neighborhoods forecasted to exceed county averages—does that change the math?

Short answer: not much.

Let's assume your central San Diego home appreciates at 6% (above the county average):

• 6% appreciation on $900,000: $54,000
• 12-month carrying costs: $66,000-$84,000
• NET LOSS from waiting: -$12,000 to -$30,000

Even with above-average appreciation in the most desirable neighborhoods, you're still losing money by waiting 12 months.

The outperformance thesis matters more for investors holding properties for 5-10 years, not for sellers trying to time a 12-month appreciation window.

The Uncertainty Factors: What Could Derail Forecasts

Real estate forecasts are educated guesses, not guarantees. As Rick Palacios Jr., director of research at John Burns Research and Consulting, candidly stated: "No one is ever right, and if they say they were right, they're lying. But if we're less wrong, that's good."

Historical Forecast Accuracy: Mixed Track Record

Looking at 2025 forecasts provides insight into prediction reliability:

Predictions that were accurate:

• NAR predicted mortgage rates would hover around 6%, and they averaged 6.72% for the year—reasonably close
• Home builders projected 4-5% growth in housing starts, and single-family starts rose 6.5%

Predictions that missed badly:

• NAR forecast a 9% jump in existing home sales to about 4.46 million, but sales remained flat around 4.0-4.1 million
• Many forecasters underestimated how long rates would stay elevated

The track record is mixed. Forecasters got far more right than wrong in 2025, but significant predictions—especially around sales volume and buyer activity—missed the mark.

What Could Go Wrong in 2026?

Mortgage rates could stay higher longer. The 6.1% prediction assumes the Federal Reserve continues cutting rates and inflation moderates. If inflation reaccelerates or geopolitical factors emerge, rates could stay at 6.5%+ or even rise.

Insurance crisis could worsen. California homeowners have seen dramatic insurance premium increases. Allstate received approval for a 34% rate increase, affecting over 350,000 homeowners. State Farm got approval for 20% increases. If carriers continue withdrawing from California or raising rates, carrying costs could exceed the estimates above.

Recession risk. Economic forecasts show ongoing uncertainty. A recession in 2026 would likely halt appreciation entirely or cause prices to decline.

Inventory could surge. If the mortgage rate lock-in effect breaks and more sellers list properties, inventory could build faster than forecasts predict, putting downward pressure on prices.

Regional variations. Not all San Diego neighborhoods will perform equally. Some areas may see flat or declining prices even if countywide averages show modest appreciation.

The point: forecasts provide a baseline expectation, but actual results vary widely based on factors no one can predict with certainty.

Decision Framework: Who Should Sell Now vs. Who Should Wait

Given the data, carrying cost realities, and forecast uncertainties, here's a framework to guide your decision.

You Should Sell Now If:

• You're carrying two properties (paying double mortgages drains equity fast)
• You face financial pressure (job uncertainty, need to access equity, debt obligations)
• Your property needs significant repairs (deferred maintenance erodes value; buyers discount problems)
• You've already relocated (paying carrying costs on an empty home you don't use)
• You're risk-averse (can't afford to gamble on forecasts that may not materialize)
• You can't afford $66K-$84K in carrying costs for uncertain $27K-$45K appreciation
• You want certainty (known proceeds today vs. unknown proceeds in 12 months)
• You're in a slow-moving neighborhood (extended days on market, price reductions common)

You Should Consider Waiting If:

• You own outright (no mortgage eliminates largest carrying cost)
• You can rent the property profitably (rental income covers or exceeds carrying costs)
• You have zero time pressure (can afford to wait years, not just months)
• Your property is in excellent condition (no deferred maintenance concerns)
• You're in a high-appreciation neighborhood (North Park, South Park, University Heights with historical outperformance)
• You have substantial financial cushion (can absorb carrying costs without stress)
• You're willing to gamble on forecasts (accepting the risk that appreciation may not materialize)
• Market conditions are improving rapidly (falling rates, rising buyer activity, declining inventory)

Calculate YOUR Specific Numbers

Don't rely on generic forecasts. Calculate your actual situation:

1. Current home value (use recent comparable sales, not Zillow estimates)
2. Monthly carrying costs (mortgage, taxes, insurance, utilities, maintenance)
3. Forecasted appreciation (use conservative 2-3%, not optimistic 5%+)
4. Time horizon (how long will you actually wait?)
5. Probability-weighted outcomes (what if appreciation is 0%? Or prices decline?)

Run the math with actual numbers. For most San Diego homeowners with mortgages, the calculation shows waiting costs more than appreciation gains.

Geographic Analysis: Where Are Forecasts Most Likely to Materialize?

