Are you considering a change of address in the near future? Whether you’re looking to buy a home in San Diego or sell your current one? Understanding the housing forecast of the real estate market is a crucial factor to consider. Last year, navigating the real estate landscape was tricky due to rising mortgage rates, mixed signals about home prices, and a low inventory. These factors posed unique challenges for both buyers and sellers eager to make their move. So, what can we expect as we step into the new year?
There’s a bright spot on the horizon, and it’s bringing a wave of optimism. Many real estate experts believe we’re moving past these hurdles and heading towards a more encouraging market climate.
Why Rates Are Falling
After peaking near 8% in late 2023, mortgage rates have started a steady decline thanks to cooling inflation and signals from the Federal Reserve that the aggressive rate-hike cycle is largely over. By early 2025, many economists expect the Fed to implement modest rate cuts if inflation continues trending toward the 2% target. Lower Fed policy rates typically pull mortgage rates down with them, and bond market investors are already pricing in this softer outlook. The result? Buyers who felt priced out just a few months ago are suddenly seeing monthly payments drop by hundreds of dollars on the same loan amount.
What Experts Are Saying
Mark Fleming, Chief Economist at First American, puts it plainly:
“Mortgage rates have already retreated from recent peaks near 8 percent and may fall further as inflation eases and the Fed shifts toward a more accommodative stance.”
Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), adds an encouraging note for San Diego buyers:
“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 and beyond for a better market.”
Lautz and other NAR economists now project average 30-year fixed rates to settle in the low-to-mid 6% range by mid-2025 — still higher than the record lows of 2020–2021, but a meaningful improvement that’s bringing many North Park, South Park, and Golden Hill shoppers back into the market.
“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 for a better market.”
Anticipating a Boost in Home Supply with Easing Rates
The Mortgage Rate “Lock-In” Effect Is Finally Weakening
As rates drop closer to 6.5%, more homeowners who have been “locked in” to ultra-low 2021–2022 rates are deciding the time is right to move.
What the Experts Predict
Lisa Sturtevant, Chief Economist at Bright MLS:
“Supply will loosen up in 2024–2025. Even homeowners who have been characterized as being ‘locked in’ to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6.5%.”
[author updated Dec 4 2025]
Expectations for More Balanced Home Price Growth
2023 vs. 2024–2025 Price Growth Forecasts
The latest Home Price Expectation Survey from Fannie Mae shows:
- 2023 average price growth: 5.9%
- 2024 expected: 2.4%
- 2025 expected: 2.7%
This slower, more sustainable pace is welcome news for buyers in North Park, South Park, University Heights, and Golden Hill.
Bottom Line: Why 2025 Looks Brighter for San Diego Buyers & Sellers
Mike Simonsen, President of Altos Research, sums it up:
“We’re going into 2025 with slight home-price gains, easing inventory constraints, and increasing transaction volume. All in all, things are looking up for the U.S. housing market — and especially for San Diego.”
Ready to buy or sell in North Park, South Park, University Heights, Golden Hill, or anywhere in metro San Diego? Work with the top-rated McT Real Estate Group — over 520 local sales, 5.0⭐ on Zillow, 4.9⭐ on Yelp, bilingual in English, Spanish & Japanese, free seller seminars, monthly market reports, and client events all year long.
Recession Fears: Understanding the Strong Housing Market
What It Could Mean for Metro‑Area Buyers and Sellers
For residents and prospective homeowners in San Diego’s inner-city neighborhoods, such as North Park, South Park, University Heights, and Golden Hill, this may offer a rare window of opportunity…
- Be ready: Get pre‑approved early…
- Consider multi‑unit or ADU potential: Whether seeking rental income…
For Sellers
It could be a sweet spot if you aim to sell…
What Could Hold It All Together
Even though broader San Diego may see more listings…
FAQs
Q: Will inner‑city neighborhoods see more listings this year?
A: Likely yes…
Q: Should I wait longer to buy?
A: The spring 2024 market may present better choices…
Q: Is it better to sell now or wait?
A: If your home is turn-key or updated…
Q: How important is staging?
A: Very. As more homes come online…
Q: Best neighborhoods for value + walkability?
A: North Park, University Heights, South Park, Golden Hill…