San Diego’s multifamily investment sales are showing signs of recovery, though activity remains below historical averages. The number of properties sold in 2025 increased by 13% compared to 2024, but remains 21% lower than the average between 2015 and 2019.
Regional Disparities
Whereas overall market pricing experienced a downward trend, certain areas demonstrated stronger performance. Notably, Chula Vista saw a significant increase in median price per unit, rising to $409,500 in 2025 – a 38% jump from the previous year. The South I-15 Corridor also experienced growth, with median sale prices increasing by 17% from 2024, largely due to high-end sales in the Mount Carmel area.
Throughout 2025, cap rates for multifamily properties remained stable, falling within a narrow range of the low-4% to low-5%.
Future Outlook
Elevated construction activity is expected to continue influencing the San Diego multifamily market. While the pace of new deliveries is forecast to unhurried from its 2025 peak, it is still projected to exceed the trailing five-year average by 41%.
Renter demand is anticipated to remain below the rate of new construction, though this gap is expected to narrow. This could lead to modest increases in vacancy rates and reduced pressure on operators. Asking rents are likely to decrease, but any declines are expected to be minimal.
Multifamily construction is not expected to halt, but a gradual tapering off is anticipated in the coming years. As inventory growth aligns more closely with historical norms, vacancy rates should stabilize, and rent growth may resume.
The pace of multifamily sales is forecast to continue its upward trend in 2026, though it is not expected to return to pre-2020 levels until 2027. The Chula Vista/Imperial Beach submarket and Downtown San Diego are expected to see continued improvement and increased activity. Cap rates are unlikely to change significantly in 2026, remaining around an average of 4.5% for the third consecutive year.
Frequently Asked Questions
What happened with multifamily sales in San Diego in 2025?
The number of properties that traded in 2025 was 13% greater than the 2024 figure, though it was still down 21% compared to the annual average from 2015 to 2019.
Which areas of San Diego saw the biggest price increases in 2025?
Chula Vista experienced a 38% increase in the median price per unit, reaching $409,500. The South I-15 Corridor also saw a 17% increase, driven by sales in Mount Carmel.
What is the forecast for cap rates in 2026?
Cap rates are unlikely to change much in either direction in 2026 and are expected to remain around 4.5% on average.
As San Diego continues to navigate evolving market conditions, will the balance between construction and renter demand ultimately lead to a more stable and affordable housing landscape?