Robert Schantz

The Crash Everyone Is Predicting Is Not in the Recorder’s Office

Robert Schantz — Tue, 03 Nov 2026 13:03:50 GMT

Every week I hear the same thing from agents, clients, and people at dinner. Foreclosures are spiking. 2008 is coming back. Sell now while you still can.

So I went to the source. Not a headline. Not a national report with a scary percentage attached to it. I went to the San Diego County Recorder’s monthly count of every Notice of Default and every Trustee’s Deed recorded in this county, going back to 2005.

Here is what it shows.

One note before the numbers. This is not a prediction. Markets change, and these numbers can change with them. What follows is what I am seeing in the data and in my own office, and what people whose judgment I value are seeing too.

The number everyone is quoting is not the number that matters

Through September, San Diego County recorded 1,659 Notices of Default in 2026. That is an average of 184 per month. The 2025 average was 178.

September alone: 183 this year. 179 last year.

Translate that. Recorded defaults are up about 3 percent. Not 100 percent. Not double. Three.

You may have seen a regional report claiming San Diego defaults more than doubled in September. That report tracks a narrower slice of residential mortgage defaults, starting from a much smaller base. I do not dispute that mortgage defaults are climbing. I dispute the conclusion people are drawing from it. When a small number doubles, it is still a small number.

The national headlines work the same way. ATTOM reported foreclosure filings up 21 percent in the first half of 2026. Up from what? From levels that were artificially held down by pandemic moratoriums and forbearance. A big percentage on a suppressed base is not a crisis. It is a return toward normal.

What a real crash looked like

I was in this business when it broke. Here is what that period looked like on paper, next to today.

Image caption: San Diego County recorded 34,069 Notices of Default and 19,577 completed foreclosure sales in 2008. In 2025, it recorded 2,136 and 234.

In July 2008 alone, 2,285 San Diego properties went to trustee’s sale. One month. This September, the number was 39.

Now the part that should end the crash conversation. At its current pace, 2026 will finish with fewer than half the defaults San Diego recorded in 2005, the last year before the bubble burst. We are not approaching crisis levels. We are running below pre-crisis normal.

What it actually takes to cause a crash

High prices do not cause crashes. Poor affordability does not cause crashes. A crash requires forced selling at scale: a flood of supply, a collapse in demand, or both at once.

Dave Meyer made the same case on the BiggerPockets podcast this week. He named the two triggers that would change his mind: mortgage rates climbing toward 8 to 9 percent, or unemployment rising toward 6 to 8 percent. Absent one of those, his base case is what he calls “The Great Stall.” Flat prices. Low volume. A market that feels stuck without breaking. He put the odds of a 2026 crash at no more than 10 percent.

The national mortgage data backs him up. Intercontinental Exchange, the financial data company that tracks mortgage performance nationwide, reported a national delinquency rate of 3.53 percent in August. Before the pandemic, in June 2019, that benchmark was 4.16 percent. During the financial crisis, it ran above 10 percent.

Translate that. Nationally, borrowers are paying their mortgages better than they did in a normal pre-pandemic year.

Why San Diego is shielded

If the nation is in a stall, San Diego has advantages that make a forced-selling wave even less likely here.

Equity. ATTOM’s first-quarter 2026 report found 58.2 percent of mortgaged homes in the San Diego metro are equity-rich, meaning the owner owes half or less of what the home is worth. The national figure is 43.3 percent. An owner with that much equity who falls behind does not lose the house. They sell, refinance, or cure. That is exactly what the Recorder shows. In 2008, trustee’s deeds equaled 57 percent of the defaults recorded that year. In 2025, that figure was 11 percent. Most people in trouble today are walking away with a check, not a foreclosure on their credit.

Jobs. San Diego County unemployment was 4.7 percent in September, down from 4.9 percent a year earlier and below California’s 5.1 percent. In January 2010, this county hit 11.1 percent. Job loss is what turns a missed payment into a forced sale, and we are nowhere near Meyer’s danger zone.

Lifestyle. This one is my opinion, not a data point. San Diegans have long called it the Sunshine Tax: the premium we pay to live in this weather, on this coast, with this way of life. People pay it on purpose. I did. I moved here in 1986 and chose to stay because of it. Owners who chose a place for how it lets them live do not walk away from it easily. And buyers who have been priced out and waiting for a way in tend to show up the moment prices soften. That demand never appears in a spreadsheet, but in my experience it is always there.

Lending. Loans made since the last crisis were documented and underwritten. SDAR’s own president said this summer that foreclosure activity is higher than a year ago but not high by any measure.

Supply. SDAR reported 2.4 months of supply for detached homes in September. Crashes do not happen with two and a half months of inventory. They happen when supply floods and buyers vanish.

Price. The September detached median was $1,079,000, up from $1,020,000 a year earlier. That is not what a market in freefall looks like.

The counterweight: what I am watching

I do not get to cherry-pick. Here is the data that cuts against me, and I take every line of it seriously.

Completed foreclosures are rising. Through September, San Diego recorded 229 trustee’s deeds. All of 2025 produced 234. The monthly pace is up roughly 30 percent, and September’s 39 was the highest single month since January 2020.

More defaults are going all the way to sale. In September, trustee’s deeds equaled 21 percent of that month’s defaults. The 2025 figure was 11 percent.

Our unemployment rate is not low by national standards. San Diego’s 4.7 percent is above the national rate of 4.0 percent. Shielded is not the same as immune. This is the number I watch most closely, because it is the one that can turn a stall into something worse.

Equity is eroding nationally. ATTOM’s national equity-rich share fell to its lowest level since late 2021, and the share of seriously underwater mortgages is rising. San Diego is still far ahead, but the cushion is not growing.

Lender-mediated inventory is building. SDAR’s September Lender-Mediated report showed 412 lender-mediated listings, up 28.3 percent year over year. Condos led that increase at 71.2 percent.

Fewer people are buying. C.A.R. reported San Diego County single-family sales down 12.2 percent from a year ago in September.

Condos are a different market. Attached homes sat at 4.0 months of supply in September, and the attached median held flat at $670,000.

Translate that. This is a slowdown with pockets of stress, concentrated in condos and in owners with thin equity. It is a market that requires skill. It is not a market that is breaking.

Where the stress actually lives

Here is what I am seeing inside my own office, not in a report.

The short sales we have closed or are processing right now share one profile. They are condos. They were purchased within the last three to four years. They were financed with FHA or VA loans.

The VA files have one more thing in common. The owners did not choose to sell. The military moved them. A service member gets orders, has to relocate, and cannot carry a San Diego mortgage while paying for housing at the next duty station.

Translate that. This is not a wave of homeowners who cannot pay. It is a narrow group of owners who bought with little or nothing down, near the top of the condo market, and now have to sell before the property has built enough equity to cover the cost of selling. FHA allows as little as 3.5 percent down. VA allows zero down. The attached median has gone nowhere in a year. Add the cost of selling, and a recent buyer with a small down payment can owe more than the property will net.

In a military town like San Diego, that profile matters. Orders do not wait for the market to recover.

That is the exception that proves the rule. The stress is showing up exactly where equity is thinnest, and almost nowhere else. An owner who bought a detached home ten years ago is not in my short sale pipeline. A military family that bought a condo with a VA loan in 2022 and just received orders might be.

The lesson from 2010 that nobody remembers

Here is what I lived through and what most people have forgotten.

County median prices fell 33.9 percent from December 2007 to their low in January 2009. By May 2010, prices were up 22.9 percent from that low.

Foreclosures were still running more than 1,100 per month when that recovery happened. San Diego did not drop below 2,000 trustee’s deeds a year until 2015.

Translate that. Prices turned more than five years before foreclosures returned to normal. Anyone who waited for the foreclosure headlines to clear before buying missed the entire recovery. The bottom is only visible in hindsight, and foreclosure counts are a lagging indicator, not a leading one.

Preparation is not panic

Gary Keller wrote SHIFT for exactly this kind of market. The core idea is simple: shifts do not reward the agents who predicted them. They reward the agents who prepared for them.

Keller Williams has now built an official community around default real estate, KW Default Solutions, covering short sales, REO, BPOs, and auctions. Some people will read that as a crash signal. I read it the opposite way. Short sales and lender-mediated listings never disappeared. They just shrank to a size most agents could ignore. When that segment grows even modestly, the agents who already know how to work it are the ones homeowners and lenders call first.

That is not a bet on a crash. That is matching the market of the moment.

What to do with this

Agents: Track four numbers every month. Recorded Notices of Default, recorded Trustee’s Deeds, SDAR lender-mediated inventory, and the county unemployment rate. When a client asks if the market is about to crash, answer with the data, not with your feelings and not with theirs. Then learn the default side of the business before you need it. When you meet a condo owner who bought in the last few years, ask two questions in the first conversation: what kind of loan they have, and whether military orders could move them.

Homeowners who are behind: Call your lender now, not after the notice arrives. If you have equity, that equity is your leverage. Use it before a trustee uses it for you.

Military owners: Call your lender and your agent the day the orders arrive, not the month you move. Short sales take time. Start the clock before the movers arrive.

Buyers: The stress in this market is concentrated where the leverage is. Condos with clean HOA financials are where negotiating power lives right now.

I will keep tracking these numbers every month. If they change, my read will change with them.

The headline says crash. The Recorder says slowdown.

I will take the Recorder.

See my digital media feeds: instacard.co/robert-schantz/home

Agents, if you want to work in a brokerage that teaches you to read the market instead of react to it: kwsandiego.kw.com/join-our-team

More resources: robertschantz.com

Sources: San Diego County Recorder document counts, 2005 through September 2026, compiled by InnoVest Resource Management. San Diego Association of REALTORS® Monthly Indicators and Lender-Mediated Properties Report, September 2026. California Association of REALTORS® September 2026 sales report. California Employment Development Department, September 2026 county unemployment data. ATTOM Q1 2026 U.S. Home Equity and Underwater Report. ATTOM Midyear 2026 U.S. Foreclosure Market Report. Intercontinental Exchange, First Look at Mortgage Performance, June and August 2026. BiggerPockets Real Estate Podcast, Episode 1350, October 30, 2026. City of San Diego Fiscal Year 2011 Adopted Budget (DataQuick, County Recorder, and EDD figures for 2007 through 2010). SDAR, “Rising Foreclosure Activity,” August 17, 2026.

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

⚠️ Disclaimer: Robert R. Schantz is a California Real Estate Broker providing information based on his opinions and the opinions of others regarding the housing market, the U.S. economy, and geopolitics affecting Americans. Robert Schantz is not a Mortgage Lender, CPA, Attorney, or Financial Advisor, and any information provided in this article or any content containing Robert Schantz—including descriptions and titles—are for entertainment purposes only. This is not to be considered broker representation, legal, financial, or tax advice. All content, including written, spoken, or visual, should be independently verified and should not substitute for professional guidance. If your property is currently listed with a real estate broker, please disregard. Keller Williams Realty San Diego Metro / CA DRE #01295699/01360786

The Market Changed. Half the Agents on the Other Side of Your Deal Did Not.

Robert Schantz — Fri, 30 Oct 2026 12:03:05 GMT

The Risk Nobody Puts in the Listing

On Wednesday of this week, I stood in front of more than 50 agents in our Mission Valley office, with many more watching virtually, and gave them a warning I have never had to give quite this way in 24 years.

The biggest risk in your next transaction may not be the inspection, the appraisal, or the lender. It may be the agent on the other side of the deal.

The market changed. The rules changed. The industry changed. A lot of agents did not.

That is not an insult. It is an observation from a broker who reviews transaction files for a living. This year, the lending rules for condos were rewritten. On Monday, November 2, the appraisal report the industry has used for decades is replaced. Listings are sitting longer. And the largest brokerage in the country is in federal court with the MLS system every other agent depends on.

Any one of those would be a lot to absorb. All of them at once is a different job.

Translate that. Your client is now paying for whether their agent kept up, and so are you, when that agent is sitting across the table from you.

Match the Market of the Moment

Gary Keller wrote SHIFT for markets like this one. His core point is simple. The market is always the market. It goes up, it goes down, it zigs and it zags. Nobody controls it, and nobody times it.

What an agent controls is whether they adjust. Keller’s argument is that when the market shifts, the agents who win go back to fundamentals and match their tactics to the market in front of them, instead of running the playbook from the market that just ended.

Translate that. The 2021 playbook does not work in late 2026. Neither does the 2023 playbook. The agent still writing offers and listing homes the way they did two years ago is not wrong because they are lazy. They are wrong because the ground moved.

Here is the market of the moment, as I see it from the broker’s chair. It has three layers: the market itself, the rules underneath it, and the industry around it. Every one of them moved this year.

Layer One: The Market Slowed, and Listings Are Sitting

The September SDAR Monthly Indicators report showed 1,737 closed sales across San Diego County, down 14.0 percent from a year earlier. Pending sales were down 15.9 percent.

Every closed sale has two sides. That is roughly 3,474 sides in September. Now look at how many agents were competing for them. The association roster figures I have for 2026 show about 10,500 members at SDAR, 4,200 at the North San Diego County Association of REALTORS, and 3,200 at the Pacific Southwest Association of REALTORS.

Some agents belong to more than one association, so the true count of active agents is lower than the sum. Even so, the math is plain. In a single month, a large share of San Diego agents did not close a transaction and did not earn compensation.

October is not shaping up any better. When I pulled closings on Thursday morning, the county stood at exactly 1,500 with two days left in the month. To meet or beat September, we needed 237 more. Late entries will move the number up. We will see. As I said, this market is choppy.

On the ground, that shows up as listings sitting on the market longer than our agents are used to. Not a collapse. A slowdown that a lot of sellers, and a lot of agents, have not priced in yet.

I am also seeing something I have not seen in a long time: glimmers of short sales. Not a wave. Glimmers. I worked through 2008 and trained agents through the short sale process then. Most agents licensed today have never closed one. That is why we built a Short Sale Guide for our agents before we needed it, not after.

When a listing goes stale, the instinct is to cut the price and wait. In Wednesday’s class I introduced another tool: the reverse offer. Instead of waiting for a buyer to write, the listing side goes to the buyers who have already shown interest, through their agents when they are represented, and puts terms on the table the seller is prepared to accept.

It is not a gimmick, and it is not right for every listing. It has compliance lines that matter. I will write a full piece on how it works and where those lines are.

Translate that. In a slow market, the listing agent who only waits is losing ground every week.

Layer Two: The Rules Underneath Every Transaction Changed

On March 18, Fannie Mae issued Lender Letter LL-2026-03, coordinated with Freddie Mac and the Federal Housing Finance Agency. It is the most significant rewrite of condo lending standards in years, and it hits every market in the country, not just San Diego.

The headline change: the Limited Review is gone. For loan applications dated on or after August 3, 2026, most established condo projects now go through a Full Review. The lender looks at the association’s budget, reserve study, master insurance, and delinquencies before the loan is approved. Projects with 10 units or fewer may qualify for a waiver.

The second change is coming. On January 4, 2027, the minimum replacement reserve allocation rises from 10 percent to 15 percent of the association’s budgeted assessment income.

Then there is the appraisal. On Monday, November 2, every new appraisal for a loan sold to Fannie Mae or Freddie Mac must use the new UAD 3.6 format. The legacy forms are replaced by one dynamic report built on structured data, with more detailed condition reporting and specific photo requirements.

Here are the key dates, in order:

July 1, 2026. The per-unit deductible on a condo master insurance policy is capped at $50,000. This hits condo associations.
August 3, 2026. The Limited Review is retired, and most condo projects now go through a Full Review. This hits every conventional condo loan.
November 2, 2026. The UAD 3.6 appraisal report becomes mandatory for new appraisals on loans sold to Fannie Mae and Freddie Mac. This hits every conventional buyer and seller.
January 4, 2027. The reserve minimum rises from 10 percent to 15 percent of assessment income. This hits condo associations, sellers, and buyers of condo units.

Two honest caveats. Some lenders received a temporary exception that lets them submit the old appraisal format through February 28, 2027. And FHA has adopted UAD 3.6 but has not set a mandatory date. So the rules your buyer faces depend on the loan and the lender.

Translate that. A condo listing is now an underwriting event before it is a marketing event. The agent who does not know that writes a 21-day escrow on a building with an underfunded reserve, and finds out on day 17.

Layer Three: The Industry Around the Transaction Is Being Rebuilt

If the market and the rules were the only changes, this would be a manageable year. They are not.

Since August 2024, buyer agents have needed a written agreement before touring, and offers of broker compensation came off the MLS. Two years later, agents are still writing those agreements inconsistently, and consumers are still confused about who pays whom.

The brokerage map is consolidating. In January, the largest brokerage in the country absorbed one of its biggest competitors. I have written about where I think that ends.

And the MLS itself is in court. California Regional MLS sued that brokerage on October 5 to defend its cooperation rules. The brokerage sued back on October 16. Six more MLSs filed their own federal suit on October 21. On October 26, four of the largest companies in residential real estate, including Keller Williams, announced Open Real Estate, a proposed shared listing data initiative. I covered all of it in my last article, with full disclosure that KW is a founding member.

Now put yourself in the shoes of a part-time agent who closed two deals last year. New buyer agreements. New condo standards. A new appraisal report. MLS rules in litigation. A slowing market. Short sales they have never seen.

That is too much for one agent working alone to absorb. I believe we will see attrition over the next few years. Not because agents are bad people. Because the job got bigger, and some will decide it is no longer worth it.

Translate that. The agents who stay will be the ones who are trained, supported, and paying attention. The ones who are not will still have licenses for a while. Some of them will be on the other side of your deal.

