S
an Diego is poised to be one of the most fiercely competitive real estate markets in the country this year, according to a recent report. This ranking often indicates that a region is struggling with a severe lack of housing inventory, leading to increased competition and higher prices.

    The city's surge up the rankings - from 29th to 19th hottest market for 2025 - suggests that San Diego's affordability crisis may be intensifying. Zillow projects Riverside, which has historically served as a buffer zone for San Diego residents priced out of the local market, will also experience intense competition, ranking 22nd on the list.

    Zillow's index takes into account factors such as forecasted home value appreciation, changes in housing inventory, and the balance between job growth and new construction. While being named one of the "hottest markets" might seem like a badge of honor, it actually signals that affordability is becoming increasingly out of reach for many residents.

    San Diego's decades-long struggle with sluggish homebuilding has led to a severe housing shortage, but there were glimmers of hope last year as prices began to decline and affordability improved. In contrast, San Francisco fell 19 spots on the rankings and may see continued declines in home values, according to Zillow's chief economist.