How Recent Interest Rate Changes Are Impacting San Diego’s Housing Market

San Diego’s housing market in 2025 is navigating a complex landscape shaped by recent shifts in interest rates. These changes are influencing buyer behavior, seller strategies, and overall market dynamics. Understanding these impacts is crucial for anyone involved in real estate transactions in the region.

Interest Rates and Buyer Affordability

As of mid-May 2025, the average 30-year fixed mortgage rate in San Diego is approximately 6.76%, with 15-year fixed rates around 5.89% . These elevated rates have a direct effect on buyer affordability. For instance, a 1% increase in mortgage rates can reduce a buyer’s purchasing power by about 11%, making it more challenging to afford homes in a market where the average home value stands at $1,033,526.

This affordability challenge is further highlighted by the fact that prospective homebuyers in San Diego need to earn approximately $135,000 more annually than renters to afford a midpriced home, equating to an income requirement of around $241,200.

Market Dynamics: Inventory and Pricing Trends

The current interest rate environment has led to notable shifts in market dynamics. In April 2025, detached home sales in San Diego rose by 6.3% year-over-year, while the median sale price for detached homes dipped 1.4% to $1,075,000 . This suggests that while demand remains, pricing is adjusting in response to affordability constraints.

Additionally, housing inventory has seen significant growth, with detached home listings jumping 29.1% and attached home inventory surging 60.5% from a year ago . This increase in supply provides buyers with more options and potentially more negotiating power.

Sellers are also adapting to these conditions, with approximately 60% of home sellers in San Diego offering concessions to buyers, placing the city among the highest in the nation for seller concessions.

Strategic Considerations for Buyers and Sellers

For Buyers:

• Assess Affordability: Given the current interest rates, it’s essential to evaluate your financial readiness and understand how mortgage rates impact your purchasing power.
• Explore Options: With increased inventory, take the time to explore different neighborhoods and property types that fit your budget and lifestyle needs.
• Negotiate Wisely: The prevalence of seller concessions indicates room for negotiation. Work with a knowledgeable agent to leverage this in your favor.

For Sellers:

• Price Competitively: In a market with growing inventory and price adjustments, setting a competitive price is crucial to attract buyers.
• Offer Incentives: Consider offering concessions or incentives to make your property more appealing in a buyer-sensitive market.
• Highlight Value: Emphasize unique features and upgrades in your property to stand out among increased listings.

How We Can Help

At Triolo Realty Group, we understand the intricacies of San Diego’s evolving housing market. Our commitment to detail-oriented service, exceptional communication, and strong negotiation skills ensures that our clients navigate these changes with confidence.

Our Services Include:

• Personalized Consultations: We assess your unique situation to provide tailored advice and strategies.
• Market Analysis: Our in-depth knowledge of local trends helps you make informed decisions.
• Negotiation Expertise: We advocate on your behalf to secure favorable terms, whether you’re buying or selling.
• Seamless Transactions: From initial consultation to closing, we manage every detail to ensure a smooth experience.

Navigating the current real estate landscape requires insight and adaptability. Triolo Realty Group is here to guide you through every step, ensuring your real estate goals are met with professionalism and care.