The Agent Across the Table

Here is the warning I gave our agents on Wednesday.

The better you know this material, the better it is for your clients and your transactions. But do not assume the agent on the other side knows it too. Many do not. You may be the only person in the deal who understands why the condo loan is stuck, why the appraisal came back with questions, or why the escrow timeline cannot hold.

I am proud of the agents at KW Metro. I believe they are among the most highly trained agents in the industry. I also run the office, so weigh that statement accordingly.

Now the counterweight, because you deserve it.

Training is not the same as being right. I network with the top brokers across San Diego County, and they are every bit as committed to training their agents as I am. There are excellent agents at every brokerage, independents and franchises alike, who know these rules cold.

The gap is structural. By the figure I use, 68 percent of agents work in brokerages with 10 agents or fewer. Many of those offices do not have a weekly training calendar, a compliance department, or a broker teaching a room of 50 agents about appraisal changes. My assumption is that a large share of the industry is simply not in the room when this material gets taught.

Some of these rules are also still settling, and lenders apply their own overlays on top of them. Even a well-trained agent will run into questions nobody has a clean answer to yet.

So the point is not that your agent is smart and theirs is not. The point is that you can no longer assume shared knowledge. In 2021, both sides of a deal usually worked from the same playbook. In late 2026, you have to confirm it.

Translate that. The questions you ask on day one decide the problems you discover on day 17.

Ask the Questions Up Front

If you represent the buyer, ask the listing agent before you write, not after you open escrow:

Has the HOA provided its current budget and most recent reserve study, and what percentage of assessment income goes to reserves?
Is there any known issue with the project’s eligibility, pending litigation, or a special assessment?
What is the per-unit deductible on the master insurance policy?
How long has the home been on the market, and what terms would the seller consider beyond price?
Is this a short sale or otherwise subject to lender approval?

Then ask your buyer’s lender which review the project needs and which appraisal format the loan will use. Get those answers in writing.

If you represent the seller, do not wait for the buyer’s agent to ask:

Assemble the HOA budget, reserve study, and master insurance certificate before the sign goes up.
Tell the buyer’s agent what the file contains and what it does not.
If you write a 14 or 21 day escrow, make sure the file can support that timeline.
If the buyer’s agent does not raise the new condo or appraisal rules, raise them yourself. Their surprise becomes your seller’s fallen escrow.

If you are a buyer or seller, ask any agent you are interviewing three questions:

What changed for appraisals on November 2?
What does a Full Review of a condo project mean for my sale or purchase?
What do you do when a listing sits?

An agent who answers all three with confidence has been paying attention. An agent who cannot is learning on your transaction.

Who You Hire Matters More Than Ever

Two weeks ago I wrote that who you hire matters, and that November 2 would prove it. Everything since has made that point louder.

Here is the part that may surprise you. I am not pessimistic about this market. I am a contrarian, and I look at real estate over the long run. The same condo rules scaring buyers away are creating opportunity for buyers who understand which buildings qualify and why. The same slowdown frustrating sellers is rewarding the agents who know how to get a stale listing moving. I will write about both in the coming weeks.

The market will always be the market. It will zig, and it will zag. The opportunity has never been in predicting it. It has always been in matching it.

So here is my question for every agent reading this, in San Diego or anywhere else: are you working the market of the moment, or the market you remember?

See my digital media feeds: instacard.co/robert-schantz/home

Thinking about your next brokerage home? kwsandiego.kw.com/join-our-team

More from Broker Bob: robertschantz.com

Sources

SDAR Monthly Indicators, September 2026, as cited in Four Giants Just Drew the Line. Independents Are Standing on It. (Oct. 27, 2026)
SDMLS closed sales, October 2026 month to date: author’s own pull from the SDMLS platform, morning of Oct. 29, 2026 (preliminary)
Association roster figures for SDAR, NSDCAR, and PSAR, 2026: author’s figures; members of more than one association are counted in each
Fannie Mae, Lender Letter LL-2026-03, Updates to Project Standards and Property Insurance Requirements (Mar. 18, 2026)
Whiteford, Taylor and Preston, Client Alert on LL-2026-03
Chadwick Washington, Fannie Mae and Freddie Mac Condominium Project Eligibility Changes (master policy deductible cap)
MBK Chapman, California Condo Declared Unavailable by Fannie Mae (January 4, 2027 reserve date)
Fannie Mae, Uniform Appraisal Dataset and UAD 3.6 FAQs
NAMB, Are You Prepared for UAD 3.6 (lender exception through Feb. 28, 2027)
RISMedia, CRMLS Preempts Compass in Federal Lawsuit (Oct. 6, 2026)
RISMedia, OneKey Joins CRMLS’s Lawsuit (Oct. 27, 2026)

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Four Giants Just Drew the Line. Independents Are Standing on It.

Robert Schantz — Tue, 27 Oct 2026 12:03:28 GMT

The fight over private listings was never about Manhattan penthouses. It is about whether a three-agent brokerage in Chula Vista can still show its buyer every home for sale in San Diego County.

This morning, that question got a lot louder.

Keller Williams, AGNT (the parent company of eXp Realty and NextHome), HomeServices of America, and Real REMAX Group announced the formation of Open Real Estate, a national initiative to build shared infrastructure for listing data. Brown Harris Stevens, Lamacchia, Samson Properties, and Windermere joined as participating members. The pitch is simple: an agent enters a listing once, and it flows to member brokerages, MLSs, portals, appraisers, and data services at the same time.

The founders did not name Compass in their open letter. I will.

Full disclosure before we go any further. I run a Keller Williams office. KW is a founding member. Read everything below with that in mind, and then check every fact I give you. I have linked the sources at the bottom.

The line in the sand

Here is the timeline, in order, from the public record.

June 2025. Compass CEO Robert Reffkin announced Compass would not follow the NAR Clear Cooperation Policy or other national MLS rules.

January 9, 2026. Compass closed its acquisition of Anywhere Real Estate, the parent of Coldwell Banker, Century 21, Sotheby’s International Realty, Corcoran, ERA, and Better Homes and Gardens Real Estate. Compass says its network now reaches roughly 340,000 agents. According to RealTrends figures reported by Bloomberg, the combined company controls more than 80 percent of residential sales by dollar volume in Manhattan and more than 70 percent in Northern California.

September 22, 2026. Compass launched “See It First” on Compass.com, a section that puts its private exclusive and coming soon listings in front of consumers before they appear anywhere else, backed by a multimillion dollar national ad campaign.

September 30, 2026. Reffkin told the Council of Multiple Listing Services that Compass planned to begin suing MLSs in mid-October.

October 5, 2026. California Regional MLS (CRMLS), the second largest MLS in the country, sued Compass first. CRMLS asked a federal court to declare its cooperation rules lawful. In that filing, CRMLS reported processing about 300 cases this year under its public marketing rule, with about 75 of them involving a Compass property.

October 16, 2026. Compass sued CRMLS. Compass also announced it would pay MLS fines for agents at its company-owned brokerages who publicly market listings kept off the MLS.

October 21, 2026. Six more MLSs (Arizona Regional MLS, Bridge MLS, Canopy MLS, Doorify MLS, Hive MLS, and REcolorado), representing more than 120,000 real estate professionals, filed their own federal suit against Compass.

October 26, 2026. Four of the largest companies in residential real estate announced Open Real Estate.

That is not a disagreement. That is a line in the sand.

Translate that.

CRMLS described the Compass strategy in its federal complaint as controlling inventory “as a competitive weapon.” The six MLSs went further. According to reporting on their complaint, they allege Compass aims to use its inventory as leverage to push smaller brokerages out of business.

Those are allegations, not rulings. No court has decided them. Compass disputes them and argues that sellers, not MLSs, should control how their homes are marketed.

But read the strategy the way an independent broker should read it.

A home is publicly advertised to buyers. The same home is withheld from the cooperative database that every other agent uses to serve their clients. The buyers who see it first are the buyers working with agents inside the network.

Translate that. The listing is the bait. The buyer is the prize. And the agent who does not belong to the network is the one standing outside the window.

Why the independent loses first

The big franchise brands will be fine. They have tens of thousands of agents, their own technology, and now their own coalition. The broker I worry about is the independent with five, ten, or twenty agents who has built a real business on one quiet promise: my buyers can see everything.

That promise only works if the MLS is complete. Here is what happens when it is not.

Your MLS is your network. A firm with 340,000 agents can afford to keep inventory in house, because it has a buyer pool large enough to absorb it. You do not have that. Your inventory is the MLS. Every home held outside it is a home your buyer cannot find, and you may not know it exists until it is already pending.

Your buyer’s access starts to depend on your competitor. When Washington State passed its ban on private listings this year, a Compass spokesperson said Private Exclusives are only private online, and that agents from other firms can visit Compass offices to see them. Translate that. Your client’s access to the market would run through a binder in your largest competitor’s office.

Your listing presentation gets harder. When enough inventory sits inside one network, the seller’s question changes. It is no longer “who will market my home best?” It becomes “why would I list with a brokerage that cannot offer me a private network?” The independent has no answer to that question except the open market. If the open market shrinks, so does the answer.

The fines do not apply equally. Compass said it will cover CRMLS fines for agents at its company-owned brokerages. An independent agent who follows the same playbook pays their own fine, takes their own suspension risk, and defends their own license.

Concentration becomes the market. In a metro where one company controls 70 or 80 percent of dollar volume, a “private network” is no longer a niche marketing option. It is most of the market, with the door locked from the inside.

This is not theory for us in San Diego. KW Metro holds memberships in both SDMLS and CRMLS. The CRMLS fight is not happening in Manhattan. It is happening in the database our agents log into every morning.

The worst possible time to shrink the audience

Here is the number that made me stop and rewrite part of this article: 1,276.

That is the count of closed sales month to date in SDMLS. I pulled it from the platform myself this morning, October 26, while I was drafting this piece.

For context, the SDAR Monthly Indicators report for September showed 1,737 closed sales across San Diego County, down 14.0 percent from a year ago. Pending sales were down 15.9 percent. The Housing Affordability Index slipped from 49 to 46.

Going into October, my estimate was that a good month would land around 1,500 closings. To get there, we would need roughly 224 more closings in the last five business days of the month. I do not expect us to get there.

Two caveats, because you deserve them. This is a month-to-date number, not a final one. And agents are not always quick about entering their closings, so the count will move up as late entries come in. So I did not stop at the MLS. I called around. I poll title sales reps regularly, and I reach out to escrow companies to ask what they are seeing in their own business. Between escrow, title, home warranty, and every other vendor that touches a transaction, I talk to a lot of people who are out in the field every day. Call it ground level reconnaissance.

They are all telling me the same thing. Closings have dropped, and dropped hard. The MLS number and the people working the files are pointing in the same direction.

I wrote recently that the next few months would be choppy. I did not expect this choppy.

Translate that. Fewer buyers are closing. Fewer buyers are going into contract. Affordability is getting worse, not better. Add the Iran war, an election one week away, and an economy nobody can read cleanly, and you have a market where every seller needs every buyer they can reach.

This is exactly the wrong moment to narrow a seller’s audience to one company’s agents. When buyers are scarce, exposure is not a marketing preference. It is the difference between a sale and a withdrawn listing.

And thin months hit the small brokerage first. Less inventory your buyers can see, fewer buyers in the pool for your sellers, and a competitor offering homeowners a private room. That is how a choppy quarter turns into a closed office.

The counterweight

I promised you the strongest honest version of this argument. That means saying the parts that do not help my side.

Some sellers genuinely need privacy. A divorce, a health issue, a public figure, a tenant-occupied property. Those sellers exist, and current MLS rules already give them options, including office exclusives with a signed seller election and non-exclusive arrangements. Jason Oppenheim of The Oppenheim Group, who is no fan of the Compass program, said earlier this year that private marketing is appropriate for perhaps 1 to 2 percent of sellers. He also estimated that roughly 97 percent of Compass listings that begin as private exclusives eventually reach the MLS. So the honest framing is not “Compass hides every home forever.” It is that the head start is the product.

Keller Williams is not a purist. In March, KW joined REMAX, HomeServices of America, and Side in partnering with Zillow on Zillow Preview, a public pre-market phase. I see a real difference between a pre-market phase that any consumer can view and a private network that only some agents can access. You are allowed to decide for yourself whether that difference is as large as I think it is.

Open Real Estate is a proposal, not a platform. There is no software you can log into today. The letter of support is non-binding. Governance, technology, and participation rules will be developed over the next six months. The founders say participating agents will share in the value their listing data creates, but the details have not been finalized. And the founders are four very large companies with business interests of their own.

So my advice to independents is the same advice I would give any seller: read the terms before you sign. “Open” is a promise. Governance is where it gets kept or broken.

What I want independents to do this week

1. Read your MLS cooperation rules. If you are in CRMLS, that is Rule 7.9: a listing under an exclusive agreement goes into the MLS within one business day of any public marketing. Know the exceptions. Know the fines. Teach them to every agent on your roster.

2. Look at Open Real Estate yourself. Participation is free for brokerages. Broker-owners can sign the non-binding letter of support and help shape the governance. Agents can register for updates. Even if you never sign, you want a seat close enough to watch how the rules get written.

3. Put exposure in writing at every listing appointment. Show the seller the size of the buyer pool on the open market versus inside any single network. Let them choose with the full picture. That is not a sales tactic. It is your fiduciary duty, and it happens to be the second principle in the Open Real Estate letter.

4. Show up for your MLS. Your MLS is now in federal court defending the rules that protect your business. Attend the meetings. Read the updates. Tell your board where you stand.

The long game

This is not Keller Williams against Compass. Strip the logos off and the question underneath is older than any of us: is the housing market a public square, or a members-only club?

For most American families, a home is the single largest asset they will ever own. Sellers deserve every qualified buyer. Buyers deserve to see every home. And the independent broker deserves to compete on service, skill, and relationships, not on the size of a private vault.

I have been in this business since 2002. The firms that win the long game are the ones that make the market bigger, not the ones that make the door smaller.

Pick your side with your eyes open.

See my digital media feeds: instacard.co/robert-schantz/home

Thinking about your next brokerage home? kwsandiego.kw.com/join-our-team

More from Broker Bob: robertschantz.com

Sources

SDMLS closed sales, October 2026 month to date: author’s own pull from the SDMLS platform, morning of Oct. 26, 2026 (preliminary)
SDAR Monthly Indicators, September 2026 (current as of Oct. 5, 2026)
Open Real Estate, open letter and platform overview: openrealestate.com
Business Wire, “Leading Real Estate Firms Partner to Form Open Real Estate” (Oct. 26, 2026)
HousingWire, “4 Real estate giants team up to create new, shared listings platform” (Oct. 26, 2026): housingwire.com/articles/open-real-estate-data-initiative
Real Estate News, “CRMLS files suit against Compass over listing rules” (Oct. 5, 2026): realestatenews.com
Inman, “Compass files antitrust suit against CRMLS over listing rules” (Oct. 16, 2026): inman.com
RISMedia, “Six MLSs Sue Compass, Seeking to Block Lawsuits and Affirm Rules” (Oct. 22, 2026): rismedia.com
Propmodo, “Six Regional MLSs File Joint Lawsuit to Block Compass Policy Challenge”: propmodo.com
Bloomberg Law, “DOJ Allows Compass-Anywhere Deal After Overruling Staff” (Jan. 9, 2026)
Inman, “Compass puts spotlight on listings with ‘See It First’ feature” (Sept. 22, 2026): inman.com
Realtor.com via Yahoo Finance, “Compass Says Washington State’s Ban on Private Listings Doesn’t Forbid Its ‘Private Exclusives’” (June 12, 2026)
Inman, “Jason Oppenheim: Compass’ real play isn’t listings, it’s leverage” (May 26, 2026): inman.com
Houston Agent Magazine, “Keller Williams, REMAX, HomeServices of America, Side enter pre-market listing agreement with Zillow” (Mar. 17, 2026)

The Machine Still Works. The Door Is the Problem.

Robert Schantz — Fri, 23 Oct 2026 12:03:45 GMT

The house still works as a wealth machine.

The problem is how few people can get through the door.

For three Fridays I have been building one argument. In Part 1, I made the case that the primary residence has quietly taken over the job the pension used to do. In Part 2, I showed that the line between households building wealth and households falling behind runs through the date on the deed, not the number on the paycheck. In Part 3, I looked at the people standing at that door, the agents, and how their own industry is splitting.

I promised from the start that this series would not end with a villain. It ends with a question. What actually widens the door?

Translate that.

Diagnosis is easy. Everyone can tell you housing costs too much. The useful question is which levers move the price of getting in, who controls each one, and what you can do about it before anyone in Sacramento or City Hall gets around to it.

How narrow the door is right now

Start with the number that matters most.

According to the California Association of REALTORS®, only 19 percent of California households could afford a median-priced single-family home in the second quarter of 2026. In San Diego County it was 17 percent.

Fewer than one in five.

The San Diego median in that report was $1,075,000. To afford it, C.A.R. estimates a household needed a minimum income of about $268,000 a year.

Now add the rate. On October 22, Freddie Mac put the 30-year fixed at 7.32 percent. A year earlier it was 6.19 percent. On an $860,000 loan, which is that San Diego median with 20 percent down, the difference is about $646 a month in principal and interest. That is roughly $7,750 a year, for the same house, in twelve months.

There is one bright spot in the C.A.R. numbers. Statewide, 30 percent of households could afford a median-priced condo or townhome. That is still too low. But it is half again as many people as can afford a detached home, and it is why I keep telling first-time buyers that the attached market is where the door is widest.

