California E&S Insurance

San Diego housing market feels… different right now (mid-2025 update from someone in the trenches) I’ve been working in San Diego real estate for a while now, and honestly, this is the first time in years it feels like the market is catching its breath. Not tanking. Not exploding. Just… shifting into something that actually feels balanced (well, as “balanced” as San Diego ever gets). **Here’s what’s stood out to me lately:** * Prices are finally cooling off – down about 2.8–4.4% year-over-year. Median SFH is still \~$1.025M and condos are around $660K, so it’s not exactly cheap living, but we’re not climbing at the pandemic pace anymore. * Inventory is creeping up – nearly 29% more homes for sale than this time last year. Condos/townhomes especially have jumped (38% increase). That means buyers actually have *choices* again. * Homes are sitting longer – average 22–28 DOM vs. 18 last year. That extra week might not sound like much, but in this market it’s a sign the FOMO frenzy is gone. * Offers are still competitive, but calmer – instead of 20 offers and $100K over, I’m seeing 2–3 offers and maybe a small discount off list. * Rental market is holding strong – vacancy is just 4.5%, and rents are ticking up again (Little Italy 1BRs are up 23% from last year). The *real* problem? Affordability is a joke right now. Only about 12% of households can afford the median-priced home. You’d need roughly $266K in annual income to buy at the median. Median household income here is about $100K. That gap is massive. **House Hacking – One of the few viable entry points right now** If you’re a first-time buyer or small-scale investor trying to get into San Diego without lighting your savings on fire, **house hacking** a 2–4 unit is probably the smartest move in 2025. **Here’s why it works here:** * FHA will let you get in for as little as 3.5% down if you live in one unit, and San Diego’s high-cost loan limits mean you can still finance a lot of the duplex–fourplex inventory without going jumbo. * You spread your risk — even if one tenant moves out, you’ve still got other units covering part (or most) of your mortgage. * Cap rates on small multifamily are in the mid-4% to low-5% range, and while that’s not insane cash flow on day one, it’s stable. Vacancy is hovering around 5%, which is solid. * ADUs are still a huge upside play here — you can add one or two on many multifamily lots and boost gross rents by $2,200–$3,000 per unit. * The real juice is in value-add: renovate, re-tenant at market, maybe build ADUs, then refinance in 12–24 months once the NOI bumps. Submarket-wise, I’d be looking at places like Chula Vista, El Cajon, National City, or parts of Mid-City. They’ve got better per-unit pricing, less competition from luxury supply, and more stable workforce rental demand. It’s not magic — you’ve gotta run conservative numbers and account for higher insurance/maintenance. But compared to trying to buy a $1M SFH right now? House hacking actually pencils. **On the investment side:** * Small multifamily (2–4 units) is still the cash flow sweet spot (4.5–5.8% cap rates). * Emerging areas like Barrio Logan, Encanto, and National City have the most upside IMO. * Short-term rentals are still printing money *if* you’re in a permitted zone — but the city’s capping supply hard. The wild card? Interest rates. If we slide into the low 6% range next year like some forecasts say, I think we see a mini feeding frenzy again, which could squeeze inventory and nudge prices back up. So yeah… my take is that we’re in this weird “calm but competitive” phase. Not enough pain to spook sellers, not enough bargains for buyers to high-five over — but the window is open if you’re strategic. Anyone else feeling this shift, or are you still seeing chaos in your corner of SD? Side note: I’ve been building a little project called [Dealsletter](http://www.dealsletter.io) that tracks market trends + investment opportunities in places like San Diego. We regularly find tons of real estate deals in this market as well as house hacks. Almost 2k subscribers and currently building out our platform. Check it out if interested! Feel free to also DM me. I’m always open to talk all this real estate especially in this market.

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