The Surprising Ways San Diego Homeownership Is More Affordable Than You Think

San Diego homeownership looks expensive on the surface — and in many ways it is. But a closer look at equity positions, underwater mortgage rates, and ongoing ownership costs tells a more complicated, and frankly more encouraging, story for current owners and serious buyers.

California Leads the Country on Mortgage Health

One of the clearest measures of housing market health is how many homeowners owe more than their home is worth — what's called being "underwater." According to a Cotality report for Q1 2026, California has the smallest share of underwater mortgages of any state in the country. That's not a marginal difference — it reflects years of sustained appreciation that has kept California homeowners in a fundamentally stronger financial position than owners in most of the rest of the U.S.

For San Diego in particular, that equity picture is striking. California ranks No. 2 nationally for equity in mortgaged homes, with an average of $627,000 in equity per homeowner, per the same Cotality data. For anyone who bought here even five or six years ago, that is a significant financial asset — one that can support a refinance, a HELOC, a move-up purchase, or a decision to sell from a position of real strength.

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The Hidden Cost Advantages Most People Miss

The affordability conversation in San Diego almost always starts and ends with purchase price. What gets less attention is what it actually costs to own and operate a home once you're in it.

Take electricity. According to the San Diego Union-Tribune's analysis of the Cotality data, the median annual electricity cost in San Diego County is $1,918 — ranking 34th out of the 50 largest metros. Compare that to Birmingham at $2,684 a year, Milwaukee at $2,673, or Cincinnati at $2,607. San Diego's mild climate means heating and cooling loads that many other metros simply can't match, and that gap adds up over time.

For military families PCSing to Naval Base San Diego, NAS North Island in Coronado, or MCRD San Diego, these ongoing cost comparisons matter — especially when weighing whether to buy versus rent during a shorter-term assignment. Lower utility costs and strong equity appreciation make ownership worth a harder look even on a three-year timeline.

What This Means For You

- If you own a home in San Diego, your equity position is likely stronger than national headlines suggest — now is a reasonable time to get a current valuation if you haven't in the last 12 months.

- Underwater mortgages are essentially a non-issue for most San Diego owners, which means the distressed-sale pressure you see in other markets is largely absent here.

- Ongoing ownership costs — particularly utilities — are meaningfully lower in San Diego than in many comparable metros, which partially offsets the higher purchase price over time.

- Buyers who are waiting for a market correction driven by widespread financial distress should understand that California's equity cushion makes a broad price collapse structurally unlikely in the near term.

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The honest picture of San Diego homeownership is more nuanced than either the doom-and-gloom affordability coverage or the boosterish "always a great time to buy" messaging. Strong equity, low distress rates, and real ongoing cost advantages are facts worth understanding — whether you're deciding to sell, refinance, or just trying to get a clear view of where you stand.

Frequently Asked Questions

How much equity do San Diego homeowners typically have?

California homeowners average $627,000 in equity in mortgaged homes, ranking second in the country, according to a Cotality report for Q1 2026. San Diego's sustained appreciation over the past decade means most owners who have held their homes for five or more years are sitting on substantial equity positions.

Are underwater mortgages a concern in San Diego right now?

Not significantly. California has the lowest share of underwater mortgages of any state in the country, per the Cotality Q1 2026 report. That means the kind of forced-sale pressure that drove prices down in markets like Phoenix or Las Vegas after 2008 is structurally much less likely here.

Does it cost more to own a home in San Diego than in other major cities?

The purchase price is higher, but some ongoing costs are lower. San Diego County's median annual electricity cost is $1,918 — well below metros like Milwaukee ($2,673) or Cincinnati ($2,607) — partly because the mild climate reduces heating and cooling demand year-round, according to analysis published by the San Diego Union-Tribune.

Source: The San Diego Union-Tribune