San Diego County is geographically diverse, and appreciation patterns vary significantly by location.

Neighborhoods with Strongest Appreciation Potential

Central Urban Core: North Park (Walk Score 86), South Park, University Heights, and Golden Hill lead the list. These neighborhoods benefit from:

• Walkability premium (most errands accomplished on foot)
• Limited supply (established neighborhoods with little room for new construction)
• Urban lifestyle demand (millennials and Gen Z prioritize walkable neighborhoods)
• Historical outperformance (these areas have exceeded county averages in past cycles)

Clairemont and Normal Heights also show solid fundamentals with more affordable price points attracting first-time buyers and investors.

Coastal Areas: Stable but Slower

La Jolla, Pacific Beach, Mission Beach, and Ocean Beach benefit from coastal premiums and limited inventory, but appreciation may lag central neighborhoods because:

• High base prices (already at premium levels with less room for appreciation)
• Affordability constraints (smaller buyer pool can afford $2M+ coastal properties)
• Insurance challenges (coastal properties face higher premiums and coverage challenges)

Suburban Areas: More Vulnerable

Suburban neighborhoods and newer developments face headwinds:

• More inventory (suburban areas have more room for new construction)
• Price sensitivity (buyers stretched by high rates and prices cut budgets first in suburbs)
• Commute patterns (if remote work declines, commute locations matter more)

If your property is in a suburban area with rising inventory and extended days on market, the appreciation forecast is less reliable.

The Cash Buyer Alternative: Certainty Today vs. Uncertain Appreciation Tomorrow

This analysis reveals why cash offers to sell your house for cash in San Diego provide compelling value even when they come in below retail market value.

Consider a cash offer scenario:

• Home value: $900,000
• Cash offer: $828,000 (92% of value)
• Discount from retail: -$72,000

At first glance, that $72,000 discount seems steep. But compare it to waiting 12 months:

• Forecasted appreciation (3%): $27,000
• Carrying costs (12 months): -$66,000 to -$84,000
• Net proceeds from waiting: -$39,000 to -$57,000 loss

The cash offer at 92% of value actually delivers better net proceeds than waiting 12 months for uncertain appreciation while paying carrying costs.

The Certainty Premium

Cash offers provide:

• Guaranteed close (no financing contingencies, no appraisal risk)
• Fast timeline (7-14 days vs. 43-49 days average on-market time)
• No repairs required (as-is sales avoid repair costs and negotiations)
• No carrying costs (eliminate 12 months of mortgage, taxes, insurance, utilities)
• No market risk (no gambling on forecasts that may not materialize)
• Immediate liquidity (access your equity now, not in uncertain future)

For homeowners who need to sell, carrying two properties, facing financial pressure, or simply wanting certainty, the cash offer "discount" often delivers superior net proceeds compared to the wait-for-appreciation strategy.

Conclusion: Making the Data-Driven Decision

The 2026 San Diego housing market forecast presents a paradox: experts predict 3-5% appreciation, yet for most homeowners, waiting to capture that appreciation costs more than the gain itself.

Here's what the data tells us:

• Expert consensus: 2-5% appreciation, median prices reaching $1.03-$1.05 million by year-end 2026
• Mortgage rates: Expected to decline toward 6.1%, potentially stimulating buyer activity
• Inventory: Remains constrained at 2.2-3.0 months supply, supporting price stability
• Central neighborhoods: North Park, South Park, University Heights, Golden Hill forecasted to outperform county averages
• The carrying cost reality: $66,000-$84,000 annually for typical homeowner overwhelms $27,000-$45,000 forecasted appreciation

For homeowners carrying mortgages, the math is clear: waiting 12 months for forecasted appreciation typically results in net losses, not gains. The exceptions are homeowners who own outright, can rent profitably, have extremely low carrying costs, or achieve appreciation well above forecasts.

Cash offers provide an alternative that deserves serious consideration. While the offer price may be 8-15% below retail value, the net proceeds after eliminating 12 months of carrying costs often exceed the wait-for-appreciation strategy. More importantly, cash offers provide certainty today rather than gambling on uncertain forecasts that may not materialize.

Don't make your decision based on generic forecasts. Calculate YOUR specific numbers:

1. Your actual monthly carrying costs (mortgage, taxes, insurance, utilities, maintenance)
2. Your realistic appreciation potential (use conservative 2-3%, not optimistic 5%+)
3. Your risk tolerance (can you afford to be wrong if forecasts don't materialize?)
4. Your timeline and financial situation (two properties? Financial pressure? Relocation?)

The data-driven decision prioritizes net proceeds and financial reality over emotional attachment to forecasted appreciation that may never materialize.