Hunch: ‘Rebalancing’ might take longer than expected.
Executive Summary
San Diego housing market exhibits a pronounced -2.38% YoY price decline with 3,245 unit surplus inventory, creating a buyer-favorable landscape with 29.6% of listings showing price cuts (+50.3% YoY) – significantly outpacing the national increase of 17.4%. Market segments reveal contrasting realities with strategic pockets of opportunity.
Rating and 12-Month Price Forecast: Parcl Labs initiates coverage of San Diego with a Bullish rating, forecasting a 12-month price of ($596.1/sq ft, +3.1%) – just clearing our 3% threshold for a bullish designation. While a 29.6% price-cut share currently indicates buyer leverage, this Bullish outlook anticipates a market shift, supported by ongoing rebalancing. We will review this forecast if current headwinds persist.
San Diego’s absorption rate has fallen to 0.482 as supply (6,262 units) substantially outpaces demand (3,017 units), creating a 0.537 supply-demand gap – significantly wider than the national gap of 0.326. Price cuts have reached a 12-month high at 29.6%, signaling accelerating market rebalancing.
Extreme submarket divergence exists with premium ZIP 92129 showing severe correction signals (supply +137.5% YoY, prices -9.0% YoY) while Imperial County demonstrates robust appreciation (+41.5% YoY) against San Diego County’s -1.1% YoY price decline.
ZIP-level data exposes the most pronounced correction signals in premium neighborhoods, with ZIP 92129 registering a 137.5% supply increase against a 7.0% demand decline, creating a 144.5% market gap that has driven prices down 9.0% year-over-year to $1,351,000. This premium market deterioration contrasts sharply with pockets of resilient demand in ZIPs 92117, 92114, and 92056, which registered exceptional transaction growth of 28.4%, 19.8%, and 15.1% respectively. These localized demand growth areas represent tactical opportunity zones for investors seeking counter-cyclical appreciation potential amid the broader market deceleration, highlighting the importance of granular sub-market analysis in the current transitional environment.
Mid-market property segments command significant yield premiums over luxury (Mid-Century Starter: 5.28%, 1980s Suburban: 5.17% vs. Luxury Estate: 3.64%), with Vintage Family homes showing persistent buyer advantage (supply-demand gap: 0.1203) as other segments approach equilibrium.
The number of homes for sale between La Jolla and Carlsbad is 15% above the highest count in 2024 – which was in mid-July.
Where will we be next month?
I thought many would be giving up by now, but instead more are pushing to get out. Are they aware of the difficulty, and that half won’t be selling this year?
The current chaos combined with the decline of the buyer-agent is causing buyers to stay on the couch – unless they see a compelling deal online. With high rates and prices, you can’t blame them for being very picky!
Yet there are still lucky sales happening. Ones that you wouldn’t think had any chance of selling but they end up closing over list anyway with a buyer-agent who has only closed 1-2 sales in the last 12 months. It is a very treacherous environment!
Here’s another example of how sellers are making decisions these days.
It was time for our clients to sell the family homestead. Bless her heart, their Mom lived a happy life there through to the end, just like many around Olde Carlsbad. What a great place to spend the last 60 years of your life!
Like many, the house really hasn’t been touched – it’s all original. How much do you spend to prepare it for sale….if any? There is a decent ocean view…through the power lines. The lot is large enough to split and you can add the ADUs….and be into it for another $1,000,000 to $2,000,000? I sold the house three doors to the north and you can see that they’ve added the ADU. But they paid under $500,000 in 1999 – and when you buy right you don’t mind spending the money.
4030 Sunnyhill Dr., Carlsbad 92008
3 br/2 ba, 1,994sf
YB: 1960
Lot size: 26,100sf (0.60-acre lot)
SP: $2,000,000
As we were getting ready to go on the open market, the sellers were approached by a family friend. My list price was going to be $2,200,000 at the end of April, which is about the time that the chaos and uncertainty was really starting to affect the market.
