August Market Updates
Investor Insights | Sourced by Industries Capital
At Industries Capital, we monitor real estate trends, capital markets, and interest rate policies to help investors make informed decisions. Here’s what we’re seeing now in August 2025:
Rental Market
The average rent in San Diego across all unit types currently sits near $3,110/month (year-over-year increase of ~$10) per Zillow. Zillow
In downtown San Diego, smaller units (studios / 1BR) are experiencing slight declines, while larger 3–4BR units are showing modest rent growth. Realty Management Group
Student housing is lagging behind general market growth: from 2020 to 2025, student housing rents grew ~21.6% vs ~37.2% for market-rate rents. Axios
Looking ahead, forecasts suggest broader rent growth in San Diego may come in between 1%–3% in 2025, supported by ongoing affordability constraints in home ownership. The Luxury Playbook+1
Takeaway: Rental growth is tepid. There’s slight upward momentum in certain submarkets (larger units, high-demand locations), but overall the market is cautious. Staying disciplined on underwriting rents and vacancy assumptions is critical.
Home Prices & Supply / Demand
According to Redfin, median home prices in San Diego in August 2025 were about $960,000, which is ~1.5% lower than a year ago. Redfin
The market is showing signs of cooling: listings are down, inventory is tightening, and interest rates recently saw their largest drop in months. Edelman Realty
Some forecasts expect modest appreciation in 2025 (under 3%) across U.S. markets, including slow but stable growth in real estate valued in high-demand coastal or Sunbelt zones.
Takeaway: The San Diego market is in a transition — not collapsing, but softening. Opportunistic acquisition strategies could outperform in this environment, especially in value-add or repositioned assets.
Sales Pace & Inventory Dynamics
New listings in San Diego are down, contributing to tighter visible inventory. Edelman Realty
As supply shrinks, the competition among sellers may tighten—but buyers remain rate-sensitive, especially in higher price bands.
Because turnover is slower, deals will require longer holds or more creative exit strategies.
Economic & Capital Markets Snapshot
The U.S. Consumer Price Index (CPI) rose 2.9% year-over-year as of August 2025. Bureau of Labor Statistics
In August, shelter costs (rent & owners’ equivalent rent) were significant contributors to monthly CPI gains. Bureau of Labor Statistics
The Federal Reserve has recently cut rates (0.25%) and is projecting two additional cuts in 2025. CBS News
Mortgage rates remain a challenge: in Q2 2025, the average 30-year mortgage hovered around 6.79%, putting pressure on affordability. Yahoo Finance
Takeaway: Inflation remains a headwind, especially through shelter cost persistence. The Fed’s easing indicates potential relief ahead, but for now borrowing costs remain elevated and limit margin for error.
What This Means
Segment divergence: Detached homes are holding value and showing slight appreciation, while attached homes continue to soften. Condos and townhomes are facing longer listing periods and heavier pricing pressure.
Buyer leverage is growing: With days on market lengthening and selective inventory building, buyers have more room to negotiate. Price reductions, seller credits, and concessions are becoming more common, particularly in the attached segment.
Sales momentum is cooling: Fewer transactions are closing, and homes are sitting longer before going under contract. Sellers should expect slower absorption and prioritize strategic pricing over aggressive list values.
Rental gains remain muted: Rent growth is effectively flat across most submarkets. Owners appear more focused on maintaining occupancy than pushing rents, signaling a shift toward stabilization rather than expansion.
Rates and inflation remain the bottleneck: Mortgage rates remain elevated despite the Fed’s recent 0.25% cut, and shelter costs continue to anchor inflation. Until financing costs ease more meaningfully, affordability will stay the market’s biggest constraint..
This analysis reflects general market trends and is provided for informational purposes only. It is not intended as investment advice.
