Will Housing Prices Drop in 2026? Real Estate Forecast: What Buyers, Sellers & Homeowners in San Diego Should Know
- Tristen Campanella
- Jan 21
- 3 min read
by Tristen Campanella
The 2026 housing market is shaping up to be a reset year — not a crash, not a boom, but a more measured, rational, and opportunity-driven phase of real estate.
Home prices are not expected to drop in 2026, instead this will be a year of more stablitly for both home buyers and home sellers. While there will be opportunities for home buyers with more homes for sale, homes that are desirable are still moving quickly. Home sellers, this is the time when making your home move in ready is more important than ever.
After years of volatility, rapid appreciation, and interest-rate whiplash, the data from major housing authorities points to a market defined by stability, modest growth, and improved balance — especially for informed buyers and strategic sellers.
Below is a clear, data-backed breakdown of what’s ahead in California, nationally, and right here in San Diego — and how to think about your next move.
California 2026 Housing Forecast- Will Housing Prices Drop in 2026?
(According to the California Association of REALTORS®)
The California Association of REALTORS® is forecasting continued but moderated price growth across the state in 2026.
Key projections:
Median home price for all of California: ~$905,000 vs December 2025: $850,680 statewide median price for existing single-family homes.
Annual price growth: ~3.6%
Sales volume: +2% year over year
This comes after some softening in late 2025 — largely driven by affordability constraints rather than declining demand.
What’s driving California’s resilience?
Chronic housing undersupply (especially in coastal areas and single family homes VS attached homes.)
Strong household balance sheets
Pent-up demand from buyers sidelined by high rates
Gradually improving affordability as rates ease slightly
In short: prices aren’t accelerating wildly — but they’re also not retreating in any meaningful way. California real estate continues to behave like a long-term asset, not a speculative one.
National Housing Outlook for 2026
(Realtor.com Forecast)
On the national level, Realtor.com projects a steady, balanced market — a sharp contrast to the chaos of prior years.
National expectations:
Mortgage rates: ~6.3% average
Existing-home sales: +1.7% (off near 30-year lows)
Price growth: ~2.2%
Inventory: Slight increase
This combination suggests less pressure on buyers, fewer panic-driven decisions, and a more predictable environment for sellers.
Instead of dramatic swings, 2026 is expected to reward:
Realistic pricing
Patient negotiations
Buyers who are financially prepared
Sellers who understand current demand (not 2021 expectations)
San Diego 2026 Market Snapshot
(Based on Zillow data)
Locally, San Diego continues to chart its own path — one shaped by lifestyle demand, limited land, and long-term desirability.
Currently
Average home value: California Association of Realtors shows a $1,000,000 median value, an increase of 1% since November
Days on market: ~30–37 days
What this means locally:
The market has shifted from frenetic to functional
Buyers have more time to evaluate options
Sellers must price and prepare intentionally
Well-located, well-presented homes are still selling
San Diego hasn’t “cooled off” — it’s normalized.
Redfin’s 2026 Outlook: The Great Housing Reset
Redfin calls 2026 “The Great Housing Reset.”
Their projections align closely with other data sources:
Home prices: ~1% growth
Mortgage rates: Low-6% range
Sales activity: Modest rebound
Rather than fear-driven cycles, Redfin expects confidence to return gradually as buyers and sellers recalibrate expectations.
The big takeaway?Real estate is returning to fundamentals.
🤔 So… What Does This Mean for You?
✔ Buyers
More listings and less competition than recent years
Fewer bidding wars, more room to negotiate
Affordability still matters — strategy is key
✔ Sellers
Pricing correctly matters more than ever
Preparation, presentation, and timing are critical
Homes that show well and are priced right still sell
✔ Homeowners
Equity remains solid and relatively stable
Modest appreciation reduces downside risk
Smart planning (not rushing) is rewarded
🔮 The Bottom Line
2026 is not about chasing peaks or fearing crashes.
It’s about:
Clarity over chaos
Strategy over speculation
Long-term thinking over short-term noise
Whether you’re buying, selling, or simply watching the market, this is a year to make intentional, informed decisions — and to work with someone who understands both the numbers and the nuances of San Diego real estate.
If you want help interpreting what this forecast means for your specific situation — timing, equity, relocation, or next steps — I’m here to help. Book a time to ask me anything!