Do you gamble and go on the open market? None of these 1/2-acre lots have sold for a long time, and we speculated that there is some pent-up demand, but at what price? This is a pure fixer which turns off most buyers, but could the builders/flippers be interested? At what price?
Our clients took the sure thing.
I had dreams of the open-house extravaganza of the year, and maybe of the decade, but it was the right move – the uncertainty was too high. I had my hands full with two appraisals, but they came in at value, and we closed as agreed.
For those potential sellers who are already writing off 2025 and plan to sell in the new year instead, note how the selling season has been starting sooner than ever. Peak pricing last year in Coastal North was in February, and this year it was January (scroll over):
The buyers’ enthusiasm tapers off after March:
If you do everything right, you should sell in the first 2-3 weeks:
Think the additional inventory this year was bad? There will be truckloads next year! Beat the rush and get out early – or just sell now!
The takeaways from the graph above will be different for different people.
Not suggested:
Those who did negotiate probably didn’t get much of a discount.
Most buyers and sellers were satisfied their agent was worth it.
Better agents are prevailing.
Why is it important to Get Good Help?
The failure rate will be higher this year.
In normal markets, we’ve had a success rate of 60% to 65% of the listings closing escrow successfully. During the frenzy, it was as high as 80%! But look at what we’re faced with now.
NSDCC Total Sales/Total Listings
2024: 1,837/2,831 = 65%
2025: 716/1,549 = 46%
Obviously, this year is incomplete but I did include all of the current pendings to approximate this year’s conditions. It’s unlikely that the success rate will be improving through the second half of 2025.
It’s likely that MOST of the sellers this year will be unsuccessful.
What’s for sure? There will be a load of listings in 2026.
Almost one-third of last month’s buyers paid over the list price…..for the fourth month in a row! Either sellers are being smart about pricing attractively, or a fair amount of the buyers and buyer-agents haven’t gotten the memo about the tougher market conditions.
Sales and pricing are holding up too.
The median sales price is almost identical to last May, and sales were higher:
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A+ thank you
Lisa Tuomi
June 11, 2025
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Many years ago, we purchased a home in Carlsbad, using a realtor that was recommended to us - Jim Klinge. Fast forward to 2025, we recently had the privilege of selling 2 homes in Carlsbad, CA and didn't hesitate to reach out to Jim and Donna Klinge of Klinge Realty Group to guide us through the sales. The transactions were very different, each with its own unique situation, opportunities and challenges. From start to finish, Donna and Jim helped navigate the pre-sale preparation, the listing, showing of the house, buyer negotiations, the final close and all of the paperwork and decisions in between. What stands out with both transactions is the professionalism of Jim and Donna (and their team), wonderful communication (timely, relevant, concise), their deep understanding of market dynamics (setting realistic expectations), their access to top-notch contractors, and last, their ability to guide us across the finish line successfully. We wouldn't hesitate to use Jim and Donna in the future and highly recommend them for anyone looking to buy or sell a property in North San Diego County.
Jerry Meyer
March 28, 2025
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We sold a home with Jim and Donna and from beginning to end they were consummate professionals. Their initial walk through the property resulted in a list of items to be repaired or updated. They supplied a list of vendors and job quotes to do the repairs and updates. We originally wanted to sell ‘as is’ and just get it over with. They gave us a selling price for ‘as is’ and options for doing a few updates/repairs to doing it all with the selling price for each option. We agreed to do all they suggested and we sold for the exact price they predicted. For every dollar spent we got back more than $2 back in the selling price. And they got that price in a rising interest rate environment! Donna and Jim are extremely detailed and guide you through ever aspect of the sale. There were no surprises thanks to their guidance. We couldn’t be more pleased with their representation.
Thank you Donna and Jim,
Jerry and Mary
Heather Quejada
March 27, 2025
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We have known Jim & Donna Klinge for over a dozen years, having met them in Carlsbad where our children went to the same school. As long time North County residents, it was a no- brainer for us to have the Klinges be our eyes and ears for San Diego real estate in general and North County in particular. As my military career caused our family to move all over the country and overseas to Asia, Europe and the Pacific, we trusted Jim and Donna to help keep our house in Carlsbad rented with reliable and respectful tenants for over 10 years.