Three levers, and who holds them

When I strip away the noise, I see three levers that actually change who gets inside.

Lever one: how many homes get built. This is the big one, and it belongs to elected officials, planning departments, and voters. When a region does not build enough homes for a generation, prices rise no matter what anyone does with interest rates. San Diego is a textbook case. The land is limited, the approval process is long, and for years almost nothing was built at the entry level.

Lever two: how a buyer pays for the entry. The down payment is the wall most first-time buyers hit. Income can carry a payment long before savings can cover 10 or 20 percent of a seven-figure price. Programs that close that gap matter, as long as they do not simply push prices higher.

Lever three: the decisions a household controls. When you buy. What you buy. Whether family helps. Whether you build a second unit on land you already own. Nobody has to pass a law for you to pull this lever.

Most housing arguments fight over lever one and ignore lever three. That is backwards for any individual family. Lever one is where the long-term answer lives. Lever three is the only one you can pull this year.

What is on the ballot in eleven days

Two measures on the November 3 ballot touch the first two levers directly. I am going to describe what each one does, who is for it, and who is against it. I am not going to tell you how to vote.

Full disclosure first. I am a member of the California Association of REALTORS®, and C.A.R. has publicly announced support for both measures. It sponsors Proposition 37. You should know that before you read anything I write about them.

My own standard is simple, and I have held it for 24 years. I support what gets more housing built and more people into it, done the right way. Read the measure. Read the argument against it. Then decide.

Proposition 37: the Middle-Class Homeownership Act. This measure would let the California Housing Finance Agency issue up to $25 billion in revenue bonds to fund down payment loans.

The loan can cover up to 17 percent of the home price, and the buyer puts down at least 3 percent.
Household income can be up to 200 percent of the area’s median income.
The loan is limited to newly built or newly converted homes, with the buyer as the first owner, under price caps the measure sets.
Builders who opt into a “qualified builder” track agree to labor standards and a price cap. In exchange, they get a different set of construction defect rules, including a duty to repair problems before a homeowner goes to court.
The Legislative Analyst’s Office reports no direct state or local cost, because buyer payments repay the bonds.

The case for it is straightforward. The down payment is the biggest barrier, and tying the loans to new homes is meant to add supply rather than just bid up the existing stock. The defect provisions also aim at one of the real reasons builders stopped building condos in California.

The case against it is just as real. The Public Policy Institute of California estimates that about 90 percent of renters would be income-eligible, but fewer than 40 percent of those eligible renters could afford the payments on an entry-level home. Critics, including the League of Women Voters of California, argue the people near the top of the income limit would benefit most. Others argue it subsidizes builders without fixing the cost of building. And the Legislative Analyst’s Office itself lists open questions: how much investors will want the bonds, how the loan costs compare with other programs, and whether it actually increases construction.

Proposition 45: environmental review for “essential” projects. This measure, filed by the California Chamber of Commerce, creates a faster track under the California Environmental Quality Act for projects it defines as essential.

Agencies would face stricter deadlines to finish environmental review and issue permits.
Agencies would have to list everything an application needs up front, limiting new requests later.
An applicant could propose a single alternative instead of the agency studying several.
Courts could generally stop only the part of a project affected by a violation, not the whole project.

Supporters, including builders, hospital associations, water agencies, and affordable housing groups, argue that delay is one of the biggest costs in California construction, and that time is money a buyer eventually pays.

Opponents, including environmental groups, labor groups, nurses, and the League of Women Voters of California, argue it weakens environmental review and public input, reaches far beyond housing, and does not actually require that faster approvals lower prices. The Legislative Analyst’s Office expects state and local costs to rise at first, by tens of millions of dollars a year and potentially more than $100 million, and calls the long-term effects uncertain.

Translate that.

Both measures are aimed at real problems. Neither one is a guaranteed fix. Whatever happens on November 3, no measure on this ballot changes any individual buyer’s math before the spring market.

What San Diego has already proven

Here is the part of this conversation that gives me real hope.

We already have proof that changing the rules can move supply. It is sitting in backyards all over this county.

In 2016, California cities and counties issued 1,336 permits for accessory dwelling units. In 2025, according to state Annual Progress Report data, they issued 41,844. That is more than thirty times as many in nine years. The City of San Diego alone issued 2,165 ADU permits last year.

That did not happen because of a single bill or a single vote. It happened because the state kept removing barriers, one at a time, until building a small home on an existing lot became something ordinary homeowners could actually do.

San Diego is also in the middle of a much bigger test. SB 79 took effect statewide on July 1, allowing more housing near major transit, and the city adopted a phased plan to implement it. The Midway district, long held back by the 1972 coastal height limit, is finally moving through the approval process. I wrote about that history in “San Diego Set Its Ceiling in 1972.” Whether those changes turn into homes people can buy, and not just units on a zoning map, is the question for the next five years.

In my opinion, this is where the anger I wrote about in Part 2 belongs. Not at the retiree who bought in 1995. At the meeting where the next project gets approved or denied. Push your elected leaders, at every level, to approve and build more housing. That pressure works. The ADU numbers prove it.

The counterweight

I would be doing you a disservice if I ended this series sounding certain.

Help with the down payment can raise prices. If more buyers get money to spend and the number of homes does not grow, prices can absorb the help. That is why the supply lever matters more than any single financing program.

ADUs are mostly rentals. They add homes, and they can help an owner carry a mortgage, but most ADUs are not a way for a new buyer to own. They widen the door to housing. They do not always widen the door to ownership.

Faster is not automatically cheaper. A project approved in half the time still has to pencil out for the builder, at today’s rates, insurance costs, and construction prices.

Policy is slow. Even the best idea on this ballot takes years to show up as a closed escrow. A household that waits for policy to fix its math may wait through its entire entry window.

All of that is true. None of it changes the central point of this series. The door is narrow, but it is not closed, and the people who get through it are usually the ones who stop waiting for it to widen on its own.

What to do with this

If you are trying to get in. Lever three is yours, so pull it. Treat your entry date as the most important number in your financial life, because Part 2 showed it is. Look hard at the attached market, where affordability is roughly half again better statewide, and buy the association, not just the unit. Sit down with a lender now, not when you find the house, and ask what down payment programs already exist for your income and county. And if Proposition 37 passes, ask that same lender exactly how it would work for you once the rules are written, because the details will matter more than the headline.

If you are already inside. You are the beneficiary of the machine, and you have more power to widen the door than anyone else. If you have the lot, look at an ADU, for family, for income, or both. If you have children who are renting, have the conversation now about helping them get in earlier, with a financial professional at the table. And show up. Planning board meetings and city council hearings are decided by the people who attend them.

If you are an agent. You are standing at the door. Learn every first-time buyer program available in your county, and learn Proposition 37 well enough to explain it accurately whichever way the vote goes. Never present a ballot measure to a client as a sure thing. Present the facts, and send them to the official voter guide. And stop treating the first-time buyer as a small deal. For that family, you are helping choose the most important financial date of their lives.

If you vote in San Diego. Read the official voter guide for Propositions 37 and 45, including the arguments against. Then look past this election. Find out when your city’s next housing decision comes up, and be in the room.

The end of the series, and the start of the work

Three weeks ago I said the house is doing the job the pension used to do. That has not changed. For most American families, it is still the one machine that forces the saving, uses leverage, and shelters the gain.

What has changed is how many people can reach it. The goal is not to pull down the people already inside. It is to get more people in, sooner, and to hold the door for whoever comes next.

Real estate is a long game. It always has been. The families who win it are rarely the ones who timed it perfectly. They are the ones who found a way in and stayed.

So here is the question I will leave you with to close this series. If you are already inside, who are you going to help through the door next?

Follow the work

See my digital media feeds: instacard.co/robert-schantz/home

Agents considering KW Metro: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources

California Association of REALTORS®, “2nd Quarter 2026 Housing Affordability” (statewide single-family 19 percent; San Diego County 17 percent, median $1,075,000, minimum qualifying income $268,000; statewide condo and townhome 30 percent)
Freddie Mac Primary Mortgage Market Survey, October 22, 2026 (30-year fixed 7.32 percent; 6.19 percent a year earlier)
Payment comparison: $860,000 loan, 30-year fixed, principal and interest only, computed at 6.19 and 7.32 percent
California Association of REALTORS®, Ballot Measures, November 3, 2026 (support for Propositions 37 and 45; sponsor of Proposition 37)
Legislative Analyst’s Office, Proposition 37 analysis, November 3, 2026 ballot
UC Berkeley Institute of Governmental Studies, California Ballot Proposition Guides, Proposition 37 and Proposition 45, November 3, 2026
CalMatters, “Prop. 37 on California’s ballot would offer help with down payments,” October 2026 (price caps, PPIC eligibility and affordability estimates, League of Women Voters opposition, qualified builder provisions)
KQED 2026 California Voter Guide, Proposition 37 (income limit, supporters and opponents)
California Department of Housing and Community Development, Housing Element Annual Progress Report data, Table A2, as compiled by BackyardADU, October 2026 release (2016: 1,336 ADU permits; 2025: 41,844; City of San Diego 2025: 2,165); 2016 figure from the Big West Coast ADU Dataset, UC Berkeley
Robert Schantz, “San Diego Set Its Ceiling in 1972,” Broker Bob on Substack (SB 79 implementation and the Midway height limit)

The Listing War Just Reached California

Robert Schantz — Tue, 20 Oct 2026 12:03:51 GMT

The fight over private listings is not a fight about technology.

It is a fight about who gets to see your home before it sells.

Last Friday, October 16, Compass filed a federal antitrust lawsuit in Los Angeles against CRMLS, the largest MLS in California. Eleven days earlier, CRMLS had filed its own suit against Compass in New York, asking a federal court to declare its cooperation rules lawful.

For a year and a half, most California agents watched this fight from a distance. Chicago. Seattle. Courtrooms and congressional letters. That distance is gone. CRMLS serves more than 93,000 real estate professionals, and our office holds a CRMLS membership alongside our primary MLS here in San Diego.

Translate that.

The rules about whether a seller’s home has to be exposed to the whole market are now being litigated in our state, by an MLS our agents use every day.

How we got here

Here is the short version, in order.

April 2025: Zillow announced its Listing Access Standards, which bar listings from its site if they were publicly marketed but not made widely available through the MLS.
June 2025: Compass sued Zillow over those standards.
February 6, 2026: A federal judge denied Compass’s request for a preliminary injunction, so Zillow kept enforcing its standards.
March 17 and 18, 2026: Zillow announced Preview, its own approach to pre-market listings. The next day Compass dismissed its lawsuit without prejudice, which means it can refile later.
May 12, 2026: Zillow sued Compass and MRED, the Chicago-area MLS, alleging they worked together to hide listings from buyers.
July 22 and August 6, 2026: The House Judiciary antitrust subcommittee and Senator Elizabeth Warren each sent letters to Compass and MRED about their nationwide private listing partnership. Senator Warren wrote that the partnership “threatens to create a two-tiered housing market” and raised concerns about fair housing and about appraisals that depend on complete market data.
August 2026: Compass settled its separate antitrust suit against Seattle’s Northwest MLS, which added a new First Look status as part of the deal. The Northwest MLS has since filed counterclaims of its own.
September 15, 2026: A federal judge in Illinois denied Zillow’s request for an injunction against MRED and sent Zillow’s claims against MRED to private arbitration. The claims against Compass are on hold until that arbitration ends. Zillow called it “not a final ruling.”
September 22, 2026: Compass launched See It First, a section of its own website that features private exclusive and coming soon listings before they appear anywhere else, backed by what it called a multimillion-dollar national campaign.
October 5 and October 16, 2026: CRMLS sued Compass. Compass sued CRMLS.

Notice something about that list. Scrutiny of private listings has come from a Republican-chaired House subcommittee and from a Democratic senator. This is not a partisan fight. It is a market structure fight.

What CRMLS actually requires

The center of the California case is CRMLS Rule 7.9, its version of the cooperation rule. In plain English:

If a listing is under an exclusive agreement and it is publicly marketed, the listing broker has to submit it to the MLS within one business day.
A listing can stay inside one brokerage without going to the MLS, but only if it is not publicly marketed.
Publicly marketing an office exclusive without submitting it carries a fine of 1 percent of the list price, with a $500 minimum and a $2,500 maximum.
Using Coming Soon status without a seller-signed form carries a $750 fine. A listing without a valid agreement draws a $1,500 fine and removal.

CRMLS also added a Limited Exposure Coming Soon option in July for sellers who want more flexibility.

Now the scale. According to CRMLS, more than 271,000 listings were submitted last year, and 89 fines were issued under Rule 7.9. So far in 2026, CRMLS has processed about 300 Rule 7.9 cases, roughly 75 of them involving Compass listings.

Compass says it will pay the fines for agents at its company-owned brokerages when the marketing was done at the seller’s written direction, as long as those agents assign their right to sue CRMLS so Compass can fold those claims into its own case.

The industry is not staying quiet

This is not just a fight between lawyers. People who run real estate companies and MLSs are saying, in public, exactly where they stand.

One of the loudest voices belongs to James Dwiggins, president of NextHome, the franchise brand eXp World Holdings acquired in May. NextHome has more than 500 franchisees across the country. The day Compass filed against CRMLS, he posted on LinkedIn: “Compass just sued CRMLS. Every MLS in the country should be paying attention.”

His argument is the one I keep coming back to. “If you want the benefits of the cooperative, you share your listings with the cooperative.” And he made the point that gets lost in most of the coverage: “Sellers who want privacy already have a path.”

He is not alone.

Kelly Lennox, chief legal officer of the Northwest MLS, the Seattle MLS that has already been through its own fight with Compass, told MLS leaders that “Hope is not a strategy.”
Amit Kulkarni, a former Bright MLS executive, warned that MLSs “are all going to get sued if they just sit there.”
Ninoska Fabbri, CEO of Homezai, raised the data question that matters to every appraisal and every comp: “Inventory is the market, and data is its memory.”

At the Council of MLS conference on September 30, Compass CEO Robert Reffkin made his case directly to MLS leaders. He said the freedom to put listings on Compass’s own website is “all I’ve been fighting for.” Attendees described the room as tense. Even some of the people who pushed back on him said they support seller options, as long as buyers do not lose access.

To be fair, every voice in this fight has a business on the line, and that includes the people I agree with. But when the leaders of franchise brands, MLSs, data companies, and independent brokerages are saying the same thing, it is worth paying attention to what they are saying.

Why exposure matters more right now

When twenty buyers are lined up for every house, a private listing can feel harmless. Somebody is going to buy it anyway.

That is not the San Diego market we are in this fall.

SDAR’s September report showed condos and townhomes at 4.0 months of supply. Pending sales countywide were down 15.9 percent from a year earlier. Freddie Mac’s 30-year fixed held at 7.40 percent for the second week in a row on October 15. Buyers are fewer, slower, and more careful.

In that kind of market, every buyer who never sees a home is a buyer who could have made the offer. A seller who limits exposure is not just choosing privacy. In my opinion, they are often choosing a smaller audience at exactly the moment they need the biggest one.

What the data says, from both sides

There is no shortage of studies. There is a shortage of agreement.

ARELLO, the association of state real estate license regulators, looked at more than 10 million sales from January 2024 through June 2026. Measured against expected price, MLS listings sold 0.95 percent above in 2025. Private listings sold 0.87 percent below. Coming soon listings sold 1.16 percent above. The gaps were wider in majority non-white and majority Hispanic neighborhoods. ARELLO takes no position on private listings and says the numbers do not establish causation or discrimination.
Bright MLS and Drexel University found MLS-listed homes sold about 17.5 percent higher than comparable homes sold off the MLS.
Zillow’s research found off-MLS homes sold for 1.3 percent less.
Compass’s own study of its closed sales found that homes marketed in phases, starting as coming soon or private exclusive before reaching the MLS, sold for 4.6 percent more and 34 percent faster.

Each company funded its own research, and each company’s research supports its own business. That is worth keeping in mind on every side of this.

But here is the finding I think matters most. In the ARELLO data, the best results did not come from listings that skipped the open market. They came from coming soon listings that built interest first and then went to the MLS.

Translate that.

The evidence is not against pre-marketing. It is against keeping the home off the open market.

The counterweight

I want to be fair to the other side of this, because there is a real argument there.

Seller choice is real. Some sellers have legitimate reasons for privacy: a divorce, a safety concern, a public figure, a tenant in place, a family situation they do not want on a website. Those sellers deserve options, and California rules already give them some. A listing that is not publicly marketed does not have to go into the MLS at all.

Compass also points out that MLSs covering more than 350,000 agents in 12 states already allow sellers to publicly market office exclusives without fines. That is a fair point for the courts to weigh.

And Zillow is not a neutral party either. Its business depends on having every listing to show buyers and agents. When Zillow argues for full exposure, it is also arguing for its own inventory.

So I will say this plainly. This is not a story about good companies and bad companies. It is a story about what serves the seller.

What I see in my own office

Here is what the private listing conversation actually looks like from my desk.

Every so often an agent calls me and says, “Broker Bob, I have a seller who wants me to take the listing, but they do not want it in the MLS. Period.”

When I ask a few more questions, the story is almost always the same. The seller is not in a hurry. They are not sure they want to move. They want to see what someone might pay without committing to the market. That is not a motivated seller. That is a seller testing the market.

The agent usually believes that having the listing will turn into a sale. In my experience, it almost never does. A home that only a handful of people can see, owned by someone who is not sure they want to sell, rarely ends up closed.

