San Diego expected to be one of 2025's hottest real estate markets
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San Diego is expected to be one of the most competitive real estate markets in the country this year, according to a new report.
Why it matters: Regions that make Zillow's annual "hottest market" ranking are usually those that are "starved for housing inventory," and that competition can push up prices.
Driving the news: San Diego came in as the 19th hottest market for 2025, up 10 spots from a year earlier.
- Zillow projects Riverside, which often operates as a release valve for San Diego's affordability crisis with residents trading long commutes for cheaper homes, as the 22nd hottest market.
How it works: Zillow's index is based on forecasted home value appreciation for this coming November, the rate of increase over the previous year, how many days a typical home was listed last year, and the projected change in the share of homes occupied by homeowners.
- It also reflects whether home building has kept up with growth, by incorporating the difference between the number of jobs added over the last two years, and the number of building permits issued for new homes in the same period.
The intrigue: While making the "hottest market" list sounds like a compliment, an especially competitive housing market isn't good news for anyone already struggling with affordability.
- Decades of sluggish homebuilding has put San Diego in a severe housing shortage, but there were small signs last year that prices were declining and affordability was increasing.
- San Francisco, on the other hand, fell 19 positions on this year's rankings, and a Zillow chief economist said he expects home values to keep slipping there.