The California Association of REALTORS® (C.A.R.) has released its 2027 housing market forecast, offering an early look at what buyers and sellers may experience in the year ahead. The outlook points toward a gradual improvement in home sales, modest price growth, and mortgage rates that are expected to remain relatively elevated.
For buyers and sellers in San Diego County, including Carmel Valley, Del Mar, Encinitas, Solana Beach, and Carlsbad, the forecast offers useful context. However, statewide trends are only part of the picture. San Diego's coastal location, limited housing supply, and neighborhood-specific demand can create market conditions that differ from California as a whole.
Here is what C.A.R. expects in 2027 and what those projections could mean for our local real estate market.
What Does California’s 2027 Housing Forecast Predict?
C.A.R. expects California's housing market to improve modestly in 2027. The forecast projects the following changes:
- Home sales: Existing single-family home sales are projected to increase 3.7%, reaching approximately 277,900 transactions.
- Home prices: The statewide median home price is forecast to rise 1.4%, reaching $894,400.
- Mortgage rates: The average 30-year fixed mortgage rate is projected to remain around 6.6%.
- Housing affordability: The share of households able to afford a median-priced California home is expected to remain at approximately 20%.
These projections suggest a market that may become more active without returning to the rapid price appreciation seen during the pandemic-era housing boom. C.A.R. also anticipates some improvement in housing inventory, although the ongoing shortage of homes for sale is expected to continue supporting prices.
In other words, the forecast points toward a gradual recovery rather than a dramatic market shift.
How Could the Forecast Affect San Diego Real Estate?
While California's overall outlook provides a useful starting point, San Diego has its own market dynamics. Housing costs, desirable coastal communities, employment patterns, and limited opportunities to add housing in established neighborhoods all influence local demand.
Recent San Diego County data also illustrates why sales activity and home prices do not always move in the same direction. According to the Pacific Southwest Association of REALTORS®, the countywide median sales price for all home types reached $899,000 in September 2026, up 1.6% from September 2025. During the same period, pending sales declined 10.9%, and new listings declined 7.1% year over year.
That combination is important. Prices can remain relatively resilient even when fewer buyers are completing transactions, particularly when the supply of homes coming onto the market is limited.
For the coming months, we will be watching three factors closely: mortgage rates, the number of homes available for sale, and whether buyer confidence improves enough to increase transaction activity.
Will San Diego Home Prices Increase in 2027?
C.A.R.'s forecast calls for modest statewide price growth, but it should not be interpreted as a prediction that every San Diego neighborhood will appreciate by the same percentage.
In North County Coastal San Diego, property values can vary considerably based on location, property type, condition, and price range. A well-positioned home in Carmel Valley may experience a different level of demand from a condominium in another part of the county. A property near the coast may also attract a different buyer pool from a larger home farther inland.
Limited inventory could continue to support prices in desirable neighborhoods. However, buyers are increasingly sensitive to monthly payments, and sellers may need to be more realistic about pricing than they would have been in a highly competitive market.
Our expectation is that local results will continue to depend heavily on the individual property and its immediate competition, rather than on the statewide forecast alone.
What Could Lower Mortgage Rates Mean for Buyers?
C.A.R. expects the average 30-year fixed mortgage rate to remain around 6.6% in 2027. That is a forecast, not a guarantee, and actual rates will fluctuate with broader economic conditions.
Even a relatively small rate reduction can improve a buyer's purchasing power by lowering the monthly principal and interest payment. If mortgage rates ease and more buyers who have been waiting on the sidelines decide to move forward, demand could strengthen.
That could create additional competition for desirable homes, particularly in neighborhoods where inventory remains tight.
For buyers considering Carmel Valley, Del Mar, Encinitas, Solana Beach, or Carlsbad, waiting for a lower rate is only one consideration. It is also worth evaluating how long you plan to stay in the home, what you can comfortably afford, and whether the available properties meet your needs.
A purchase that makes sense financially and fits your life may be worth considering even if rates are not at the level you would ideally prefer. Buyers should also avoid assuming they will be able to refinance later at a lower rate.
What Could the Forecast Mean for Home Sellers?
For sellers, the projected increase in sales activity could be encouraging. If buyer confidence improves in 2027, more households may be willing to make a move after postponing plans because of mortgage rates or economic uncertainty.
However, more activity does not automatically mean every home will sell quickly or command a premium price.
Pricing, presentation, and competition will remain important. Buyers who have more options may be less willing to overlook deferred maintenance, outdated interiors, or an asking price that does not reflect current market conditions.
For homeowners considering selling in North County Coastal San Diego, the most useful starting point is an assessment of recent comparable sales, current competing listings, and the demand for similar homes in the immediate area.
It is also important to consider your next move. If you plan to purchase another home, downsizing, relocating, or moving into a different neighborhood, the conditions affecting your next purchase matter just as much as the potential sale price of your current home.
Will More Homes Become Available in 2027?
C.A.R. anticipates some improvement in California housing inventory as market conditions normalize. However, the forecast also expects the mortgage lock-in effect to continue limiting the number of homeowners willing to sell.
Many homeowners secured mortgage rates well below today's levels. Moving could mean giving up that lower rate and taking on a substantially higher monthly payment, even if their current home has appreciated.
In San Diego, this can be especially relevant for homeowners who have lived in their properties for years and have built significant equity. Some may decide to stay put, while others may be motivated by retirement, family changes, relocation, or a desire for a different lifestyle.
If more owners decide to list in 2027, buyers could benefit from additional choices. But unless inventory improves substantially, the supply of homes in sought-after communities may continue to be limited.
What Should San Diego Buyers and Sellers Do Now?
The 2027 forecast is a helpful reminder that the housing market is influenced by several moving parts. Mortgage rates, inventory, buyer confidence, and local demand all play a role, and none can be predicted with complete certainty.
For buyers, the next few months can be an opportunity to prepare. Review your budget, understand your financing options, identify the communities that best fit your lifestyle, and monitor the types of homes coming onto the market. Being prepared can help you act when the right property becomes available.
For sellers, this is a good time to evaluate your home's condition, understand its current market position, and consider what preparation may be worthwhile before listing. Waiting for a particular month or a specific interest rate does not necessarily produce a better result.
Most importantly, neither buyers nor sellers should make a decision based solely on a statewide forecast. Your financial position, housing needs, and timing are just as important as broader market trends.
The Outlook for North County Coastal San Diego
C.A.R.'s 2027 forecast points toward a gradual improvement in California's housing market, with modest price growth and a projected increase in sales. For San Diego, the local picture will depend on how mortgage rates, inventory, and buyer demand evolve over the coming months.
We do not expect one statewide number to tell the whole story for Carmel Valley, Del Mar, Solana Beach, Encinitas, or Carlsbad. Each community has its own housing mix, buyer profile, and competitive landscape.
We believe the best real estate decisions start with understanding both the broader market and the specific neighborhood where you want to buy or sell. If you are considering a move in North County Coastal San Diego, we can help you evaluate current conditions, understand your options, and develop a strategy based on your goals rather than trying to time the market perfectly.
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