If you’re watching San Diego home prices and wondering whether to buy now or wait for a housing crash, I understand the hesitation. The payments are uncomfortable, some sellers are lowering their expectations, and every price reduction seems to come with someone announcing, “Here it comes.” But a house becoming harder to sell does not automatically mean its owner is about to lose it.
My read? Affordability is putting pressure on the market, but the foreclosure data reviewed here does not establish that another 2008 is around the corner. That does not mean prices cannot fall. It means we need to separate what buyers cannot afford from what homeowners can no longer pay.
Are Foreclosures Rising? Yes. Does That Prove a Crash? No.
ATTOM reported 40,277 U.S. properties with foreclosure filings in August 2026, up 13% from a year earlier. Completed foreclosures reached 5,794, up 42%. Those increases deserve attention, but ATTOM also reported that overall activity remained below pre-pandemic norms. And a foreclosure filing can mean a default notice, scheduled auction, or repossession, not necessarily a completed home loss. [1]
For historical perspective, ATTOM’s full-year 2025 foreclosure count was 87% below the nearly 2.9 million properties recorded in 2010. That is an annual comparison, separate from the monthly August figures. The direction is concerning, but the scale still matters. [2]
There is no magic number of defaults in one ZIP code that officially triggers a housing crash. Prices can decline without a foreclosure wave if buyers pull back and inventory builds. What would concern me more is a sustained combination of missed payments, job losses, growing inventory, and owners who cannot sell for enough to cover what they owe.
What Was Different Before the 2008 Housing Crash?
The last crash involved more than expensive houses. Risky lending expanded, borrowers depended on rising values to refinance or sell, and falling prices eventually closed those escape routes. As credit tightened and foreclosures increased, more homes entered an already weakening market. That cycle helped push prices down further. [3]
Interest rates were part of the pressure, too. By June 2006, the Fed’s target rate had reached 5.25%, following its tightening cycle, creating a tougher environment for borrowers exposed to adjustable payments. But the job-market timeline matters: unemployment was 5% in December 2007 and peaked at 10% in October 2009. The worst employment damage developed as the crisis unfolded, rather than jobs already being at an “all-time low” before it began. [4] [5]
That is why I watch more than the Fed’s next announcement. An adjustable mortgage, a fixed-rate mortgage, and a homeowner with substantial equity do not all carry the same risk. The loan structure and the household’s ability to keep making payments matter.
Why San Diego Home Prices Can Rise While Asking Prices Come Down
Here is where the headlines and my boots-on-the-ground experience can look different. In the listings I’m watching, I’m seeing more realistic asking prices and sellers adjusting to what buyers can actually afford. That is my observation of the properties crossing my desk, not a claim that every San Diego neighborhood is declining.
Meanwhile, Redfin reported a $1 million median sale price for the city of San Diego over the three months ending August 2026, up 5.3% year over year. Its median sale price per square foot was down 0.37%. Even within the same report, the measures tell slightly different stories. [6]
An asking price is what a seller hopes to receive. A closed sale reflects what a buyer actually paid, and the median also changes depending on which homes sold. A seller reducing an ambitious price does not automatically establish that every nearby home lost the same percentage of value.
For Lakeside, Santee, El Cajon, La Mesa, and Alpine, I want to look at comparable homes, competing listings, condition, and actual buyer activity. A citywide headline cannot price your particular house.
What About Silicon Valley and Bay Area Home Prices?
I’m watching softer properties in Northern California, too, but the Bay Area is not moving in one direction. An August analysis of Zillow data found values rising month over month in all nine Bay Area counties, while some remained below their 2022 peaks. Alameda County, for example, was still 11.3% below that peak. Both recovery and lingering declines can exist at the same time. [7]
Changes in tech employment, bonuses, and stock compensation can affect what individual buyers feel comfortable spending. But I would not say signing bonuses have disappeared across the industry, or assume everyone selling is in financial trouble. Moving, downsizing, and defaulting are different decisions, and a listing alone does not tell us which story is happening.
Housing Affordability Is the Conversation We Need to Have
If you are waiting for a San Diego housing crash because today’s payment does not work, let’s start with that payment. What can you comfortably afford after groceries, childcare, savings, and having an actual life? Getting approved for a mortgage and enjoying the life that comes with it are two different things.
Depending on eligibility and the property, we can compare VA loans, FHA financing, down-payment assistance, seller credits, and different purchase prices. A seller credit toward an eligible rate buydown may help, but it needs to be compared with a price reduction and the full loan costs. If a temporary buydown is involved, the payment after the discount ends needs to work, too.
For sellers, affordability belongs in your pricing strategy. Before automatically cutting the price again, let’s compare what a buyer gains from a reduction versus a financing concession. Sometimes the better solution is a different deal structure; sometimes the house simply needs a more realistic price.
Follow the Numbers With Me
I’m not going to promise a crash, and I’m not going to promise your home will only go up. I’ll show you what the numbers say, what I’m seeing locally, and how financing changes the decision. If the payment does not make sense, I’ll tell you that, too.
Follow me on Instagram @vallihomes and LinkedIn for San Diego housing market updates, mortgage explanations, and practical affordability ideas. You can also watch Discover East County for the local people and businesses behind the neighborhoods we call home. My goal is to help you recognize useful opportunities without getting pulled around by every dramatic headline.
Ready to look at your own numbers? Schedule a conversation with me, and we’ll start with the payment that fits your life.
Valli Lopez | Keys With Valli
Mortgage Loan Officer · NMLS #980530
Sources
Market snapshot prepared October 11, 2026. Reporting periods differ by source.