It is very rare for me to see a seller who truly needs everything kept private. Those sellers do exist, usually at the very high end and in ultra luxury, which is not where most of our business is. For everyone else, privacy is usually a sign the seller is not ready, not a strategy that gets the home sold.

When one of our agents does hold a listing off the market, I need to know the rules are being followed. The seller’s direction is in writing. The status is right. Nothing is being publicly marketed that should be in the MLS. That is a broker supervision issue, and with fines and lawsuits now on the table, it is a bigger one than it was a year ago.

And a majority of the agents in our office believe in full exposure. Not because a rule tells them to. Because they have seen what happens when more buyers see a home.

In my opinion, the open market is the foundation of this business, not a feature of it. A walled garden may serve the brokerage that built it. It rarely serves the seller standing outside the wall, wondering why the offers are not coming in.

What to do with this

If you are selling. Be honest with yourself first. If you want to keep your home off the market to see what happens, you may not be ready to sell yet, and that is fine. If you are ready, ask your agent one question before you sign anything: who will see my home, and when? Ask whether the home will go into the MLS, and on what date. If your agent recommends keeping it private, ask how many buyers that leaves you with, and whether the same brokerage could end up representing the buyer. Get every marketing instruction in writing.

If you are buying. Know that some homes may never show up on the sites you search. Ask your agent how they find inventory before it hits the open market, and ask how you will know you saw everything that fits.

If you are an agent. Know your MLS rules cold. Under CRMLS Rule 7.9, public marketing means MLS submission within one business day. Have a signed seller form before you use Coming Soon. Keep the seller’s written direction in the file for any office exclusive. If you belong to more than one MLS, read each one’s rules, because they are not identical. And do not let a fight between large companies become your client’s problem. Your fiduciary duty runs to the seller, not to a business model.

The bottom line

This fight will be decided by judges, arbitrators, and probably regulators. None of them will decide it before your next listing appointment.

What you can decide is how you advise the seller sitting in front of you. In a market where every buyer counts, my advice has not changed. Give the home to the whole market.

Follow the work

See my digital media feeds: instacard.co/robert-schantz/home

Agents considering KW Metro: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources

HousingWire, “Compass sues CRMLS over MLS cooperation rules and marketing,” October 16, 2026
Real Estate News, “CRMLS files suit against Compass over listing rules,” October 5, 2026 (Rule 7.9, Rule 7.9.1, CRMLS fine and case counts)
Hoodline, “CRMLS Rejects Compass Demands, Preps Legal Fight,” October 2026 (fine schedule, Limited Exposure Coming Soon, 93,000 professionals, Northwest MLS settlement and counterclaims)
Bloomberg, “Compass Files Suit Over California Home Listing Service Rules,” October 16, 2026
HousingWire, “Federal court denies Zillow injunction, sends MRED claims to arbitration,” September 16, 2026
Real Estate News, “Compass drops lawsuit after Zillow embraces pre-marketing,” March 18, 2026
HousingWire, “A timeline of Zillow’s listing war with MRED and Compass”
U.S. Senate Committee on Banking, Housing, and Urban Affairs (Minority), “Warren Probes Compass-MRED Partnership Over Private Real Estate Listings,” August 2026
HousingWire, “Off-MLS listings draw antitrust attention as studies conflict on price,” August 7, 2026 (House Judiciary letters; Zillow, Compass, and Bright MLS/Drexel studies)
HousingWire, “ARELLO study finds private listings sell for less than MLS,” September 23, 2026
Inman, “Compass Puts Spotlight On Listings With ‘See It First,’” September 22, 2026
James Dwiggins, LinkedIn post, October 16, 2026
Real Estate News, “eXp enters the franchise business with NextHome acquisition,” May 7, 2026
HousingWire, “Why CRMLS’s legal fight with Compass matters far beyond California,” October 2026 (Lennox and Kulkarni quotes)
Inman, “Reffkin CMLS Pitch To MLSs Faces Attendee Pushback,” October 1, 2026 (Reffkin and Fabbri quotes)
San Diego Association of REALTORS®, Monthly Indicators, September 2026
Freddie Mac Primary Mortgage Market Survey, October 15, 2026 (7.40 percent)

The Agents Are the Workers in This Story

Robert Schantz — Fri, 16 Oct 2026 12:03:31 GMT

The most leveraged buyers in real estate this year did not buy a single house.

They bought agents.

Two of the largest deals in the history of residential brokerage closed in 2026. One in January. One in August. Neither one involved a buyer, a seller, or a front door. Both involved borrowed money, and both involved tens of thousands of real estate agents who were never asked for a vote.

For two Fridays I have been writing about the last wealth machine. Part 1 made the case that the primary residence has quietly taken over the job the pension used to do. Part 2 showed that the line between households building wealth and households falling behind runs through the date on the deed, not the number on the paycheck.

This week I turn to my own industry. The people who stand at the door of that machine and help families walk through it are going through their own version of the same split.

Translate that.

The agent who helps a family get inside the last wealth machine usually has no pension, no employer retirement match, and no guaranteed paycheck. And the companies those agents work under are being bought, merged, and financed with the same tools that reshaped American manufacturing a generation ago.

What two reporters saw in 1991

In October 1991, two Philadelphia Inquirer reporters, Donald Barlett and James Steele, published a nine-part series called America: What Went Wrong? It became a bestselling book the following spring.

Their question was simple. What happened to the American worker?

What they documented, over two years and more than 100,000 pages of records, was a set of rules and deals that moved wealth up and moved risk down. One of the mechanics they kept running into was the debt-financed takeover. In plain terms, it worked like this:

Borrow heavily to buy a company.
Put the debt on the company that was just bought.
Cut costs to make the debt payments.
Collect fees along the way.

The people who absorbed the cost were the workers. Not because they did anything wrong. Steele described them as solid middle-class people who lost jobs, benefits, or both because of decisions they had no part in.

I want to be careful here, the same way I have been careful through this whole series. This is not a story about one party, one president, or one villain. Barlett and Steele put plenty of blame on both sides of the aisle. I am not interested in assigning blame. I am interested in the mechanics, because the mechanics are back, and this time they are running inside the business I have spent 24 years in.

Same playbook, new industry

None of the deals below is a carbon copy of a 1980s buyout. The structures are different. Some are mostly stock. Some are partnerships. But the direction is the same: scale, bought with borrowed money, paid back out of the work of people who are not on the deal team.

January 9, 2026. The two largest residential brokerages in the country by deal volume completed their merger. It was an all-stock deal valued at about $1.6 billion, and the buyer took on the target’s debt. According to the buyer’s own quarterly filing, the combined company now carries about $2.1 billion in fixed-rate notes at a weighted average rate near 7 percent, with roughly $3.1 billion of debt coming due between 2029 and 2031.

August 24, 2026. A cloud-based brokerage completed its purchase of one of the best-known franchise brands in real estate for an enterprise value of about $880 million. To get it done, the buyer lined up a $550 million financing commitment arranged by a Wall Street bank and an affiliate of a private equity firm. The company said its first priority after closing would be paying that leverage down.

March 3, 2025. And I would not be honest with you if I left out my own house. Keller Williams, the company I have built my career inside, announced a strategic partnership with funds managed by Stone Point Capital, a private investment firm. Financial terms were not disclosed. The company was privately held and independent for more than four decades before that deal.

Then look at the brokerage that did not grow. One of the most famous conglomerates in America owns a brokerage division that lost $107 million in 2024. According to the parent company’s annual reports, its owned brokerages went from roughly 43,500 agents to roughly 38,000 over five years, and its franchise network went from roughly 53,500 to roughly 44,000. That is about 15,000 agents gone from one family of companies.

Translate that.

Debt has to be paid from somewhere. A brokerage does not manufacture anything. Nearly every dollar it earns starts as compensation on a transaction an agent closed. So when a brokerage carries debt, the agents are the ones producing the cash that services it. That is not an accusation against anyone. It is arithmetic.

Why the agent is the worker

Here is the part most consumers never think about.

According to NAR’s 2026 Member Profile, 86 percent of REALTORS are independent contractors. No salary. No employer pension. No employer retirement match. No paid leave. Every expense, from licensing to marketing to health insurance, comes out of their own pocket.

Go back to Part 1. In March 2026, only 9 percent of private industry workers participated in a defined benefit pension. Real estate agents are not even in that 9 percent. Most of the people helping families build the last wealth machine are trying to build their own with no machine behind them at all.

Now look at the work available to them.

In 2021, Americans bought 6.12 million existing homes, the most since 2006. In 2025 that number was 4.06 million, matching 2024 as the lowest annual total since 1995.

Transactions fell by about a third.

NAR membership peaked at about 1.6 million in October 2022. As of this spring it was about 1.4 million.

Membership fell by about one-eighth.

The work shrank roughly three times faster than the workforce. Four million sales create a little over eight million sides. Spread across 1.4 million members, that is fewer than six sides per member per year, and that is before counting licensed agents who do not belong to NAR at all.

And the sides are not spread evenly. They never are.

NAR’s 2026 Member Profile shows agents with two years or less in the business had a median of two transaction sides and $8,000 in gross income for 2025. Gross, before a single expense. Agents with 16 years or more had a median of 10 sides and $88,500.

In my own market center, my estimate is that roughly 8 percent of agents produce about 92 percent of the business. That is my number, from my office, not a national statistic. But every broker I talk to describes some version of the same shape.

That is a K.

The top arm has the database, the referrals, and the experience, and in a consolidating industry it gets courted with better terms. The bottom arm has a license, a monthly fee schedule, and a market with a third fewer transactions in it. Same industry. Same forces. Opposite directions.

Who is standing at the door

This is where it stops being an industry story and becomes a consumer story.

Remember the household from Part 2, the one trying to get inside the machine before another decade slips by. For that family, the entry date is the single most important financial decision they will make, and the person sitting next to them at the kitchen table is a real estate agent.

Very often, that agent is new.

First-time buyers do not usually come with a referral from a 20-year veteran. They find someone online, or a friend recommends someone who just got licensed. So the least experienced agents in the business frequently end up advising the buyers with the least room for error.

In California, the barrier to that seat is three college-level real estate courses and a state exam. That is the license. It is not the education.

I do not say that to insult new agents. I was one, and I have spent most of my career training them. I say it because a family’s entry into the last wealth machine deserves more than a license. It deserves someone who knows how to read an HOA reserve study, who understands what a contingency period actually protects, and who has a broker behind them reviewing the file. In my opinion, that is the real question underneath all of this consolidation. Not who owns the brokerage. Who trains the agent.

The counterweight

I would be selling you half a story if I stopped there. Here is the other half.

Scale is not automatically bad. Bigger companies can fund technology, compliance staff, legal support, and training that small brokerages cannot afford. Some of what the debt is buying may turn out to help agents and consumers. That is possible, and I will say so if it happens.

Agents are not factory workers. The worker Barlett and Steele wrote about in 1991 could not carry the plant across the street. An agent can carry the business. A license, a database, and a reputation move with the person, not the company. NAR’s own data puts the median agent’s tenure at their current firm at six years, which tells you most agents have already moved at least once.

My own company is not exempt. Keller Williams took private capital too. Agents in my office should ask me every question in the next section, and I should have good answers. If I would not accept a vague answer from another brokerage, I should not give one.

Nobody knows how these deals end. Some consolidations create stronger companies. Some collapse under their own debt. It is far too early to call any of them. I am describing the mechanics, not predicting the outcome.

All of that is true. None of it changes the central point. When the industry is financed with borrowed money and the work is shrinking, the agent is the one who carries the weight. And when the agent carries the weight, the family at the door feels it.

What to do with this

If you are an agent, start here. You did not get a job. You started a business.

This is the part almost nobody explains on the day the license arrives. The state hands you permission to practice. It does not hand you a business plan, a budget, a lead generation system, or anyone to call when the first deal falls apart. Most new agents spend their first year finding that out the expensive way.

Look at that $8,000 median again. That is not a talent problem. In my experience, it is a business planning problem. Most of those agents never sat down with anyone and built a plan: how many conversations a week, how many appointments those conversations produce, how many appointments it takes to get one signed client, what it costs to run the business for a year, and what has to be true for the numbers to work.

So when you choose where to hang your license, the most important question is not about the split. It is this one.

Who is going to help me build my business?

Then break it down and ask for names, not slogans:

Do I get a mentor? A real person who has closed hundreds of transactions and will sit next to me on my first few.
Do I get a coach? Someone who holds me accountable to my own plan every week, not just when I ask.
Does my broker actually support me? Can I reach the managing broker directly when a file goes sideways, or do I open a ticket and wait?
Is there a leadership team? Who runs training, who runs compliance, who reviews my files, and who checks in when my numbers slip?
Will someone help me write a real business plan? With my own numbers, my own goals, and a tracking system that shows me whether I am on pace.

If the answer to most of those is a website, a chat room, or a video library, you have your answer.

Here is the honest trade. Lower fees usually mean less service. That is not a criticism of any business model. It is how every business works. A company that charges you less has less to spend on the people who are supposed to help you. For an experienced agent with a mature database and a working plan, that trade can make sense. For an agent who has not built the business yet, the cheapest seat in the industry can become the most expensive one, because the cost shows up as transactions that never happen.

I will tell you how we approach it here, because I would rather you hold me to it than take my word for it.

At KW Metro we treat every agent as a business owner from day one. We run a structured, laid-out program for agents at every production level, in person and in virtual sessions. New agents start in our Launch program.

And right now we are running Breakthrough 120, a new program from Keller Williams. It is built around a clear target: helping an agent sign nine agreements in 120 days. It is not theory. It is action. Activating your database. Setting appointments. Hosting open houses. Showing up on social media. And building the daily habits that actually drive production. Any agent at any level can participate, whether you are in your first year or your fifteenth.

Every agent gets access to business planning built on the models in Gary Keller’s The Millionaire Real Estate Agent: an economic model, a lead generation model, a budget model, and an organizational model. We track activity in Command so the plan is something you measure, not something you file away. Our Wednesday meetings rotate through market statistics and risk management. And when a file goes sideways, you can call me directly.

That business focus shows up in the numbers. Through September 30, closed sales across San Diego County were up 0.6 percent year to date, and closed dollar volume was up 3.3 percent, according to SDAR. Over the same nine months, KW Metro’s closed units were up 18 percent and closed volume was up 15.6 percent. Listings sold were up 22.8 percent.

Translate that.

The county essentially held flat. Our office grew by double digits. In my opinion, that gap comes down to one thing. Our agents are running businesses, not waiting for the phone to ring. If you are thinking about where to build yours, we can sit down and consult with you on your business plan before you ever make a move.

Then build what moves with you. NAR’s data shows half of the typical REALTOR’s business comes from repeat clients and past-client referrals. That is your database. A brokerage can be bought and sold. Your relationships cannot.

And get inside the machine yourself. Every argument I made in Parts 1 and 2 applies to you. Your entry date matters too. Gross income is not wealth. Ownership is.

If you are buying or selling. Interview your agent like you would interview anyone handling the largest financial decision of your life. How long have you been licensed? How many transactions did you personally close in the last twelve months? Who is your broker, and does your broker actually review your file? Who do you call when something goes wrong in escrow? You are not being rude. You are protecting your entry date.

If you lead a brokerage or a team. Stop measuring success by headcount alone. In a shrinking transaction market, adding agents who are not trained only adds agents who will struggle and then leave. The brokerages that come out of this cycle strongest, in my opinion, will be the ones that treated training and supervision as the product, not the overhead.

Next Friday

Parts 1 and 2 described the machine and who got inside. Part 3 looked at the people standing at the door.

Part 4 closes the series on Friday, October 23, two weeks before the November election. It is the question this whole series has been building toward. Not who broke anything. What actually widens the door to homeownership, and what you can do about it in San Diego starting now.

If the agents at the door are carrying more weight than ever, the question worth sitting with this week is simple. Who trained the person who helped you buy your home, and would you know how to find out?

Follow the work

See my digital media feeds: instacard.co/robert-schantz/home

Agents considering KW Metro: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources

Donald L. Barlett and James B. Steele, “America: What Went Wrong?”, nine-part series, The Philadelphia Inquirer, beginning October 20, 1991; book edition, Andrews and McMeel, 1992
Investigative Reporters and Editors, “Join the legacy: Uncovering systemic injustice with investigative techniques,” April 8, 2025 (series background and scope)
Bill Moyers, America: What Went Wrong? (Part One), broadcast transcript, interview with James Steele
Compass, Inc., Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026, SEC filings (merger closing January 9, 2026; senior notes and debt maturities)
The Real Brokerage Inc., Form 6-K, April 27, 2026 (enterprise value of approximately $880 million; $550 million financing commitment); closing reported August 24, 2026
Keller Williams Realty, LLC and Stone Point Capital, “Keller Williams Announces Strategic Partnership to Accelerate Growth,” March 3, 2025
Berkshire Hathaway annual reports (HomeServices of America 2024 loss of $107 million; owned brokerage and franchise agent counts)
National Association of REALTORS®, 2026 Member Profile, 2025 activity (independent contractor share, transaction sides and gross income by experience, median tenure at current firm, repeat and referral business)
National Association of REALTORS®, Existing-Home Sales annual totals, 2021 (6.12 million) and 2025 (4.06 million)
NAR membership peak of approximately 1.6 million in October 2022 and approximately 1.4 million as of April 2026, as reported by NAR and covered by The Real Deal, June 2, 2026
U.S. Bureau of Labor Statistics, Employee Benefits in the United States, March 2026, released September 25, 2026
California Department of Real Estate, salesperson license education requirements
Gary Keller with Dave Jenks and Jay Papasan, The Millionaire Real Estate Agent (economic, lead generation, budget, and organizational models)
San Diego Association of REALTORS®, Monthly Indicators, September 2026 (year-to-date closed sales up 0.6 percent; closed dollar volume up 3.3 percent)
KW Metro San Diego internal production report, year to date through September 30, 2026, compared with the same period of 2025
The 92 percent / 8 percent production estimate is the author’s own estimate from his market center, not a published statistic

Who You Hire Matters. November 2 Is the Proof.

