Cooling Home Prices and Market Rebalancing
Lending Bee is closely watching the San Diego housing market as we approach 2026. With home prices softening, inventory rising, and mortgage rates potentially easing, the local real estate landscape is shifting. These changes open new possibilities for buyers and homeowners, and Lending Bee is here to help clients make the most of them.
Home Values Are Stabilizing
After years of rapid appreciation, San Diego home prices are showing signs of leveling out. By mid-2025, the median listing price dropped slightly to around $949,000, while the median sale price stood near $920,000. Industry forecasts point to a moderate price decline—roughly 1% to 2% through mid-2026. This signals a move away from the aggressive price spikes of the past few years.
Home values are being pressured by elevated mortgage rates, cautious buyer demand, and rising inventory. However, the price dip is expected to remain mild. There’s no indication of a crash. Instead, the market appears to be normalizing.
Market Corrections Without Collapse
San Diego’s real estate market is supported by strong fundamentals. Job growth, limited land availability, and sustained demand from both local and out-of-state buyers continue to provide a solid base. This is why most analysts expect prices to remain relatively high by national standards, even with small corrections.
Lending Bee provides expert guidance in this changing landscape, helping clients identify the best time to buy, sell, or refinance based on accurate, neighborhood-level data.
Inventory Growth Shifts Buyer-Seller Balance
More Listings Create Options
Inventory across San Diego County has been gradually rising. In early 2025, active listings reached nearly 2,000—an increase of about 9.5% year-over-year. Months of supply rose from 2.4 to 3.2, giving buyers more homes to choose from and more time to make informed decisions.
This increase in listings is helping to relieve some of the competitive pressure that previously drove bidding wars. With more choices, buyers are gaining leverage. Properties are staying on the market longer, and price negotiations have become more common.
A More Balanced Market is Emerging
While buyers have more breathing room, demand remains solid. San Diego continues to attract high-income professionals, retirees, and investors. Lending Bee understands that in a balanced market, timing and loan structuring matter more than ever. We help clients navigate this middle ground—where both buyer and seller have power—by securing the right financing at the right time.
Mortgage Rates: Relief or Reality?
Rates Remain Elevated for Now
As of mid-2025, mortgage rates remain above 6.5% for a 30-year fixed loan, with some lenders quoting closer to 7%. These are significantly higher than the ultra-low rates seen in 2020 and 2021. High rates are affecting affordability, keeping some buyers sidelined and slowing down price growth.
For current homeowners, refinancing remains less attractive unless significant equity has built up. For new buyers, the challenge is qualifying for higher monthly payments under stricter lending standards.
Modest Improvement Expected by 2026
Industry experts suggest we may see slow but steady improvement in rates through 2026. Some forecasts place 30-year fixed rates in the mid-6% range by late 2025, with potential to edge lower depending on inflation and Federal Reserve actions.
Even small rate reductions can open new options for buyers and provide relief to homeowners ready to refinance. Lending Bee helps clients track these shifts closely, offering proactive refinancing strategies and locking in competitive rates when opportunities arise.
Strong Fundamentals Support Long-Term Stability
San Diego’s Economic Strength
San Diego’s diverse economy plays a key role in keeping the housing market stable. Major employers in biotech, defense, technology, tourism, and education continue to drive demand for housing. The region’s quality of life, mild climate, and access to beaches and parks attract buyers from across the country.
Wages are rising in key sectors, which helps offset the impact of higher home prices. This economic strength keeps the housing market resilient, even when interest rates are high.
Housing Supply Remains Tight
While inventory is rising, San Diego still faces long-term supply challenges. Limited land, strict zoning regulations, and high construction costs keep new home development below demand. This ongoing shortage will likely prevent major price drops, even as the market cools.
Lending Bee works with clients to understand these underlying trends and make confident, informed decisions about homeownership and investment.
2026 Outlook: What to Expect
Home Prices Will Level Off
Expect continued moderation in home prices into 2026. Small declines are possible, but a return to rapid appreciation is unlikely. Most forecasts suggest values will either flatten or grow slightly as rates improve and inventory remains steady.
Buyers will have more power in negotiations, and price reductions on listings may become more common. However, desirable properties in prime neighborhoods will still move quickly and may command strong offers.
Inventory Will Increase but Stay Below Pre-Pandemic Norms
While inventory is rising, it is still low by historical standards. New construction remains slow, and many existing homeowners are reluctant to sell due to low-rate loans they locked in years ago. The result: a more balanced but still competitive market.
Lending Bee helps clients stay ahead of these shifts with tools that monitor new listings, pricing trends, and lending conditions across San Diego’s micro-markets.
Mortgage Rates May Improve, but Slowly
Mortgage rates are expected to remain elevated through 2025, with modest easing into 2026. A drop to the mid-6% range could reignite buyer activity and push more homeowners to refinance.
Rate relief will likely be gradual—not a return to pandemic-era lows, but enough to improve affordability. Lending Bee stays on top of rate movements daily, helping clients seize refinancing opportunities or secure pre-approvals before competitive properties hit the market.
Why Lending Bee is the Smart Choice in Any Market
Whether prices are rising or falling, whether rates are high or dropping, having the right mortgage strategy is critical. Lending Bee offers personalized service that cuts through market noise. We take the time to understand each client’s goals and match them with tailored loan products that support long-term success.
With deep knowledge of San Diego’s real estate market, Lending Bee helps buyers, homeowners, and investors respond to changing conditions. Our expert advisors work with trusted lenders to secure competitive rates, unlock hidden savings, and streamline the loan process from start to finish.