San Diego Condo Prices Dip 3.7% in 2025 as Sales Volume Slows — Signs of Stabilization Emerging
The Downtown San Diego condo market experienced a modest price correction in 2025, with average prices declining approximately 3.7% year over year. While this marks a continuation of the slower market conditions that began in 2023, recent data suggests the market may be finding its footing as we move into 2026.
Slower Sales Volume Weighs on Prices
The primary driver behind the price softness in 2025 was subdued sales volume. Elevated mortgage rates kept many primary residence buyers on the sidelines, particularly at the entry and mid-level price points where affordability is most sensitive to financing costs. Fewer transactions naturally reduced competitive pressure, allowing buyers more negotiating leverage and placing mild downward pressure on prices.
As illustrated in the chart below, average price-per-square-foot trends flattened for much of the year, with brief periods of softness rather than a sharp correction. This pattern is consistent with a market that is adjusting—not unraveling.
Q4 2025: Early Signs of Price Stabilization
Encouragingly, prices ticked up slightly in the fourth quarter of 2025, suggesting that the market may be nearing equilibrium. While the increase was modest, it indicates that sellers and buyers are beginning to align on value, particularly in well-located, higher-quality condo buildings in downtown San Diego.
This late-year stabilization is an important signal. It suggests that much of the price discovery process may already be behind us, even though transaction volume remains below long-term averages.
Luxury Condos Holding Up Better Than Entry-Level Units
One notable trend in 2025 was the relative strength of luxury and larger condominium units compared to entry-level offerings. Condos over 1,200 square feet and those in premium buildings experienced less volatility and, in some cases, outperformed the broader market on a price-per-square-foot basis.
This resilience is largely due to who is buying today.
Who Is Buying a condo in Downtown San Diego in This Market?
Despite higher interest rates, two buyer segments continue to provide meaningful support to the market:
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Second-home buyers, many of whom are less rate-sensitive or are paying substantial cash
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Newly retired buyers, often relocating from higher-cost or colder markets and prioritizing lifestyle over short-term pricing fluctuations
These buyers tend to gravitate toward higher-quality, amenity-rich buildings and larger floor plans, which helps explain why luxury price points are faring better than entry-level condos.
Outlook for 2026: Likely Flat Until Rates Fall
Looking ahead, prices are expected to remain relatively flat in 2026, assuming mortgage rates stay near current levels. A meaningful increase in buyer demand will likely require mortgage rates to move closer to the 5% range, which would materially improve affordability and encourage more primary residence buyers to re-enter the market.
If and when that happens, sales volume—not just prices—should respond first, setting the stage for the next growth cycle.
Bottom Line
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2025 saw a controlled 3.7% price decline, not a crash
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Sales volume remains slow, limiting upward price momentum
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Q4 stabilization is a positive signal
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Luxury condos are outperforming entry-level units
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The market is being propped up by second-home buyers and retirees
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Sustained price growth likely hinges on lower mortgage rates
For buyers with long-term horizons and strong financial positions, today’s market continues to offer selective opportunities—especially in high-quality downtown condo buildings where long-term fundamentals remain intact.