Robert Schantz — Thu, 15 Oct 2026 15:29:39 GMT

The appraisal is no longer the last thing that happens in a sale. Starting November 2, it becomes one of the first things a good listing agent prepares for.

That sounds backwards. For twenty years, the appraisal was something that happened to a listing. The buyer’s lender ordered it, the appraiser showed up, and everybody waited to find out whether the number came in. If there was a problem, it surfaced mid-escrow, with contingency clocks running and a buyer already nervous about rates.

That model just expired.

Two changes from Fannie Mae and Freddie Mac, landing within three months of each other, have moved the hard questions from the middle of the escrow to the front of the listing. One changes how condominium and HOA communities qualify for conventional financing. The other changes what an appraiser has to document about every home they walk into.

Neither one makes the news. Both will decide which escrows close this winter.

This is a bonus edition because it could not wait for the regular schedule. If you are selling a home in the next six months, this article tells you what to expect from the agent you hire. If you are a listing agent, this article tells you what your seller is going to need from you.

Change one: the condo review got harder on August 3.

On March 18, Fannie Mae issued Lender Letter LL-2026-03, and Freddie Mac released a matching bulletin the same day. Together they rewrote the project standards that decide whether a buyer can get a conventional loan in a condominium community.

The headline change took effect for loan applications dated on or after August 3, 2026. Fannie Mae retired the Limited Review. Freddie Mac retired its Streamlined Review. For any project with more than ten units, every conventional loan now goes through a Full Review.

Translate that.

Under the old rules, a lender could approve a loan in an established condo building with a light look at the association. Under the new rules, the lender evaluates the association’s budget, reserve funding, insurance, delinquency rates, pending litigation, special assessments, and inspection history. Every sale. Every refinance.

Two more pieces matter:

If the association relies on a reserve study, the budget now has to fund reserves at the highest recommended level in that study. That also took effect August 3.
For loan applications dated on or after January 4, 2027, the minimum budgeted allocation to replacement reserves rises from 10 percent to 15 percent of annual assessment income.

Read that second date again. A buyer who opens escrow on your listing in December may apply for the loan in January. The association your seller has lived in for fifteen years may qualify on the day you list and fail on the day the buyer applies.

I recently bought a condo in Mission Valley. This is not theory for me.

Change two: the appraisal report gets rebuilt on November 2.

The second change is bigger, and fewer people are talking about it.

Fannie Mae and Freddie Mac have replaced the entire library of appraisal forms with one redesigned Uniform Residential Appraisal Report, built on a new data standard called UAD 3.6. The 1004 for single-family homes, the 1073 for condos, the 2055 for exterior-only reports, all of them are retired. In their place is a single dynamic report that expands or contracts based on the property, the loan, and the scope of work.

Lenders have been allowed to use it since January 26. Starting November 2, 2026, it is mandatory. Freddie Mac has said that a legacy report submitted on or after that date will be rejected outright.

What matters for a seller is not the format. It is what the new report asks the appraiser to capture as specific, structured data instead of a sentence buried in an addendum:

Defects, damages, and deficiencies, reported as discrete items in their own sections, with photos of physical defects.
Disaster mitigation features, which is a new section of the report.
Energy efficient features and renewable energy, including whether solar is owned or leased.
Accessibility features, also a new section.
Listing history, the sales contract, and prior sales and transfer history, each with new reporting requirements.
Project information for condos and other community properties.

Translate that.

The appraiser is going to ask more questions, and the answers are going to be recorded in a format that underwriters and automated systems can read field by field. A vague answer used to disappear into a comment box. Now it shows up as a blank, or as a flag.

The people who can answer those questions fastest are the seller and the listing agent. The worst time to start looking for the answers is after the appraiser has already left.

Why this lands harder in this market.

This is my opinion, not a forecast.

We are in a choppy market. Mortgage rates are above 7 percent on Freddie Mac’s most recent weekly survey. The war with Iran is pushing fuel costs and uncertainty into every household budget. I have written over the last several weeks about buyers who lock up a house and then come back after inspections asking for $50,000 or $60,000 off.

In 2021, a deal that fell apart got replaced by the next offer in the stack. In this market, there often is no next offer. A buyer who walks because the condo association failed Full Review, or because the appraisal came back with conditions nobody anticipated, may not be replaced for weeks. The seller pays for that in carrying costs, in days on market, and in the price reduction that usually follows a fallen escrow.

So the question is not whether these rules are fair. The question is who catches the problem, and when.

The 14-day escrow is a gamble now.

As a broker, I review a lot of purchase contracts. Right now I am seeing too many 14-day and 21-day escrows.

I understand the instinct. A short escrow looks strong on an offer. It sounds like confidence. Agents want the deal to move fast before anything can go wrong.

Here is the problem. The new appraisal report asks more questions. The condo review asks for more documents. A management company questionnaire can take days to come back on its own. When a fast timeline meets a slower process, something gives, and what usually gives is the closing date.

Translate that.

A short escrow does not make the work go faster. It just leaves less room for the work. When the appraiser flags a condition or the lender needs another HOA document, the parties end up negotiating an extension. Every extension is another moment when a nervous buyer can rethink the deal, and another document someone has to draft, sign, and track.

My opinion: write the timeline the file can actually support, not the timeline that looks best on the offer. If you want a short escrow, earn it by having the packet ready before you list.

The conundrum in front of sellers right now.

Here is how a situation could play out.

A home is in escrow, and the deal is at risk of falling apart. The buyer comes back asking for more repairs, and some of those repairs are required to get the loan done. The seller does not want to give more. The listing agent calls the broker.

So the real question gets asked. This buyer has a rate locked in the sixes. If the seller cancels and goes back to market, the next buyer, unless they are paying cash, is going to qualify at today’s rates in the sevens. A higher rate means a higher payment, and a higher payment means that next buyer can afford less house.

Here is a simple illustration of the math.

A $700,000 loan at 6.50 percent: about $4,424 a month in principal and interest.
The same loan at 7.40 percent: about $4,847 a month.
The difference: about $422 a month, or more than $5,000 a year.

Translate that.

The buyer in escrow is not just a buyer. In this market, that buyer is carrying a rate the next buyer may not be able to get. Before a seller says no to a repair credit, the seller should weigh it against the cost of starting over: more days on market, more carrying costs, and a next buyer with less purchasing power.

Sometimes the right answer is still no. But it should be a decision made with the math in front of you, not a reaction. That is a conversation agents, buyers, and sellers are having in a lot of escrows right now, and it is exactly the conversation a good listing agent knows how to lead.

The counterweight: this is not a reason to panic.

I want to be honest about what these changes do not do.

Not every buyer is affected the same way. These are Fannie Mae and Freddie Mac rules. Cash buyers are outside them entirely. FHA, VA, and USDA are expected to adopt the new appraisal format on their own timelines after the November deadline, and FHA and VA run their own condo approval systems. Jumbo lenders set their own standards, although many follow the agencies closely.

Most detached homes in an HOA are not touched by the condo review. The Full Review applies to condominium projects and co-ops. A detached single-family home in a planned development with an HOA does not go through that project review the way a condo does. The new appraisal report still applies to that home, and the HOA still has to produce its documents under California law, but the reserve-percentage test is a condo issue.

Some of the changes actually loosened the rules. The same lender letter eliminated the 50 percent investor concentration limit for projects under Full Review. It expanded the waiver of project review to communities with ten or fewer units, up from four. Some small buildings are easier to finance today than they were in February.

Many appraisers are already using the new report. It has been in broad production since January. Good appraisers have trained on it. The mandate date is a deadline for the industry, not a cliff for your listing.

None of that changes the point. The rules now reward preparation and punish surprise. Preparation is a skill, and not every agent has it.

If you are selling: what to expect from the agent you hire.

Who you hire matters. It always has. These two changes make the difference easier to see.

When you interview a listing agent this fall, ask these six questions. A strong agent will answer them without looking anything up.

“If my home is in an HOA, what will you request from the association before we list?” The answer should include the budget, the reserve study, the master insurance declarations, and information about litigation, special assessments, and delinquencies. If you own a condo, it should also include the balcony and elevated element inspection report required under SB 326.
“How will you know whether my association can pass a lender’s Full Review?” You want to hear that they will look at the reserve funding percentage and the reserve study before a buyer’s lender does.
“What does the new appraisal report ask about, and what will you need from me?” An agent who has never heard of the November 2 change is telling you something.
“How will you document the improvements I have made?” Permits, receipts, solar contracts, and fire hardening work all belong in a file before the appraiser arrives.
“What happens if the appraisal raises a condition?” You want a plan, not a shrug.
“What escrow length will you recommend, and why?” Fast is not the goal. Closed is the goal.

You are not hiring someone to put your home on the internet. You are hiring someone to get it closed.

If you are a listing agent: build the packet before the sign goes up.

This is where the work moves. What used to be gathered mid-escrow now gets gathered at the listing appointment.

The C.A.R. forms available through zipForm are excellent, and so is the San Diego Association of REALTORS® risk management form. Agents should be using both. But after reviewing these new requirements, I found items that neither one asks a seller for. So in my office, I developed a supplementary seller form. It does not replace the standard forms. It fills the gaps, so the listing agent gets the information up front and is prepared during escrow instead of scrambling in the middle of it.

Whether your brokerage has a form like that or not, here is the packet I would expect every listing agent in this office to assemble.

For any home in an HOA:

The current operating budget, with the replacement reserve allocation as a percentage of assessment income. Know whether it clears 10 percent today and 15 percent after January 4.
The most recent reserve study, and whether the association is funding at the highest recommended level in that study.
The master insurance declarations page.
A completed lender questionnaire from the management company, or at minimum a confirmed turnaround time and fee for one.
Any pending litigation, special assessments, and the current delinquency picture.
For condos, the SB 326 balcony and elevated element inspection report.
Everything California already requires the seller to deliver under Civil Code §4525, gathered now instead of on day three of escrow.

For the property itself:

Permits and finals for additions, remodels, and any ADU.
Solar documents, and a clear answer to one question: owned, leased, or a power purchase agreement.
Documentation of disaster mitigation work. In the City of San Diego, that includes any Zone 0 defensible space work, ember-resistant vents, and roof information. The new report has a section for this. Give the appraiser something to put in it.
Receipts and dates for major systems and repairs.
A seller disclosure package that matches what the appraiser will see and photograph. If the disclosures say nothing about a defect the appraiser documents with a photo, that is a problem for everyone.

For the transaction:

Clean, accurate MLS listing history. The new report has stronger requirements for reporting listing history, so price changes and relists will be visible.
Concessions written clearly into the contract. The sales contract is reported in more detail, and vague credits create questions.
Meet the appraiser at the property with the packet in hand. Provide information. Never pressure. There is a bright line between giving an appraiser facts and trying to influence a value, and every agent in this office knows which side of it to stand on.

Call the buyer’s lender early. On a condo, ask in the first week whether the project will need a Full Review and whether anything in the association’s file concerns them. A problem found on day five is a conversation. A problem found on day twenty-five is a cancellation.

This is a textbook example of why agents must stop thinking about the listing as a marketing event and start thinking about it as an underwriting event. The marketing gets the offer. The file gets the closing.

The long game has not changed.

I have said it many times, and I will keep saying it. Real estate is a long game. Rates will move. The headlines will change. San Diego is still a supply-constrained market where well-prepared homes still sell.

What changed this year is where the work happens. The agents who learn the new rules will look like magicians this winter, closing files that other agents could not. The agents who do not learn them will blame the market.

So here is the question I would leave every seller and every agent with this week. If the appraiser asked you ten detailed questions about this home tomorrow morning, how many could you answer with a document instead of a guess?

Coming Friday: Part 3 of The Last Wealth Machine.

This Friday, October 16, the series continues with Part 3.

Parts 1 and 2 made the case that the primary residence has quietly become the main wealth-building tool for American households, and that the dividing line between those who build that wealth and those who do not was never really about income. Part 3 turns to the people standing at the door of that machine: real estate agents.

If today’s article is about why who you hire matters, Friday is about who the industry is actually putting in front of buyers and sellers, and what it should take to earn that seat.

If you are not subscribed yet, now is the time. It lands in your inbox Friday morning.

See my digital media feeds at instacard.co/robert-schantz/home

Thinking about where you hang your license? kwsandiego.kw.com/join-our-team

Buying or selling in San Diego? robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Sources: Fannie Mae Lender Letter LL-2026-03 (March 18, 2026) · Freddie Mac UAD and Forms Redesign FAQ and UAD Inspection and Reporting Tips · Freddie Mac Primary Mortgage Market Survey

The Iran War Will Not Decide What Your San Diego Home Is Worth in 2036

Robert Schantz — Tue, 13 Oct 2026 12:04:27 GMT

The headlines are going to get worse before they get better. I am still not changing how I think about San Diego real estate.

Let me be clear before I go one sentence further. What follows is my opinion. It is not a forecast, it is not financial advice, and it is not a promise about what any one home will do. It is how a broker who has watched this county through 2008, through COVID, and through two rate shocks is reading the room right now.

And right now, the room feels different.

Gradually, Then Suddenly

This past week True Food Kitchen closed its UTC location. The company filed for Chapter 11 on October 5 after closing 12 restaurants nationwide, with Westfield UTC on the list alongside Century City and El Segundo. The filing lists roughly $42.1 million in debt.

To be fair, True Food has its own story. Its restructuring officer pointed to pandemic-era ghost kitchens, management turnover, and locations with weaker traffic than expected. One chain does not make a recession.

But it is not one chain. San Diego has watched Breakfast Republic close its original North Park location, along with a long list of neighborhood restaurants across North Park, Hillcrest, Little Italy and the East Village. The San Diego chapter of the California Restaurant Association has said 72 percent of county restaurants reported lower customer traffic compared to prior years.

Then there is the war.

The Iran war began on February 28. Eight months later the Strait of Hormuz is still contested, tankers are still being hit, and diesel is sitting at levels this country has never seen. The EIA’s national average for on-highway diesel was $6.38 a gallon the week of September 28, down slightly from a record $6.53 the week before. In January it was $3.46. California diesel was $8.18.

Translate that. Diesel moves almost everything you buy. The produce at your grocery store. The lumber at the job site. The package on your porch. Every one of those costs rode a truck, and the truck just got far more expensive to run.

I do not think we have felt that yet. Not fully. Freight contracts reset on a lag. Retailers absorb what they can before they pass it on. That is the part that worries me.

In 2007 and 2008 it happened the way Hemingway described going broke: gradually, then suddenly. For a long time it felt like a slow leak. Then banks were closing on a Friday afternoon.

I am not saying we are there. I am saying I recognize the gradual part.

What I Am Seeing Inside My Own Office

Here is the field report, and it is the part no data release can give you.

Our listings are taking longer than our sellers expect. We are still selling. Homes are still closing. But the conversation at the listing appointment has changed, and the conversation two weeks later has changed even more.

Rates explain most of it. Freddie Mac reported the 30-year fixed at 7.28 percent on October 1. A year earlier it was 6.34 percent. On September 24 it crossed 7 percent for the first time since January 2025. The Federal Reserve raised its benchmark rate on September 16, its first increase since July 2023.

And the Fed may not be finished. The target range now sits at 3.75 to 4 percent. Headline inflation ran 3.4 percent in August, and the Fed’s own September projection puts 2026 inflation at 3.7 percent, with an energy shock still feeding through the system. If inflation stays high, another quarter point before the end of the year is a real possibility. The September inflation report comes out October 14.

Here is where I want to be honest with you. That is all conjecture. Mine, the economists’, and the markets’. A Fed hike does not move mortgage rates one for one, and a ceasefire in the Gulf could change the whole picture in a week. Nobody knows what happens next. Anyone who tells you they do is selling something.

The Unit Count Is the Real Story

Everyone watches price. I watch units, because units are how agents, offices, lenders, escrow officers and title reps get paid.

From the SDAR Monthly Indicators report for September 2026:

· Closed sales · 1,737 · down 14.0 percent from a year ago · Pending sales · 1,700 · down 15.9 percent · Median sales price · $910,000 · up 1.7 percent · Inventory · 5,684 · down 4.8 percent · Housing Affordability Index · 46, down from 49

August was worse. Closed sales fell 17.1 percent year over year.

Here is what makes that turn notable. Through August, year to date closed sales were actually up 1.7 percent over 2025. San Diego was having a decent year. Then rates moved, and two months in a row closings dropped by double digits.

Pending sales are the windshield. Closed sales are the rearview mirror. A 15.9 percent drop in pendings tells you what October and November closings are going to look like.

And this sits on top of a market that was already smaller. Here is the same window, January 1 through August 10, for every year since 2021, from the SDMLS figures our office pulls each month:

· 2021 · 21,614 closings
· 2022 · 17,016 · down 21.3 percent from 2021
· 2023 · 12,255 · down 43.3 percent from 2021
· 2024 · 12,485 · down 42.2 percent from 2021
· 2025 · 11,638 · down 46.2 percent from 2021
· 2026 · 11,810 · down 45.4 percent from 2021

Look at the shape of that. Two years of falling, then four years flat.

