Will San Diego Housing Prices DROP? May 2025 Market Insights!

 

The San Diego real estate market for May 2025 is a complex puzzle. It’s a confusing, high-stakes environment defined by stabilizing (but high) rates, a significant surge in inventory, and an “invisible buyer pool” finally making a move. As The GreenHouse Group, we’ve broken down the data to give you, our clients and community, the essential truths you need to make informed decisions.

 

📈 Inventory is Surging: The Opportunity Window is Open

This is the most critical factor shaping the spring market. Supply is suddenly pouring into the market, which is a rare sight for San Diego:

• Detached Homes: Inventory has surged by nearly 32%.
• Attached Homes: Inventory saw an even more dramatic jump of almost 61%.

This injection of supply is the reason competition is officially back. While price appreciation has slowed (detached homes are only up about 3%), this surge is applying real pressure. Major forecasters like Zillow have even adjusted their 2025 outlook to predict negative appreciation for the first time since the 2008 recession. The price stability we’ve enjoyed for years is finally showing cracks.

 

📉 The New Rate Reality: Stop Waiting, Start Planning

We all chase the lowest possible rate, but the current market demands a shift in mindset. You simply cannot time the market; you can only commit to time in the market.

While rates briefly dipped—leading to a chaotic, short-lived buyer frenzy—they have settled back into the sixes and sevens. Buyers who had been waiting on the sidelines are finally accepting this as the new reality. This quiet acceptance is paving the way for the “invisible buyer pool”—those driven by life changes like family size, job commutes, or storage limits—to finally enter the market.

The Strategic Buyer’s Window: If rates drop (and if the economy crumbles further, they likely will), prices will instantly surge as competition explodes. This specific period—with high inventory but stabilized rates—is a strategic window for decisive buyers. Waiting for the “Black Friday sale” means signing up to fight “a bunch of angry, aggressive shoppers.” Preparation wins.

 

⚠️ Critical Warning for Homeowners: The HELOC Trap

If you are a current homeowner with a low-interest mortgage, you are sitting on valuable equity. Many are exploring HELOCs (Home Equity Lines of Credit) or HELoans to fund home improvements or build ADUs without sacrificing their low rate.

We must caution you: these products were at the heart of the 2008 financial crisis. If a bank offers you a financial product for free, pause and ask why. Critically, banks have the right to close your line of credit at any time. This means you owe the money you’ve borrowed, but your “safety pad” for future draws is suddenly gone.

Our Advice: Never count on continued appreciation or a future pay raise to pay off a loan. Have a clear, actionable exit strategy in place that relies on your financial profile, not external market factors.

 

Ready to Turn Market Chaos into Clarity?

At The GreenHouse Group, we specialize in taking the complex data, marrying it with your unique financial profile, and delivering a clear strategy for buying, selling, or borrowing in San Diego.

Don’t wait for the perfect moment—create it.