First-Half Multifamily Sales Activity Triples Year-Over-Year in San Diego

Shifts in the San Diego multifamily market moderated across the board during the second quarter. A dip in the number of new units delivered during this period coincided with a slight improvement in vacancy and a minor decline in asking rents. Overall operating conditions in San Diego tend to evolve gradually, even as broader market forces influence fundamentals. At the submarket level, however, activity has been more pronounced. The majority of new construction delivered in 2025 has been concentrated in the Chula Vista area. This submarket is the only area where there is both vacancy improvement and rent growth compared to 12 months ago, with asking rents up 4.8%. While the Balboa Park submarket posted an increase in vacancy, rents have risen by 4.1% from one year ago. The area now contains roughly one-quarter of all units under construction in the region.

The San Diego multifamily investment sales market continues to record increased activity compared to the first half of both 2023 and 2024, though the number of sales that have taken place continue to lag historical norms. The sales that have taken place have reflected a wide range in pricing. While the median sale price to this point in the year is down 5% from 2024 to $343,500 per unit, some properties traded for nearly $700,000 per unit. The slight decline in pricing was driven primarily by a dip in Class B values. Compared to 2024, Class B assets that have changed hands this year are, on average, 13 years older and are more often located in more affordable inland areas such as El Cajon and La Mesa. As a result, median Class B pricing is down 17% from last year, while both Class A and Class C properties have continued to trade at elevated values.

Looking ahead

The increasing pace of deliveries scheduled for the second half of the year is expected to have a mixed impact on San Diego multifamily operating conditions. The vacancy rate is forecast to inch higher in coming months, though increases should be modest despite a cyclical high number of new unit deliveries. Asking rents may post a modest increase from current levels, partially driven by an influx of new Class A product coming online with elevated asking rents. Conditions could soften slightly again in 2026 as absorption lags the pace of new construction, though net move-ins have been steady in recent periods and are not expected to slow. The Balboa Park submarket will likely exemplify these broader market trends, as the relatively small submarket adds a significant number of new units. The National City/Chula Vista area is expected to remain one of San Diego’s top performers in rent and vacancy improvements, fueled in part by strong employment growth in the area.

Current trends are likely to continue throughout the remainder of the year in the San Diego multifamily investment sales market. Transaction volume typically accelerates in the second half of the year in this market, so increased activity can be expected in the coming months. Transaction volume is unlikely to reach historical norms in 2025, though 2026 sales activity may approach the lower range of what was previously considered normal for the region. Submarkets such as Chula Vista/Imperial Beach and Downtown San Diego, which are typically leaders in sales, are expected to become more active in the near term. So far this year, trades have been spread out evenly across the region’s submarkets. Cap rates are expected to remain stable, holding near 4.5% as they have since 2023.

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