Our best year since rates moved was 2024, at 12,485 closings. That is barely more than half of 2021. It is still more than 4,500 closings short of 2022, a year that already felt slow at the time.

When I look at the long-range chart our operating principal produces every month, the picture is even clearer. The ceiling of the market we work in now sits below the floor of the good years. This is not a dip we are waiting to climb out of. It is a new range.

Prices went up. Transactions nearly halved.

Translate that. This county has more licensed agents chasing fewer transactions than at any point in my leadership career. The next three to six months are going to be hard on offices and agents who built their business on volume that no longer exists.

The Story of One Million Dollar House

Numbers on a report do not sell homes. Payments do. So let me walk you through one house.

A year ago, a buyer looked at a $1,000,000 home in San Diego County. Twenty percent down, $800,000 loan, 30-year fixed at 6.34 percent, the Freddie Mac average at the time. Principal and interest came to about $4,973 a month.

Now fast forward to today. The rolling 12-month median price in San Diego County, from the SDAR Housing Supply Overview, is up 1.1 percent. So that same seller, reading the headlines, expects about $1,011,000.

Same house. Same 20 percent down. Today’s rate of 7.28 percent. Principal and interest is now about $5,534 a month.

That is $561 more every month. More than $6,700 a year. For the same kitchen, the same roof, the same commute.

Translate that. The buyer did not get poorer. The house did not get better. The payment simply moved out from under both of them.

Now flip the question around. What would that house have to sell for today to give the buyer the same $4,973 payment they would have had last year?

The answer is about $908,500.

That is roughly $102,500 below what the seller expects. About 10 percent.

And if the Fed does move another quarter point and mortgage rates follow it up to roughly 7.53 percent, that break-even price drops to about $886,000.

These figures are principal and interest only, before property tax, insurance and HOA dues, which only widen the gap.

And insurance is the line item nobody budgeted for. The California FAIR Plan, the insurer of last resort for a growing number of homeowners who cannot find coverage anywhere else, raises its overall dwelling rate 29.1 percent on October 15, approved by the California Department of Insurance. Individual policies will vary, and some will go up more. Outside the FAIR Plan, Insurify estimates California homeowners premiums already rose about 16 percent from 2023 to 2025, and projects another 16 percent this year.

Translate that. For some owners, homeowners insurance costs roughly 30 percent more than it did a year ago. Stack that on top of a payment that already went up $561 a month, and the buyer who barely qualified last year does not qualify this year. That buyer did not lose interest in your house. They lost the math.

The tug of war

Now you understand the conversation happening in every living room in this county.

The seller is anchored to a number. Their neighbor sold for it in the spring. The headline says prices are up. They are not wrong about any of that.

The buyer is anchored to a payment. Their lender approved them for one, and that number did not change when rates did. They are not wrong either.

Both sides are right. That is exactly why it is hard.

I want to be specific about which house I am talking about. I am not talking about the house that everybody wants. The turnkey home on the best street, priced right, staged beautifully. That house still gets multiple offers. Rates do not stop it.

I am talking about the other house. The one with the original kitchen. The roof with a few years left. The one that photographs fine and shows worse. The one sitting on day 45 while the seller wonders what happened.

That is the house where the agent earns their compensation.

And I want to be specific about what that means, because sellers do not always see it.

That house is a harder sale. It takes longer to sell, which means more weeks of showings, open houses, follow-up calls, and feedback that the seller does not want to hear. It takes more marketing and more advertising, and the listing agent pays for most of that up front, out of their own pocket, before there is any guarantee of a closing. It takes a harder negotiation, with buyers who have more choices than they did a year ago and inspection reports they intend to use.

The house everybody wants nearly sells itself. This one has to be sold. That is the difference, and that is the work.

The conversation an agent has to have

A good agent does not walk into that listing appointment and tell the seller their home is worth less. That is not true, and it is not respectful.

A good agent walks in and shows the seller the buyer’s math.

It sounds something like this:

“Your home did not lose value. Your buyer lost purchasing power. A year ago, the buyer who could afford your home at a million dollars had a payment of about $4,973. Today that same buyer, at the same price, is looking at about $5,534. Most of them cannot stretch $561 a month. So they are not saying no to your house. They are saying no to the payment. Our job is to find the price where enough buyers can say yes.”

Then you talk about condition, because condition is what separates this house from the one everybody wants. Every repair a buyer sees is a repair they will price in, on top of a payment that already hurts.

Then you talk about tools other than price. A seller credit toward a rate buydown can sometimes do more for the buyer’s payment than the same dollars off the price. Repairs before listing. Pricing slightly under a search threshold so the right buyers actually see it.

None of this is new, by the way. Gary Keller has told the story of starting Keller Williams in the early 1980s, when mortgage rates had been running in the high teens, close to 18 percent. At those rates buyers simply could not carry a payment. So sellers bought points. They gave up a piece of their sale price to buy the buyer’s interest rate down, because that was what it took to get a home sold.

Translate that. Sellers have been paying to bridge the gap between price and payment for more than forty years. Today the tool is a seller credit toward a rate buydown. The idea is exactly the same.

And then you have the hard part of the conversation. The longer it sits, the more the market tells buyers something is wrong with it. The first price adjustment is almost always cheaper than the third.

Nobody has to give away the house. But somebody has to meet the market. Unless it is the house everybody wants, it will be a negotiation from both sides to find a price that works. That is not a crisis. That is a normal market doing what normal markets do. We just have not seen one in a while.

The Lender-Mediated Report: A Tick, Not a Wave

I track the SDAR Lender-Mediated Properties report every month, because distressed inventory is where trouble shows up first. Here is September, as first published:

· Lender-mediated inventory · 412 · up 28.3 percent from a year ago · 7.2 percent of all active listings · Lender-mediated condo inventory · 238 · up 71.2 percent · Lender-mediated closings · 74 · 4.3 percent of all closings · Lender-mediated condos sat 61 days, against 43 for traditional condo sales

Now the honest part. Lender-mediated closings were 4.5 percent of the market in June, 3.9 percent in July, 4.1 percent in August and 4.3 percent in September. That is not a surge. That is a tick.

The inventory is the number to watch. Distressed listings are building faster than they are selling, and they are building almost entirely in condos. That matches what the broader data says: San Diego does not have one market right now. It has two.

The K Is Showing Up in the Data

The K-shaped economy is not a theory in San Diego. You can see it in SDAR’s own September numbers.

· Detached median · $1,079,000 · up 5.8 percent · 2.4 months of supply · Attached median · $670,000 · down 0.2 percent · 4.0 months of supply

The top of the K is still buying. Cash buyers and well-qualified move-up buyers are paying more for scarce detached homes. The bottom of the K is where the condo inventory is piling up and the distressed listings are concentrating.

The middle is the part that has hollowed out. It is the household that earns too much to qualify for help and too little to absorb a $561 monthly payment increase on the same house.

Consumer debt tells the same story nationally. The New York Fed reported total household debt of $18.8 trillion in the second quarter, with credit card balances at $1.263 trillion, up $54 billion from a year earlier. The rate at which mortgages moved into serious delinquency rose to 1.52 percent from 1.29 percent a year before. That is still low by historical standards. It is moving in the wrong direction.

Look Up the Road at Los Angeles

Los Angeles has its own problems, and some of them have nothing to do with Iran.

I wrote this summer about what is happening to Hollywood. The short version: the industry that built the Los Angeles middle class is going through the most rapid change in its history. FilmLA counted 37,709 on-location shoot days across greater Los Angeles in 2021. In 2025 it counted 19,694. Television production alone fell 58 percent between 2021 and 2024. The second quarter of 2026 was down another 12.7 percent from a year earlier. California more than doubled its film and television tax credit, and the numbers still have not turned.

Translate that. Those shoot days were paychecks. Grips, editors, caterers, set builders, working actors, the people who rent the equipment and drive the trucks. That is the middle of the K in Los Angeles, and it is the buyer pool for a huge share of that county’s homes.

You can see it in the asking prices. Realtor.com’s September 2026 report shows the Los Angeles metro median list price at $1,034,500, down 5.9 percent from a year ago, with 17.1 percent of listings carrying a price cut, up 1.9 points.

In my opinion, Hollywood and real estate are living through the same thing. An industry built on one business model, watching that model change faster than the people inside it can adapt. The ones who adapt will be fine. The ones waiting for 2021 to come back will be waiting a long time.

And before San Diego gets smug about it, our own asking prices in that same report fell 6.3 percent, with a 20.4 percent price-cut share. Asking prices are what sellers hope for. Closed prices are what buyers pay. SDAR still shows closed prices up. The gap between the two is the tug of war I described above, and it is where the next six months get negotiated.

If you missed the Hollywood piece, it is here: Hollywood Did Not Kill the Sitcom. It Dismantled the Factory That Made Them.

Now the Contrarian Part

Everything above is real. None of it changes my view of San Diego real estate over ten years.

2008 was a credit collapse. Homes were bought with no documentation, no money down, and loans built to explode. When they exploded, owners had no equity to stand on, so they walked.

Today, in my opinion, the equity is still there. Most San Diego owners bought or refinanced at rates and prices that leave them with a cushion. Owners with equity and a fixed payment do not have to sell into a bad market. They wait. That is a very different floor than 2008.

Look at what happened after the last crash. Prices did not snap back. They climbed slowly, starting around 2010, and for a few years it barely felt like a recovery.

Then look at where they went. The S&P Cotality Case-Shiller index for San Diego stood at 203.14 in December 2014. In July 2026 it stood at 449.75. San Diego home values have more than doubled since 2014. That includes a pandemic, a 7 percent rate cycle, and every scary headline in between.

Translate that. Nobody who bought in San Diego in 2011 or 2012 was buying because the news was good. The news was terrible. They were buying because they understood the long game.

I am not telling you the bottom is near or that it is coming. Market timing is a guess dressed up as a strategy. The bottom only shows up in hindsight. What I am telling you is that a war in the Persian Gulf, as serious as it is, is a short-term shock to a long-term asset in one of the most supply-constrained coastal counties in America.

Whether you buy now, wait for rates to drop, wait for rates to rise, or wait for a crash that may or may not come, the decision that matters most is how long you plan to hold. Ten years forgives a lot. Ten months forgives almost nothing.

What I Would Do Right Now

If you are buying: Buy a payment you can carry if rates never come down, and a home you would keep for ten years. If a lower rate shows up later, refinance. If it does not, you are still fine. And look hard at the condo side of the market. That is where the inventory and the negotiating room are, as long as you read the HOA reserve study before you write the offer.

If you are selling: Price for the market that exists this month, not the one your neighbor sold into last spring. The listings that sit are the listings priced for a buyer who no longer qualifies.

If you are an agent: The next six months will separate agents who track their numbers from agents who hope. Know your database. Call it. The volume is not coming back to rescue anyone who is not already working.

If you own and are not selling: Do nothing dramatic. Your equity is not on the evening news. Your fixed payment does not care what diesel costs.

The Long Game

I have been doing this for 24 years. I have never once seen a headline cycle decide the long-term value of a home in this county. I have seen plenty of headline cycles decide when people panicked.

The next three to six months could be choppy for buyers, for sellers, and for the offices and agents who serve them. I believe that. I also believe that in 2036, someone will look back at a San Diego home bought in late 2026 and wish they had bought two.

Both of those things can be true. That is what a long game means.

This Is Not Meant to Scare You

I want to say this plainly. I did not write this to scare anybody.

I wrote it to put on paper what I see, what I know, what I feel, and what I have lived through before. I was in this business in 2008. I watched good agents leave and good families lose homes. I also watched the people who stayed steady come out the other side stronger than they went in.

We will all get through this. We always have. Every market I have worked in has recovered. Not on anyone’s schedule, and not in a straight line, but it has recovered.

What changes is how you have to look at your business. You need a different lens. The agent who worked 2021 and the agent who will thrive in 2027 are not doing the same job. The buyer who waits and the buyer who buys are not making the same bet. Every one of those choices is personal, and every one of them is yours to make. My job is to give you the clearest picture I can, not to make the decision for you.

So do not be afraid of what is happening.

Someone told me once, years ago, when you are going through hell, keep going. I have never forgotten it.

You have probably also heard that the Chinese word for crisis is made of the characters for danger and opportunity. The language scholars will tell you that is a bit of a stretch. The second character is closer to a turning point, a moment when things can go either way.

I actually like that version better. A turning point does not promise anything. It just means what you do next matters more than usual.

So I will leave you with the questions I am asking myself this week.

If the market gets harder, what is your plan for the next six months, and does it still work if rates do not come down?

And if you were looking at this market ten years from now, what would you wish you had done today?

That is my opinion. I could be wrong. I have been wrong before. I have just never been wrong betting on San Diego over ten years.

See all my digital media feeds in one place: instacard.co/robert-schantz/home

Agents who want a brokerage built for markets like this one: kwsandiego.kw.com/join-our-team

Buyer and seller resources: robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Sources: SDAR Monthly Indicators, Housing Supply Overview and Lender-Mediated Properties reports, September 2026 · Federal Reserve September 2026 Summary of Economic Projections · FilmLA production reports · SDMLS closed units, pulled August 10, 2026 · California Department of Insurance approval of the California FAIR Plan dwelling rate filing, effective October 15, 2026 · Insurify 2026 California Home Insurance Report · Freddie Mac Primary Mortgage Market Survey, October 1, 2026 · U.S. Energy Information Administration weekly fuel prices, week of September 28, 2026 · Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, Q2 2026 · Realtor.com September 2026 Monthly Housing Trends Report · S&P Cotality Case-Shiller Indices, July 2026 release · True Food Kitchen Chapter 11 announcement, October 5, 2026

The Dividing Line Was Never Income

Robert Schantz — Fri, 09 Oct 2026 12:04:14 GMT

The biggest predictor of household wealth in San Diego is not what you earn.

It is the year you bought.

Last Friday I made the case that the house is the last wealth machine most households can still get inside. Pensions are mostly gone. The 401(k) handed the risk to the worker. The primary residence is the one asset left that forces the saving, uses leverage most people cannot get anywhere else, and shelters the gain.

This week is the uncomfortable follow-up. If the house is the machine, then the question that decides a family’s financial life is not how hard they work. It is when they got in.

Translate that.

Two households can do the same job, earn the same inflation-adjusted pay, live on the same street, and end up thirty years apart in wealth. The difference is not effort. It is timing.

Two households, same street, thirty years apart

Here is an illustration. The households are hypothetical. The index is not.

The Federal Housing Finance Agency publishes a house price index for San Diego County going back to 1975. Between 1995 and 2025, that index rose by a factor of about 5.3.

So picture a household that bought a $200,000 home in San Diego County in 1995. Using that index, the same home would be worth roughly $1,056,000 by 2025. That is right around where SDAR put the county’s median detached sale price this August, $1,120,000.

Now picture the household buying the house next door this fall.

Same floor plan. Same school. Same commute. One family has about $850,000 of appreciation working for them. The other is writing a down payment check and starting at zero.

Neither family did anything wrong. One of them simply walked through the door three decades earlier.

Four tailwinds that flow to the people already inside

None of the rules below were written to divide anyone. Each of them rewards being inside the machine, and the longer you have been inside, the more they pay.

1. Appreciation compounds on the house, not on the paycheck. A raise is taxed and spent. Appreciation on a primary residence compounds quietly on the full value of the home, not just the owner’s down payment. A household that has been compounding since 1995 is not ahead by a little. It is ahead by a multiple.

2. Proposition 13 freezes the tax base at the purchase price. Under the California Constitution, a home is assessed at its purchase price, and the assessed value can rise by no more than 2 percent a year until the property sells. A $200,000 assessment from 1995 can have grown to no more than about $370,000 by 2026, and in years when inflation ran below 2 percent it grew less. At a typical San Diego effective rate of roughly 1.15 percent, that owner pays at most about $4,250 a year in property tax. The buyer next door, paying $1,120,000, starts near $12,900. Same street, same services, roughly three times the bill.

3. The rate window that closed. For the week ending January 7, 2021, Freddie Mac’s 30-year fixed hit 2.65 percent, the lowest reading in the survey’s history going back to 1971. Owners who bought or refinanced in that window locked it in for thirty years. According to the Federal Housing Finance Agency’s National Mortgage Database, roughly half of all outstanding mortgages still carry a rate of 4 percent or less. On October 1, Freddie Mac put the 30-year fixed at 7.28 percent, the highest since October 2023. On a $600,000 loan, that is the difference between about $2,418 a month and about $4,105. Roughly $20,000 a year for the same loan amount.

4. The tax code rewards the gain. Under Section 121, a married couple can exclude up to $500,000 of gain on the sale of a primary residence, $250,000 for a single filer. The mortgage interest deduction applies to interest on up to $750,000 of acquisition debt. Both are worth the most to people who already own, and to people who have owned the longest.

Put the four together and you get a pattern NAR’s own research shows clearly. In its 2025 Profile of Home Buyers and Sellers, first-time buyers fell to 21 percent of the market, a record low, and their median age rose to 40, a record high. Repeat buyers had a median age of 62. And the typical seller had stayed in their home 11 years, also a record.

The people inside are staying inside. The people outside are arriving later than any generation before them.

This is not a story about villains

I want to be very clear about this part, because it is where the conversation usually goes wrong.

The 1995 buyer is not the problem.

That household bought into a falling market. The same FHFA index dropped about 10 percent between 1990 and 1995. Mortgage rates that year were close to 8 percent. Plenty of people in San Diego looked at those prices and those rates and decided to wait. The ones who bought took a real risk, made a real payment for a long time, and are now collecting on it. That is not a scandal. That is the machine doing exactly what it is supposed to do.

