Home sales in California are now lower than they were during the Great Recession.
Yet prices haven't crashed. They're still hovering near record highs.
So what's really happening in the housing market, and what does it mean for San Diego buyers and sellers? Let's break down the latest data from January and February 2026.
California's Housing Slowdown: The Numbers
A recent housing report compared the last three years of home sales in California with the housing crash of 2007 to 2009. The results were surprising.
Between 2023 and 2025, California recorded about 954,000 home sales. During the worst years of the housing crash, there were 1.25 million sales. That means home sales today are about 24% lower than during the Great Recession.
But here's the crucial context.
Back then, the market collapsed because foreclosures flooded the market with excess supply. Today, we have the opposite problem. Very few homes are available for sale. Because of this limited inventory, the median home price in California recently sat around $710,000, still very close to the all-time high.
The Real Issue: Affordability, Not Supply
Mortgage rates have been on quite a ride. They climbed from around 6.3% in early 2023 to about 7.6% at their peak, before recently dropping back down closer to 6%.
Combined with high home prices, this created a double challenge for buyers.
As a result, according to the California Association of Realtors, only about 30% of California households can afford a starter home right now. During the Great Recession, that number was closer to 49%.
Today's slowdown isn't about a housing bubble bursting. It's about affordability pricing buyers out of the market entirely.
San Diego Market: Stable but Constrained
The San Diego housing market has been remarkably stable compared to many other parts of the country.
The median price for a detached home currently sits at about $1.04 million, according to the North San Diego County Realtors Market Report.
What's interesting is how flat prices have been over recent months. December came in just under $1 million. January ticked up to around $1.03 million. February landed around $1.04 million.
Instead of sharp swings, prices are moving sideways. This is a typical pattern when markets adjust to higher interest rates.
The Inventory Shortage Continues
San Diego currently has about 2.1 months of housing supply.
A balanced market typically has 4 to 6 months. That means we're running at less than half the inventory needed. In fact, inventory is about 25% lower than a year ago.
The biggest culprit? The mortgage lock-in effect.
Millions of homeowners bought or refinanced when rates were between 2% and 3%. Selling now would mean doubling their mortgage rate, so many are choosing to stay put.
A Slower, More Balanced Market
While inventory remains tight, the market has definitely slowed compared to pandemic years.
Homes in San Diego now take about 35 to 40 days to sell. That's a big change from just a few days with multiple offers a couple years ago.
Buyers are taking more time. They're comparing properties and negotiating more than before. Currently, homes are selling for about 97 to 98 percent of their original list price, meaning buyers typically negotiate 2 to 3 percent off asking.
This is something we rarely saw during the pandemic boom. But the limited inventory still prevents major price declines
Could Mortgage Rates Change Everything?
Mortgage rates currently hover around 6 percent. That's an important psychological threshold for buyers.
Some lenders even offer rates slightly below 6% for well-qualified borrowers.
If the economy slows and rates drift lower, it could bring more buyers back to the market. Here's why that matters: a 1% drop in mortgage rates can increase buying power by about 10%. That could significantly impact demand.
The Bottom Line
Across California, home sales have slowed dramatically because affordability is stretched.
But in San Diego specifically, here's what we're seeing:
- Prices are holding steady, not crashing
- Inventory remains extremely low
- Homes take slightly longer to sell
- Buyers have more negotiating power than during the pandemic
The market isn't crashing. But it's also not the frenzy of recent years. It's slowly shifting toward a more balanced, healthier market.
Thinking about buying or selling in San Diego? Understanding what these market shifts mean for your specific situation is crucial. Call or text me at 858-335-4597 to discuss your options. I'm always happy to chat.
Until the next week's San Diego Housing Market Mondays.
