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San Diego Real Estate Forecast for 2026: What Investors Should Do Now
Is San Diego’s real estate market finally setting up for a rebound?
After a year of uncertainty, slower transaction volume, and affordability challenges, many buyers and investors are asking the same question: What comes next for San Diego real estate?
With over a decade of experience in real estate management at Good Life Property Management, we can tell you that the answer isn’t about waiting for the perfect moment. It’s about understanding the market cycle, recognizing where we are today, and preparing strategically for what’s coming next.
The 2025 data suggest San Diego isn’t declining. It’s recalibrating. And that reset could position spring 2026 as a meaningful turning point for long-term investors.
Below, we break down what’s driving this shift, what the San Diego real estate forecast for 2026 looks like, and what investors should be doing now to prepare.
Why timing the San Diego real estate market rarely works
Trying to time the real estate market sounds logical in hindsight. Everyone wishes they had bought earlier or sold at the peak. In practice, real estate doesn’t move like a stock chart.
Interest rates, inventory levels, job growth, migration trends, and local regulations influence the San Diego housing market. All of these factors move together in complicated and often unpredictable ways. By the time headlines confirm a shift, experienced investors have usually already acted.
This is why even economists and seasoned professionals rarely call the exact top or bottom. Successful real estate investing isn’t about guessing dates. Instead, it’s about positioning yourself correctly within the cycle.
Bottom line: Don’t wait for timing headlines or certainty. Instead, focus on understanding the market cycle, acting early, and managing quality assets for long-term results.
What actually drives long-term real estate investing success
Over time, wealth in San Diego real estate has consistently been built through fundamentals, not speculation.
Long-term success typically comes from:
- Buying quality properties in strong locations
- Focusing on durable rental demand
- Managing assets professionally
- Allowing appreciation and rent growth to compound
- Using tools like 1031 exchanges to reposition without unnecessary tax friction
In high-demand Southern California real estate markets, disciplined ownership tends to outperform short-term market timing. Holding good properties over time works better than trying to jump in and out of the market.
Long-term investors benefit from multiple income and wealth-building mechanisms, not just price appreciation. We explain this in more detail in The 5 Ways Real Estate Pays.
San Diego real estate review: What happened in 2025
From an on-the-ground perspective, the 2025 market followed a familiar but uncomfortable pattern.
- Spring 2025 (March to May) was the most active period, with steady buyer interest and relatively stable pricing.
- Activity cooled through the summer as higher mortgage rates reduced affordability.
- A brief uptick occurred in the fall when rates dipped into the low 6% range.
- Momentum slowed again as rates rose upward and broader economic uncertainty made buyers more cautious.
Significantly, San Diego home prices did not experience a sharp correction. Instead, prices essentially flattened as demand paused—a sign of resilience rather than weakness. Historically, these slower periods often create pent-up demand that fuels the next phase of the cycle.
For a data-backed look at how San Diego compares nationally, see our analysis in Market Update: San Diego Holds Firm in National Home Price Rankings.
Why the San Diego real estate forecast for 2026 looks more positive
Three key factors are converging, pointing to a healthier San Diego real estate market in 2026.
1. The Fed’s shift on quantitative tightening
In December 2025, the Federal Reserve officially ended its quantitative tightening program, which had been shrinking its balance sheet since mid-2022. This policy was one of the forces placing upward pressure on long-term interest rates. With that pressure easing, many analysts expect mortgage rates to trend lower over the next 6 to 12 months gradually.
2. Mortgage rates and buyer affordability
Most forecasts suggest the 30-year mortgage rate could move into the low 6% range, with the potential to approach the high 5’s if inflation continues to moderate.
Even small rate reductions can significantly improve affordability, and that can be enough to pull hesitant buyers back into the San Diego market.
3. Supply constraints remain
San Diego continues to face long-term challenges in housing supply. Limited new construction, strict zoning, and high development costs mean inventory remains tight. But demand hasn’t disappeared. Instead, it’s been delayed. As conditions improve, demand could return quickly, especially during the traditionally active spring buying season.
Much of this underlying demand is driven by employment opportunities, lifestyle appeal, and chronic supply limitations. We discuss these factors in greater detail in our guide to the Cost of Living in San Diego, CA.
What to expect over the next 2 to 4 years
Looking beyond 2026, the most likely scenario is a return to a more normalized market.
That may include:
- Home price appreciation closer to inflation
- Gradual wage growth is catching up
- Fewer extreme price swings
For long-term investors, this environment is often ideal. Stable growth combined with professional San Diego property management is where real wealth compounds quietly over time.
Strategy over timing: How investors should prepare now
Rather than waiting for a perfect entry point, investors should be using this period to prepare by:
- Reviewing portfolio performance
- Evaluating cash flow and rent positioning
- Exploring refinancing or repositioning opportunities
- Planning potential 1031 exchanges
- Getting clarity on financing before the competition increases
Property owners who plan early tend to move with more confidence when opportunities appear. At Good Life Property Management, we help owners navigate both San Diego property management and Orange County property management, giving investors a regional perspective across Southern California while executing locally with precision.
As portfolios grow, many investors also reassess how their properties are managed. If you’re weighing your options, this breakdown on Should I Hire a Property Manager or Do It Myself? can help clarify the decision.
Thinking about your 2026 real estate strategy?
If you’re considering buying, selling, or restructuring your real estate portfolio, now is the right time to plan.
Whether you need guidance on real estate investing, insight into San Diego home prices, or a second opinion on your 2026 strategy, our team is here to help you make informed, data-driven decisions.
For investors comparing opportunities across Southern California real estate, understanding operational costs matters just as much as market forecasts. We break this down in How Much Does Property Management Cost?
Frequently Asked Questions
Is San Diego real estate expected to rebound in 2026?
While no forecast is guaranteed, improving affordability, easing interest rate pressure, and strong underlying demand suggest conditions could improve meaningfully by spring 2026.
Will San Diego home prices go down?
Most indicators point toward price stability rather than a sharp decline. Limited inventory and long-term demand continue to support San Diego home prices.
Is 2026 a good time for real estate investing in San Diego?
For long-term investors, periods of market reset often provide strong opportunities, especially when paired with disciplined management and strategic planning.
How does property management impact long-term returns?
Professional San Diego property management helps protect cash flow, reduce vacancy, control expenses, and preserve asset value — all critical for long-term success.
Should I consider investing outside San Diego?
Many investors diversify across Southern California real estate, including opportunities supported by experienced Orange County property management, depending on goals and risk tolerance.
Steve Welty
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