My opinion, and it is only my opinion, is that the anger many younger households feel about housing is aimed at the wrong target when it lands on the people who already own. A retiree who bought in 1995 did not cause the shortage. The shortage is the product of decades of decisions about what gets built, where, how fast, and at what cost. That is where the frustration belongs, and that is where it can actually change something. Pushing elected leaders at every level to approve and build more housing does more for the next generation of buyers than resenting the last one.

The goal is not to pull the insiders down. It is to get more people inside.

The counterweight: entry date is not destiny

If timing were everything, every early buyer would have won. They did not.

Some early buyers bought at the wrong moment. Using the same FHFA index, a household that bought in San Diego County in 2006 watched the index fall about 35 percent by 2011. It did not get back above its 2006 level until 2018. Twelve years underwater on paper, while still making the payment every month. Anyone who lived through that does not need a lecture on how the machine runs in reverse.

The people inside are stuck too. The same rules that reward staying also punish moving. An owner with a 2.65 percent mortgage, a 1995 tax base, and a gain larger than the Section 121 exclusion has three good financial reasons never to sell. That is part of why tenure hit a record 11 years. It is also part of why so little inventory comes to market, which pushes prices higher for the people still trying to get in. The lock-in is real on both sides of the line.

California did loosen one of those locks. Under Proposition 19, operative April 1, 2021, homeowners 55 and older, physically and permanently disabled homeowners, and wildfire or disaster victims can transfer their tax base to a replacement home anywhere in California, up to three times, subject to value limits. The same measure also narrowed the parent-to-child exclusion, effective February 16, 2021. It now generally applies only to a family home that the child moves into as a primary residence, and only on the first $1 million of added value, adjusted annually. Those rules matter for older owners deciding whether to move, and for families deciding what happens to the house next.

And for landlords, the long hold has its own bill. An owner who has held a rental for decades often has a low basis and years of depreciation behind it. Selling outright can mean capital gains plus depreciation recapture. Section 121 does not cover a rental the way it covers a primary residence. There are tools for that situation, including a Section 1031 exchange, but the right move depends on facts only a CPA and a qualified exchange professional can evaluate. Get that advice before you list, not after.

What to do with this

If you are inside. You are the beneficiary, so know your numbers. Know your cost basis and keep every capital improvement receipt. Know your current assessed value and how far it sits below market. If you are 55 or older and thinking about moving, ask your tax professional how Proposition 19 applies to you before you rule a move out. And if you plan to leave the house to your children, have the estate planning conversation now, because the parent-to-child rules changed in 2021 and many families still do not know it.

If you are inside and your kids are not. The most powerful thing a household on the inside can do for the next generation is help them get in earlier. That can mean help with a down payment, co-ownership, or simply sitting down together with a lender and a financial professional to look at the numbers. NAR’s own estimate is that being delayed from homeownership from age 30 to age 40 can cost roughly $150,000 in equity on a typical starter home. A decade inside the machine is worth more than almost any gift you can write a check for.

If you are outside. Entry date is the one variable in this entire article you can actually control. You cannot control rates, Proposition 13, or the tax code. You can control how long you wait. A first purchase does not have to be the forever house. It has to be the way in. That is why I wrote The Condo Market Is Not Booming. That Is the Opening. The door for a lot of San Diego buyers right now is an attached home, bought carefully.

If you are an agent. Stop treating the first-time buyer as a small deal. You are helping someone choose their entry date. For many of them, it will be the most important financial decision of their life, and they will not know that for twenty years.

Next Friday

Parts 1 and 2 have been about the machine and who got inside it.

Part 3 turns to my own industry. Most people never think about the agents who open the door to homeownership, but a lot of them are working through their own version of this split right now. That is where we go next.

If the split comes down to when you got in, the question for the rest of this series is how we get more people in sooner.

Follow the work

See my digital media feeds: instacard.co/robert-schantz/home

Agents considering KW Metro: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources

Federal Housing Finance Agency, All-Transactions House Price Index for San Diego County, CA (annual, 2000 = 100), via Federal Reserve Bank of St. Louis FRED, series ATNHPIUS06073A (1990: 78.59; 1995: 70.69; 2006: 221.58; 2011: 144.71; 2018: 228.68; 2025: 373.45)
San Diego Association of REALTORS®, Monthly Indicators, August 2026 (detached median $1,120,000)
California Constitution, Article XIII A (Proposition 13), assessment at acquisition value with annual increases capped at 2 percent
California State Board of Equalization, Proposition 19 (base year value transfers operative April 1, 2021; parent-child exclusion changes effective February 16, 2021)
San Diego County Assessor/Recorder/County Clerk, Parent to Child Exclusion (Proposition 19)
Freddie Mac Primary Mortgage Market Survey, January 7, 2021 (2.65 percent, survey record low) and October 1, 2026 (7.28 percent)
Federal Housing Finance Agency, National Mortgage Database, outstanding mortgages by rate, Q4 2025
National Association of REALTORS®, 2025 Profile of Home Buyers and Sellers, released November 4, 2025
Internal Revenue Code §121 (exclusion of gain on sale of principal residence) and §163(h) (qualified residence interest)
Internal Revenue Code §1031 (like-kind exchanges)
Illustrations: $200,000 1995 purchase scaled by the FHFA county index; Proposition 13 maximum assessment computed at 2 percent per year for 31 years; property tax at an illustrative 1.15 percent effective rate; payments computed on a $600,000, 30-year fixed loan, principal and interest only

San Diego Real Estate Housing Market Report: September 2026

Robert Schantz — Wed, 07 Oct 2026 12:03:53 GMT

San Diego does not have one housing market anymore. It has two, and they are moving in opposite directions.

Detached homes are getting scarcer and more expensive. Attached homes, the condos and townhomes, are piling up, sitting longer, and showing up in the distressed pipeline at a rate that has climbed every month since summer.

The county headline hides all of it. The overall median rose 1.7 percent to $910,000. Inventory fell 4.8 percent. Months supply sits at 3.0. Read that and you would call this a calm, balanced market.

It is not calm. It is split. And for a first-time buyer willing to do the homework, the split is the opening.

The September Headline Numbers

From the SDAR Monthly Indicators report for September 2026, current as of October 5:

Closed sales: 1,737, down 14.0 percent from a year ago
Pending sales: 1,700, down 15.9 percent
New listings: 3,004, up 2.0 percent
Median sales price: $910,000, up 1.7 percent
Inventory: 5,684, down 4.8 percent
Months supply: 3.0, down from 3.1
Days on market: 39, down from 41
Percent of original list price received: 97.5 percent
Housing Affordability Index: 46, down from 49

The rolling 12-month median from the Housing Supply Overview is $910,000, up 1.1 percent. That is the honest appreciation figure for the county.

Translate that. Prices held. Volume did not. A 15.9 percent drop in pending sales is the number that tells you what October and November closings will look like.

The rate environment explains a lot of it. SDAR reports that the Federal Reserve raised its benchmark rate by a quarter point on September 16 to a range of 3.75 to 4 percent, its first increase since July 2023, and the 30-year fixed rate moved above 7 percent in late September, up from an August average of 6.67 percent, according to Freddie Mac. Buyers who were waiting for rates to come down just watched them go the other way.

The Gap Between Attached and Detached

Here is the split, side by side, September 2026 versus September 2025.

Metric Detached Attached Median sales price $1,079,000 (up 5.8%) $670,000 (down 0.2%) Inventory 2,950 (down 12.9%) 2,734 (up 5.8%) Months supply 2.4 (down 14.3%) 4.0 (up 5.3%) Days on market 37 (down 9.8%) 44 (up 4.8%) Pct. of original list price 97.7% 97.2% Pending sales 1,082 (down 16.8%) 618 (down 14.4%) Affordability Index 38 62

Four things stand out.

The price gap widened. A year ago the median detached home cost $348,500 more than the median attached home. This September the gap is $409,000. Over the past twelve months it peaked in July at $482,591. The attached median has been stuck between $629,000 and $679,500 all year while the detached median has run from $1,000,000 to $1,141,591.

The supply gap is the widest it has been all year. Detached months supply is 2.4. Attached is 4.0. That 1.6-month spread has held for three straight months, July, August, and September. Last October the spread was 1.0 month.

Attached inventory has nearly caught detached inventory. There are 2,734 condos and townhomes for sale against 2,950 detached homes. A year ago attached inventory was 76 percent of detached. Today it is 93 percent. In a county where detached homes have always dominated the active listing count, that is a structural change.

The year-to-date story confirms it. The detached year-to-date median is $1,100,000, up 3.3 percent. The attached year-to-date median is $665,000, down 0.7 percent. On a rolling 12-month basis, single-family is up 2.9 percent and condos are down 0.7 percent.

Translate that. If you own a detached home in San Diego, you are still in a seller’s market. If you own a condo, you are in something much closer to a balanced market, and in some buildings it is already a buyer’s market. Pricing a condo off what the county headline says will cost your seller time and money.

The Lender-Mediated Report: Tracking the Pipeline

I pull SDAR’s Lender-Mediated Properties Report every month for one reason. It is the earliest place distress shows up in our county data. Here is what September says, and how it compares with what we have tracked since June.

As first reported June July August September Lender-mediated inventory n/a 367 394 412 Condo/townhome lender-mediated inventory n/a 193 219 238 Single-family lender-mediated inventory n/a 174 175 174 Lender-mediated new listings n/a 153 184 164 Lender-mediated closings 97 83 71 74 Share of all closings 4.5% 3.9% 4.1% 4.3% Lender-mediated, $250,001 to $500,000 n/a 86 100 113 Share of that price band n/a 10.7% 12.6% 13.9% Lender-mediated condo median n/a $635,000 $575,000 $577,500 Lender-mediated condo days on market n/a n/a 57 61

n/a means the figure was not in the report pages I have on file for that month. I am not filling those cells with estimates.

A note on revised numbers

These reports get revised after they publish, and you should know that before you read any single month as gospel. The MLS updates when agents update. A listing marked sold a week late, a status changed after the fact, or a short sale designation added mid-listing all move the history after SDAR has already printed it.

That happened here. The August report put lender-mediated inventory at 394. On the September report’s chart, the August point now plots at roughly 425, and July plots closer to 390 than the 367 first reported. The direction of the revision matters more than the exact figure. The pipeline was bigger than we were told at the time, not smaller. I report each month as first published, and I will flag revisions when the next report shows them.

What September shows

Lender-mediated inventory: 412, up 28.3 percent from 321 a year ago, now 7.2 percent of all active listings
Lender-mediated condo and townhome inventory: 238, up 71.2 percent. Single-family lender-mediated inventory: 174, down 4.4 percent
Lender-mediated share of attached inventory: 8.7 percent. Share of detached inventory: 5.9 percent
Lender-mediated new listings: 164, up 5.1 percent, 5.5 percent of all new listings
Lender-mediated closings: 74, down 16.9 percent, 4.3 percent of all closings
Lender-mediated condo median: $577,500, down 6.9 percent, while the traditional condo median held at $675,500
Lender-mediated condo days on market: 61, up 35.6 percent, against 43 for traditional condos
$250,001 to $500,000: lender-mediated inventory went from 51 to 113, up 121.6 percent, and now makes up 13.9 percent of every listing in that price band

What to keep watching

1. Condos are now the majority of the distressed pipeline. Lender-mediated condos were 53 percent of lender-mediated inventory in July, 56 percent in August, and 58 percent in September. Single-family lender-mediated inventory has not moved off 174 or 175 in three months. Every unit of growth in this pipeline has come from attached product.

2. Inventory is filling faster than it clears. At September’s pace, 412 lender-mediated listings against 74 closings works out to roughly five and a half months of supply. Traditional listings sit at roughly three months by the same rough math.

3. The discount is real and it is concentrated. Lender-mediated condos sold at a median $575,000 in August and $577,500 in September, roughly $100,000 below the traditional condo median both months. That is a 14.5 percent discount in September. They are also taking longer: 57 days in August, 61 in September.

4. The entry-level band keeps climbing. The $250,001 to $500,000 range has gone from 10.7 percent lender-mediated in July to 12.6 percent in August to 13.9 percent in September. That band is mostly condos, and it is where the buyers with the thinnest equity live.

5. One encouraging sign. Lender-mediated new listings fell from 184 in August to 164 in September. One month does not make a trend. If that holds in October, the inflow is slowing even as the backlog sits.

Translate that. The distress in San Diego is not spreading across the market. It is narrowing into one place: condos, at the lower end of the price range, owned by people who bought recently with small down payments. I made the case earlier this week in San Diego Prices Are Not Falling that this is a pocket, not a wave. September did not change that. Lender-mediated sales are still 4.3 percent of all closings, and nothing in this data resembles the foreclosure era. But the pocket gets deeper every month, and it sits exactly where first-time buyers are trying to get in.

The Counterweight

Before anyone calls this a condo crash, look at what did not happen.

The traditional condo median rose 0.1 percent. Traditional condo inventory rose only 2.1 percent. Condos are still selling at 97.2 percent of original list price. Detached prices rose 5.8 percent. Total inventory is lower than a year ago.

The weakness is real, and it is specific. It is not a county-wide correction, and anyone telling you otherwise is reading the headline, not the report.

Where the Opportunity Is

We are walking into the slowest stretch of the year. Most people do not want their home on the market between Halloween and New Year’s, and the data shows it. Last November and December, detached new listings dropped to 1,165 and 948. Attached new listings dropped to 857 and 637. That is roughly half of what came to market this September.

Translate that. The seller who lists in November or December is usually not testing the market. They have to sell. A job transfer, a divorce, an estate, a payment they can no longer carry. That seller negotiates differently than the one who listed in April to see what they could get.

First-time buyers: the condo door is open

If you are trying to break into this market, the condo side is where you have room to work right now.

More to choose from. Condo and townhome inventory is 2,734, up 5.8 percent. In the $250,001 to $500,000 range, condo inventory is 762, up 15.1 percent.
More time to shop. Condos are averaging 44 days on market, with 4.0 months of supply. You are not writing an offer from the driveway on day two.
More room to negotiate. Condos are closing at 97.2 percent of original list price, and the motivated holiday seller is about to show up.
Better math. The attached Housing Affordability Index is 62. The detached index is 38. The condo is the realistic entry point for most first-time buyers in this county, and owning something now starts the equity clock that a perfect house ten years from now does not.

The catch: buy the association, not the condo

Here is where first-time buyers get hurt. On August 3, Fannie Mae and Freddie Mac retired the fast-track condo project reviews. Limited Review and Streamlined Review are gone. Projects with more than 10 units now get a Full Review, and the lender is reading the association’s budget, reserve study, insurance, delinquencies, and litigation before it funds your loan.

That means a building can kill a deal that the unit itself would have passed. A thin reserve fund, an underinsured master policy, or pending litigation can make a project unwarrantable, and the cheap condo turns into a cash-only condo overnight. On the other end, buildings with 10 units or fewer can skip the project review entirely, which means nobody is checking the association for you. Plenty of small San Diego complexes fall into that category.

The lender-mediated condo discount is real. Some of that discount is the market pricing in exactly these problems. Before you chase the $100,000 gap, find out why it is there.

I laid out the full checklist in Buy the Association, Not the Condo. The short version: get the reserve study, the budget, the master insurance policy, and the last twelve months of board minutes before you write the offer, not in week three of escrow.

Single-family: priced right still sells, especially in coastal North County

The detached market has not slowed for homes that are priced correctly and show well. Detached months supply is 2.4, days on market dropped to 37, and sellers are getting 97.7 percent of original list price.

Coastal North County is the clearest example. Our agents working that area are having a very strong year, and the county data backs up what I see in the office. On a rolling 12-month basis, traditional medians are up in Carlsbad NW (3.1 percent to $1,750,000), Carlsbad SW (5.8 percent to $1,650,000), Encinitas (5.1 percent to $1,975,000), Oceanside South (5.2 percent to $1,210,000), Del Mar (18.3 percent to $3,187,500), and Solana Beach (30.6 percent to $2,350,000). And the distress barely registers there. Lender-mediated listings are 1.5 percent of inventory in Carlsbad NW, 2.5 percent in Encinitas, and zero in Carlsbad NE, Carlsbad SW, and Cardiff.

The small-sample caution applies. Del Mar and Solana Beach are thin markets where a handful of large sales can swing a median. The direction is still clear. Coastal North County detached is not where the softness lives.

What To Do With This

If you are a first-time buyer: Shop condos this fall and winter. Use the inventory and the slower season to negotiate on price, on credits, and on time. Then read the association before you read the listing photos.

If you are selling a condo: Price it for the condo market, not the county market. You are competing with 4.0 months of supply and lender-mediated units selling well below traditional pricing. Assemble your HOA documents before you list so the buyer’s lender does not find a problem in week three.

If you are selling a detached home: Your market is still tight. But pending sales fell 16.8 percent and rates moved above 7 percent. Price for today’s buyer, not the spring market you missed. Priced right and in good condition, it will sell.

If you are an agent: Learn the short sale process now. Most agents working today have never closed one. The listings are coming in the segment where your first-time buyer clients live, and the agent who understands how a lender-mediated file actually works will be the one who gets it closed.

