San Diego First-Home Buyers Face Fierce Competition as Entry Prices Stabilize

The number of first-home buyers closing deals in San Diego in June hit its highest level since late 2022, with demand steady in affordable neighborhoods even as prices plateau in pricier enclaves, according to new data from the Greater San Diego Association of Realtors.

Rising interest rates and persistent supply shortages have made nationally high housing costs a flashpoint issue for locals, but the surge in first-home buyer activity stands out as a rare bright spot this summer. As rents in neighborhoods like North Park and Barrio Logan continue to creep upward, many longtime renters are seeking to buy despite intense competition and modest inventory growth.

City Heights and Chollas Creek Attract Budget-Conscious Buyers

Affordable entry points remain concentrated east of Balboa Park. Median sale prices for condominiums in City Heights settled at $470,000 last month, nearly unchanged from early spring and more than $250,000 lower than the city's median for detached houses. In Chollas Creek, new units marketed by local nonprofit LISC San Diego—through its "Pathways to Homeownership" program—were oversubscribed within days, staff said. First-time buyers who qualified for down payment assistance through the San Diego Housing Commission found their dollar stretched furthest between El Cajon Boulevard and University Avenue, where fixer-uppers under $625,000 still appear sporadically.

San Ysidro and parts of Encanto also reported above-average open house attendance in June. Property manager Sarah Sanchez with Keller Williams Realty confirmed that three out of five recent sales in a small tract off Avenida De La Fuente went to buyers using CalHFA's Dream for All shared appreciation loan—a state program revived in April for the 2026 funding cycle. “It’s the only way some folks can get through the door,” Sanchez said.

Entry-Level Options Shrinking Across Central San Diego

With the citywide median home price holding at $823,000 in June, according to Zillow, entry-level shoppers are increasingly being pushed out of Mission Valley and Clairemont, where two-bedroom townhomes now top $700,000. The SDAR reported a 14% jump year-over-year in the number of first-time buyer mortgage applications in May and June. At the same time, the supply of sub-$600,000 listings fell by 9% compared to summer 2025, reflecting ongoing scarcity in starter home segments.

Lender Bay Equity Home Loans reported average down payments for first-time conventional buyers reached $71,400 in San Diego during Q2, compared to $62,000 over the same period last year. Most first-time buyers are relying on assistance—from relatives or city programs—to clear that hurdle. For buyers with FHA loans, median time-on-market for suitable properties in zip codes 92105 and 92113 was just 8 days in June, underscoring intense competition.

Looking ahead, the summer market is expected to remain competitive for entry-level buyers. Local agents recommend lining up mortgage pre-approval well before entering the market, and buyers should be prepared for multiple-offer scenarios—especially south of I-8 and east of 30th Street. The Housing Commission's next round of down payment grants opens August 1, but funding typically runs out within weeks. For many first-time buyers in San Diego, speed and preparation are now as important as budget.