Naturally, when the time came to sell our beloved Carlsbad home to pursue a rural lifestyle in retirement out of California, we could think of no better team to represent us than Jim and Donna. They immediately went to work to update our house built in 2004 to current-day standards and trends — in 2 short months they transformed it into a literal modern-day masterpiece. We trusted their judgement implicitly and followed 100% of their recommended changes. When our house finally came on the market, there was a blizzard of serious interest, we had multiple offers by the third day and it sold in just 5 days after a frenzied bidding war for 20% above our asking price! The investment we made in upgrades recommended by Jim and Donna yielded a 4-fold return, in the process setting a new high water mark for a house sold in our community.
In our view, there are no better real estate professionals in all of San Diego than Jim and Donna Klinge. Buying or selling, you must run and beg Jim and Donna Klinge to represent you! Our family will never forget Jim, Donna, and their whole team at Compass — we are forever grateful to them.
Lou F
March 27, 2025
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WeI had the pleasure of working with Klinge Realty Group to sell our home in Carmel Valley, and I cannot recommend them highly enough!
Jim and Donna demonstrated exceptional professionalism, offering expert guidance on market conditions and pricing strategy, which resulted in a quick and successful sale.
Communication was prompt and we were well-informed throughout the entire process.
For anyone looking for a dedicated and knowledgeable real estate team, look no further!
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William Sams
March 25, 2025
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Donna and Jim Klinge of Klinge Realty Group have our highest possible recommendation. From Donna and Jim’s first visit to our house through closing their advice and counsel was candid and honest in all dealings. They kept us fully informed throughout the process. The house sold less than three days after listing with a two-week closing. My wife and I have sold several houses during our lives. This was by far the best experience. Klinge Reality is a premium service realtor. You can’t make a better choice for someone to sell your home fast and for top dollar.
Emily Hernandez
December 29, 2024
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Donna and Jim provided exceptional support and professionalism throughout the entire process. We couldn't have been happier with their efforts. They made our house shine, and thanks to their expertise, it sold above the listing price in the very first weekend! Truly a fantastic experience from start to finish.
Jesus Adrian Sahagun
November 11, 2024
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This year has been difficult on our family, mainly due to having to sell our home. Thankfully we knew God had a plan for us and working with the Klinge team was a key part of it. It was an obvious decision to work with them again after such an amazing experience when purchasing the same home we needed to sell. The challenge was, how will we do this in so little time with so much going on? Jim and Donna held our hand every step of the way. Whenever an unexpected issue arose they found and provided a solution. Never once did we feel pressured to make a decision and the Klinges were always reassuring after providing the information that the decision was ours to make. Despite the curve balls, they never panicked and exemplified the “can do” attitude, making us feel optimistic and taken care of. Their expertise and professionalism was superb. But of all the reasons to work with the Klinges, the most impactful and valuable is their compassion and genuine care for their clients. We pray that we can one day purchase our forever home and you better believe that Jim and Donna will be representing us - as long as they will have us of course. Thank you again Klinge team! Your execution, experience, and care are unmatched.
SABIHA PASHA
July 23, 2024
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Jim and Donna were fantastic! Jim understanding my needs, recommending potential places, pointing out the pros and cons of each property was invaluable. Then when the offer was accepted Donna’s organized guidance through the inspections, paperwork etc made the whole process seem effortless.
So grateful that I had them on my side!
Anu Koberg
July 13, 2024
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We first found Jim through his blog at bubbleinfo.com, which really showcased his knowledge of SoCal real estate. Since then we've done three transactions with Jim and Donna, and they are an incredible full service agency, with Jim's deep market insight and Donna's deft contract and project management. We trust them implicitly in their analysis and strategy, which is based on years of experience. They're always available and on top of things, and we strongly recommend them to anyone.
