What's Happening to San Diego's Condo Market? And Could This Be an Opportunity for Buyers?

Insurance headaches. Special assessments. Balcony inspections. Tougher lending requirements. San Diego's condo market has taken a few hits lately. But is there a silver lining?

There's an old saying in real estate that condos are often the last to rise in a strong market and the first to fall when things soften. We're certainly seeing some of that play out in San Diego right now. While detached homes have held their value relatively well, the condo and townhome market has been under pressure. And it's not just interest rates or affordability. There's a lot more going on behind the scenes.

First came the insurance problems.

California's insurance market was already struggling before the devastating Los Angeles wildfires in January 2025 brought the crisis into even sharper focus. Insurance companies have pulled back, premiums have increased, and some condominium associations have struggled to secure affordable master policies. For condo owners, that can translate into higher HOA dues, special assessments, and sometimes difficulty selling when a community's insurance coverage doesn't meet lender requirements.

Then came the balcony inspections.

California's SB 326 requires condominium associations to inspect certain exterior elevated structures, including qualifying balconies and walkways. The first inspections were due by January 1, 2025. The intent is important: keeping buildings safe. But these inspections have also uncovered deferred maintenance and repairs that some communities simply weren't financially prepared to handle. And guess who ultimately pays for those repairs? The homeowners. For associations without adequate reserves, that can mean substantial special assessments or increased monthly dues.

Now lenders are looking much more closely.

I recently spoke with a lender who shared an interesting perspective. Some condo communities are simply showing their age, and years of deferred maintenance are becoming increasingly apparent in HOA documents and inspection reports. Lenders aren't just looking at whether the buyer qualifies anymore. They're taking a hard look at the financial and physical health of the entire community. Does the HOA have sufficient reserves? Is the insurance adequate? Are there outstanding repairs? Pending litigation? Special assessments? A buyer can have excellent credit, a strong down payment, and a perfectly good loan approval, yet still run into financing challenges because of the condominium project itself. That's a big shift, and something both buyers and sellers need to understand.

The numbers tell the story.

According to September 2026 San Diego County housing data:

• 2,734 attached homes were on the market, up 5.8% from a year earlier.
• 2,950 detached homes were available, down 12.9%.
• Attached homes had 4.0 months of inventory, compared with just 2.4 months for detached homes.
• The median attached sale price was approximately $670,000, slightly below last year, while detached homes were up 5.8% to approximately $1.079 million.

That's a significant difference in market dynamics. More attached inventory means more competition for sellers and more choices for buyers. And while we're not seeing a dramatic countywide price collapse, we are seeing a clear divergence between attached and detached properties.

But here's where I see opportunity.

Despite the challenges, I still believe condos and townhomes have an important place in the San Diego housing market. For first-time buyers, they remain one of the more attainable ways to get into homeownership and begin building equity. For downsizers, they can offer a simpler lifestyle without the responsibilities of maintaining a large property and yard. For second-home buyers, especially those dreaming of a place near the beach, the lock-and-go lifestyle is incredibly appealing. And for long-term buyers and investors, softer pricing may present opportunities that simply weren't available a few years ago. Of course, affordability cuts both ways. A lower purchase price is attractive, but high HOA fees, insurance costs, and potential assessments can quickly change the monthly payment.

That's why I think the most important distinction right now isn't simply condo versus detached home. It's a well-managed community versus one with financial or maintenance challenges.

My advice? Do your homework.

If you're considering purchasing a condo, it's more important than ever to understand what you're buying. Review the HOA budget, reserve study, meeting minutes, insurance coverage, inspection reports, and any planned assessments. And work with a lender who understands condominium financing before you get too far into the process. A beautifully updated kitchen won't make up for a financially troubled HOA. For sellers, the same principle applies. Getting ahead of documentation, understanding your community's financing eligibility, and pricing appropriately are critical in today's market.

The bottom line

I don't think condos are going away, and I certainly don't think they're a bad investment across the board. I do think we're experiencing a market correction that is separating stronger, well-managed communities from those that haven't kept up with maintenance and financial planning. And as we've seen through many real estate cycles, periods of uncertainty can create opportunity for buyers willing to look beyond the headlines.

The key is knowing what you're buying, what you're paying for, and what risks might be hiding in those HOA documents.

If you're thinking about buying or selling a condo or townhome in North County San Diego, let's talk. Our team can help you understand the market, evaluate the community, and make a smart move.

Stephanie Cowan | The Cowan Team at Compass

North County San Diego Real Estate Specialists