Is a Housing Market Crash Coming? What 2025 Experts Are Saying
With all the buzz around rising home prices in recent years, it’s natural to wonder: is a crash looming, and is now a good time to buy? In 2023, a Fannie Mae survey found that nearly 23% of consumers—roughly one in four—expected home prices to decline within a year.
Fast forward to 2025, and that sentiment still lingers for many. But the more important question is: what do the experts say now, and how does that translate for your local market (like San Diego)? Let’s dive in.
What the Experts Predict: A Broader, More Balanced View
If you’re still on the fence, let’s zoom out a bit. One of the most respected forecasts comes from Fannie Mae’s Home Price Expectations Survey (HPES), conducted in partnership with Pulsenomics, which polls over 100 economists, housing strategists, and analysts each quarter.
National Outlook: Slower, Steady Growth
- According to the Q2 2025 HPES, experts now expect +2.9% growth in 2025 and +2.8% in 2026.
- This represents a downward revision from prior projections of ~3.4% for 2025, reflecting a more cautious outlook.
- Meanwhile, P. Morgan expects home prices to rise about 3.0% in 2025.
- Zillow, for its part, recently revised its 12‑month national forecast to +0.4%, reflecting a much more tempered outlook.
- That said, some predictions are more cautious: Redfin expects a 1% decline nationally by the end of 2025, citing rising inventory and falling demand.
In short, no crash is widely predicted, but growth is not expected to surge ahead as it did in prior years. Instead, many see a soft, more stable trajectory ahead.
What This Means for You (and Your Home Value in San Diego)
Let’s look at how national trends might translate to household wealth. Consider this hypothetical:
- Suppose you bought a home for $400,000 years ago.
- If home prices rise 9% annually, your investment could grow by ~$59,000 over five years (before accounting for costs, taxes, or improvements).
- Growth may be higher in hot metropolitan areas, and more modest in slower markets.
The point: modest, steady gains still tend to beat stagnation or outright losses—especially over a multi-year horizon.
San Diego’s Market in 2025: What’s Really Going On
National trends are helpful, but real estate is local. Here’s what’s happening in San Diego as of mid‑2025:
Current Conditions & Price Trends
- The average home value in San Diego is about $982,733, down ~3.9% over the past year.
- The median sale price for detached homes in July 2025 rose ~4.7% to $1,099,000 year-over-year.
- Conversely, attached homes (condos/townhomes) dropped ~7.1% to a median price of $650,000.
- In August 2025, median home prices were ~$960,000, ~1.5% below last August’s reading.
- Homes are spending more time on the market: average days on market increased from ~23 days last year to ~39 days this year.
So what’s the local takeaway? San Diego isn’t experiencing a bust—far from it—but the market is showing calming signs: price corrections in some segments (especially condos), slower absorption, and more balanced negotiations.
Forecast for San Diego: 2025–2026
- Local forecasts expect ~3% median price appreciation in 2025 and ~4% in 2026.
- Mortgage rates are projected to hover in the 6.5% area by the end of 2025.
- Inventory may rise, but likely stay below historic norms; mortgage rates could stabilize in the 6% range.
In short, modest gains are the expectation locally, not runaway growth.
So … Should You Be Worried or Confident?
Here’s the bottom line based on current data and projections:
| Concern | What the Evidence Suggests |
| A crash? | Very unlikely. Most forecasts expect growth, even if slower. |
| Declines? | Local segments like condos may see short-term softening, but not a broad collapse. |
| Equity growth? | Yes—if you hold long term in resilient segments, gains are still likely. |
| Best bets? | Detached, owner-occupied homes generally perform more stably than condo/attached markets. |
If you buy a property in 2025 in a desirable area, applying a conservative 3% annual growth rate could still lead to solid appreciation over five years. In San Diego, that might grow your $900,000 home to around $1,045,000 (again, ignoring costs or renovations).
Your Next Steps (for 2025 & Beyond)
- Watch inventory trends closely in your neighborhood—rising supply is one of the strongest early signs of a softening market.
- Compare the performance of detached vs. attached segments locally—detached homes are showing more resilience.
- Monitor mortgage rates. A small dip could reignite buyer demand and help sustain growth.
- Lean long. Real estate tends to favor patient investors over those with short-term time horizons.
Want to turn these insights into action?
Schedule a call with the McT Real Estate Group, REALTOR® to discuss:
• Your specific neighborhoods or property types
• Upcoming listings before they hit the market
• Strategies to position your home and/or offer the strongest in today’s evolving market
Let’s have a chat and dive into what these changes could mean for your real estate plans.