Where to Find Me

See all of my digital media feeds in one place: instacard.co/robert-schantz/home

Agents thinking about where to build the next stage of your career: kwsandiego.kw.com/join-our-team

Buyer and seller resources: robertschantz.com

Sources

SDAR / San Diego MLS, Monthly Indicators, September 2026 (current as of October 5, 2026)
SDAR / San Diego MLS, Housing Supply Overview, September 2026 (current as of October 5, 2026)
SDAR / San Diego MLS, Lender-Mediated Properties Report, September 2026 (current as of October 5, 2026)
SDAR / San Diego MLS, Lender-Mediated Properties Report, August 2026 (current as of September 5, 2026)
SDAR Lender-Mediated Properties Reports for June and July 2026, as previously reported
Fannie Mae Lender Letter LL-2026-03 and the matching Freddie Mac bulletin, effective August 3, 2026
Robert Schantz, Buy the Association, Not the Condo
Robert Schantz, San Diego Prices Are Not Falling

San Diego Prices Are Not Falling. They Are Stuck.

Robert Schantz — Tue, 06 Oct 2026 12:02:15 GMT

Everyone waiting for a San Diego price crash is reading Texas and Florida headlines and applying them to the wrong map.

Prices here are not falling. They are not soaring either. They are stuck. And stuck has its own causes, its own winners, and a small but growing list of casualties that most people are not watching yet.

I recently watched a sharp breakdown titled “The New American Housing Crisis Has Landed” (link at the bottom). Its central argument is one I have been making in our office for two years: this is not simply a price problem or a rate problem. It is a mobility problem and a supply problem. I want to run that framework through San Diego County, because the local answer looks very different from the national one.

The Paradox Nobody Can Explain at the Dinner Table

Nationally, Redfin reported 57.9 percent more sellers than buyers in August 2026, the widest gap in its records going back to 2013. In any textbook, that is a buyer’s market and prices fall.

Prices did not get the memo.

Here is San Diego County for August 2026, straight from SDAR:

Detached median sales price: $1,120,000, up 4.7 percent year over year
Attached (condo and townhome) median: $670,000, up 0.1 percent
Detached inventory: down 20.7 percent, with 2.3 months of supply
Attached inventory: up 4.6 percent, with 4.0 months of supply
Closed sales: down 17.6 percent detached and 16.3 percent attached

Translate that. San Diego is not adjusting on price. It is adjusting on volume. Fewer homes are changing hands, and the ones that do are still selling near record numbers. The softening is real, but it is concentrated in condos and townhomes, where prices are flat and supply is building.

Meanwhile, the 30-year fixed rate hit 7.28 percent on October 1, according to Freddie Mac. That is the highest reading since November 2023 and nearly a full point above where it sat a year ago. Higher rates are supposed to push prices down. In San Diego, they mostly push sales down.

Here is why.

Reason One: The Golden Handcuffs Got Tighter

A large share of San Diego homeowners are sitting on mortgages in the 3 percent range. Selling means giving up the cheapest money they will ever borrow and replacing it with a loan above 7 percent.

FHFA researchers found that for every percentage point current rates sit above a homeowner’s existing rate, the odds of that owner selling drop 18.1 percent. They estimate lock-in prevented 1.33 million sales from the second quarter of 2022 through the end of 2023. The important part is what they found next: elevated rates pulled prices down 3.3 percent, but the missing listings pushed prices up 5.7 percent.

That is San Diego in one sentence. Every time rates climb, another group of would-be sellers decides to stay. The supply that would have created price pressure never shows up.

Reason Two: San Diego Sellers Can Afford to Wait

Census data shows a record 40.3 percent of U.S. homes are now owned outright. San Diego County runs lower but is climbing: 31.1 percent of homes here were mortgage-free in 2023, up from 26 percent a decade earlier. Add the owners with small balances and years of appreciation, and you have a seller pool with no gun to its head.

Intercontinental Exchange (ICE), the financial data company that publishes the monthly ICE Mortgage Monitor, reported that mortgage holder equity hit a record $18 trillion nationally in the second quarter of 2026. Redfin puts San Diego County prices up roughly 65 percent since early 2020. Our owners are sitting on a lot of that equity.

A seller with a paid-off home and no deadline does not cut the price by $75,000. They pull the listing and try again in the spring. Expired and withdrawn listings are the pressure valve, and they keep price reductions from cascading.

Reason Three: Prop 13 Pays People to Stay Put

The video uses Florida’s homestead cap to show how a long-time owner can pay a fraction of the property tax a new buyer pays on a nearly identical house. California invented this game.

Under Prop 13, increases in assessed value are capped at 2 percent a year and reset to market value at sale. An owner who bought in Clairemont in 2001 and sells today trades a tax bill based on a 2001 value for one based on a 2026 value. That is a powerful reason to stay. Prop 19 loosened this for owners 55 and older by letting them carry their tax base to a replacement home, which helps, but it does not unlock the market for everyone else.

Lock-in from rates. Lock-in from equity. Lock-in from taxes. Three sets of handcuffs, all on the same wrist.

Why Texas and Florida Are Different: They Built

This is where the San Diego story splits from the national story.

Builders behave differently than homeowners. A homeowner can wait. A builder carrying construction loans cannot. The video reports finished, unsold new homes at their highest level since 2009. NAHB’s September survey found 38 percent of builders cut prices, with an average cut of 6 percent, and 66 percent used sales incentives, the highest share since December. Builders protect volume and sacrifice margin.

Texas and Florida built aggressively during the pandemic. Redfin has noted that the two states build more new homes than anywhere else in the country, and they are paying for it now. Realtor.com senior economist Joel Berner, speaking to Newsweek last month, put numbers on it. Measured from August 2022, Texas for-sale inventory is up 76.2 percent and prices are down 9.2 percent. Florida inventory is up 77.6 percent and prices are down 12.6 percent. Public builders have called out Texas oversupply on their earnings calls and have said buyers in Texas and Florida need more incentives than buyers almost anywhere else.

Austin is the poster child. The video points out that Austin expanded its housing supply by roughly 30 percent over a decade, and prices have fallen substantially from the 2022 peak.

Now look at San Diego. We are boxed in by the Pacific, the mountains, Camp Pendleton, federal land, and an international border. Add the Coastal Commission, CEQA review, fire zone rules, and some of the highest construction costs in the country. San Diego did not build its way into a glut. We could not have if we tried.

Translate that. Texas and Florida built past their demand. San Diego still has the original problem: not enough homes. When the motivated sellers in a market are builders, prices move. When the motivated sellers are a handful of homeowners with a life event, prices hold.

Why a New House Can Cost Less Than a Used One

Here is a number that surprises most buyers. The video reports that the typical new home recently sold for roughly $25,000 less than the typical existing home.

That sounds backward until you look at who is selling. Builders are building smaller homes on smaller lots, and they are buying down mortgage rates to move inventory. A rate buydown does more for a monthly payment than a modest price cut does. Existing homeowners rarely offer either one.

Translate that. In much of the country, the cheapest path into a house right now runs through a builder’s sales office, not the resale market. In San Diego, that path is narrow. Where new construction exists here, it is mostly inland and in North County, and there is not enough of it to set the countywide price.

Why Builder Price Cuts Are Starting to End

The builder discounts in Texas and Florida will not last forever, and the reason should worry anyone hoping for affordability.

Lennar, in comments from its earnings call cited in the video, says nearly half of visitors in some markets cannot immediately qualify for a mortgage. Once a buyer cannot qualify, another $10,000 off does not close the gap. So builders stop cutting prices and start cutting construction. Texas builders are already pulling back on permits and starts.

Translate that. The price cuts end not because demand came back, but because builders stopped building. Fewer homes started today means less supply three years from now. That is the setup for the next affordability squeeze, even in the markets that are correcting right now.

The Policy Trap: Helping Buyers Can Help Sellers More

The video makes a point every San Diego buyer should understand. When supply is constrained, programs that give buyers more purchasing power often become a subsidy to sellers.

Its example is the 2015 FHA mortgage insurance premium cut. According to the video, it produced far fewer new first-time buyers than projected and mostly let FHA borrowers bid more for the same homes. Fifty-year mortgages, retirement-account access for down payments, and other demand-side ideas carry the same risk.

In a market where detached supply is down 20 percent year over year, more buying power without more homes does not create affordability. It creates a higher price.

The Housing Bill: Right Direction, Wrong Timeline

Washington did pass something. The 21st Century ROAD to Housing Act became law on July 11, 2026, after clearing Congress with large bipartisan margins and taking effect without the President’s signature. It is the first major federal housing law in decades, and to its credit it leans toward supply: streamlined environmental review, encouragement for local zoning reform, manufactured housing, office-to-residential conversions, and a cap that bars any investor owning more than 350 single-family homes from buying more.

Here is what it does not do. It does not touch a single one of the three handcuffs. It does nothing about 3 percent mortgages, nothing to give a seller with deep equity a reason to move, and nothing about Prop 13. Zoning is still local, so the law can encourage but not require. HUD was handed more than 35 new programs, rules, and studies with no new money for staffing, after deep staffing cuts in 2025. Even the law’s supporters say its effects will take years.

Translate that. Since the bill became law, the 30-year rate has climbed from about 6.66 percent in July to 7.28 percent. Nothing in the August San Diego data shows the law bringing a single extra listing to market. It is a long-term construction policy. The problem in front of buyers today is a short-term mobility problem, and nobody in Washington has solved that.

The Counterweight: Where the Cracks Are Showing

Stuck is not the same as safe. There are cracks in San Diego, and I am watching them closely.

Short sales are back, and the people who process them are busier. On Friday I spoke with a company that handles short sale negotiations in 27 states, including here in San Diego County. His business is up. And the biggest source of new files in his pipeline is not who you might expect. It is the pandemic movers.

During COVID, a lot of people moved because they could. Remote work let them sell in an expensive metro and buy in Boise, Austin, Phoenix, or Southwest Florida. Prices in those markets ran hard. Now return-to-office mandates are pulling many of those same owners back toward the office, and they are selling into markets that have already rolled over. A ResiClub analysis of Zillow data found 15 metros down at least 10 percent from their 2022 peaks, led by Austin at 27.8 percent, Punta Gorda at 25.4 percent, and Cape Coral-Fort Myers at 18.9 percent. Boise is down 10.1 percent. Buy near the top with a small down payment, sell 10 to 25 percent lower, and the math only works as a short sale.

The mandates are not letting up. California’s own four-day return-to-office order for roughly 108,000 state workers took effect July 1, 2026. Translate that. The work-from-anywhere move was a bet that remote work would last. For a lot of households, that bet just came due.

The other pattern he described matches what I see in our office here in San Diego: owners who bought in the last four years, often in a condo, who now have to sell for a reason they did not plan for. Divorce leads that list, and he has watched divorce-driven sales rise steadily since COVID. Job changes, PCS orders, and family emergencies round it out. These sellers have not gained equity, so selling costs them money, and the short sale becomes the only door out.

It is no longer just VA and FHA. He confirmed something I wanted to hear from someone outside our office. The short sales crossing his desk are not limited to zero-down VA and 3.5 percent down FHA loans anymore. He is seeing conventional loans with 5 and 10 percent down come through as well. I do not have his exact numbers, so treat this as a ground-level signal, not a statistic. But it lines up with the SDAR data below.

Low down payments leave no cushion. VA buyers can put zero down. FHA buyers can put 3.5 percent down. Selling costs run several percent of the price. Translate that. A buyer who put little or nothing down in 2023 and has to sell in 2026 into a flat condo market can owe more than the home will net. That is a short sale, even in a market where prices never really fell.

Nationally, the stress is concentrated in exactly this group. The Mortgage Bankers Association reported FHA delinquencies at 11.52 percent at the end of 2025, compared with 2.89 percent for conventional loans. ICE reported that the share of FHA loans 90 or more days late or in foreclosure reached 5.7 percent in June 2026, up 1.8 points from a year earlier.

Five percent down is creeping back. In our office, we are starting to see more conventional loans with 5 percent down. That opens doors for buyers. It also means the next round of owners will have less equity protecting them if they have to sell early.

The bottom tier and the condo tier are where the softening lives. Attached prices are flat, attached inventory is rising, and Redfin reported that bottom-tier San Diego County prices fell about 2 percent year over year in August. The Fannie Mae and Freddie Mac condo project changes that took effect August 3 add another layer of friction in that segment.

Now the numbers. SDAR’s Lender-Mediated Properties Report for August 2026 shows the pipeline filling, even though closings have not caught up yet.

Lender-mediated inventory: 394 properties, up 23.5 percent from 319 a year ago and the highest level on SDAR’s chart going back to April 2020
Lender-mediated condo and townhome inventory: 219, up 59.9 percent, while single-family lender-mediated inventory fell 3.8 percent
Lender-mediated new listings: 184, up 34.3 percent, now 5.9 percent of all new listings
Lender-mediated closings: 71, down 26 percent, just 4.1 percent of closed sales
Lender-mediated condo median price: $575,000, down 12.5 percent, while the traditional condo median rose 0.7 percent to $675,000
Homes priced $250,001 to $500,000: lender-mediated inventory more than doubled, from 45 to 100, and is now 12.6 percent of listings in that price band

Translate that. The distress is concentrated in condos and at the lower end of the price range, exactly where recent buyers put the least money down. More of these listings are coming to market, they take longer to sell (46 days versus 38 for traditional sales), and they sell at a discount. That is a trend worth tracking. It is not a wave. Lender-mediated sales are still about 4 percent of the market, and nothing in the San Diego data today looks like the foreclosure era.

The Generation Paying for All of This

The video’s sharpest point is about who carries the cost. NAR’s 2025 Profile of Home Buyers and Sellers put first-time buyers at 21 percent of all buyers, the lowest share since NAR began tracking in 1981, and the median first-time buyer age at a record 40. NAR’s 2026 generational report held that 21 percent share. NAR also found 22 percent of first-time buyers used a gift or loan from relatives or friends for the down payment. A LendingTree survey from March 2026 found 40 percent of homeowners had help with the down payment on their current home, up from 35 percent in 2023, rising to 78 percent of Gen Z owners and 56 percent of millennials.

The age figure is disputed, and you should know that. NAR’s number comes from a mail survey with about 6,100 responses. The Mortgage Bankers Association, citing the National Mortgage Database, puts the median first-time buyer age at 32 in 2025, and Cotality shows it essentially flat at 32 since 2014. Whether the true answer is 32 or 40, the first-time buyer share is still at a record low, and that is the number that matters here.

Translate that. The system protects people who already own, with low rates, deep equity, and capped property taxes. It squeezes people who do not. In San Diego, homeownership is becoming something you inherit as much as something you earn. I will be digging into that in the K-shaped economy series.

Do Not Blame the Boomers

Scroll social media for five minutes and you will see the anger. Millennials blaming boomers for sitting on all the equity. Boomers selling a house bought decades ago to a millennial who stretched every dollar to buy it. The numbers feed it. In San Diego, a Redfin analysis of 2024 census data found that empty-nester boomers own 27 percent of homes with three or more bedrooms, nearly twice the 14 percent owned by millennials with kids.

I understand the frustration. But the anger is pointed at the wrong target.

A boomer who bought in 1985 and still owns that house did nothing wrong. They bought a home, paid it down, and held on. That is exactly what we tell every first-time buyer to do. Their equity is the reward for doing it right.

The real problem is housing policy. For decades, cities, counties, and the state made it slow, expensive, and politically painful to build. Prop 13 rewards staying put. Local zoning blocks density. Neighborhood opposition stops projects that would add the very homes younger buyers need. Washington’s answer arrived this summer and has not moved the needle yet.

Translate that. If you are angry about housing, do not direct it at your parents. Direct it at your city council, your county supervisors, and your state representatives. Show up when a housing project is on the agenda. Ask candidates how many homes they will approve, not just how they feel about affordability. The fix is local, and it starts with the people who want homes speaking as loudly as the people who do not.

That is why I write this Substack. My career has been about one thing: putting people into homes. Pensions are disappearing, and for a growing number of families the home is now the retirement plan. That means the gap between owners and renters is becoming the gap between people who will retire with wealth and people who will not. I want more people on the right side of that line, and the only way to get them there is to build more homes.

What to Do With This

If you are selling: Price for the market you are in, not the one you remember. Detached homes in good condition are still moving. Condos and townhomes need sharper pricing and better preparation, because buyers in that segment have choices and patience.

If you are buying: The negotiation lives in attached product, in homes that have sat, in builder incentives where new construction exists, and in carefully vetted short sales. Get fully underwritten before you shop, because short sale and lender-mediated sellers only take qualified buyers seriously.

If you bought recently with little down and life just changed: Call your lender and a broker before you miss a payment, not after. A short sale handled early protects far more than one handled late. And talk to a CPA before you commit. The federal exclusion that kept forgiven mortgage debt tax-free in a short sale expired on January 1, 2026, unless your written agreement with the lender was in place before that date, and California generally taxes forgiven debt as well. The old line that a short sale is tax-free is out of date.

If you are an agent: Learn the short sale process now, before you need it. NAR membership bottomed out at about 963,000 in February 2013 and climbed to a peak of 1.6 million in October 2022. That is more than 600,000 net new Realtors who entered the business after the last short sale wave ended, and many of them have never closed one. I worked through the 2008 crisis and spent those years teaching agents how to navigate short sales: lender approvals, hardship packages, BPOs, and realistic timelines. That experience is now built into our own Short Sale Guide for Agents at KW Metro, and we are already training our agents on it. The agents who know this process will be the ones these sellers call.

San Diego is not crashing. It is not booming. It is holding, because the people who own homes here have every reason not to sell, and the people who build homes here cannot build enough to change that. The market will not move until one of those two things changes.

Watch the short sales. They will tell you which one changes first.

See my digital media feeds and market updates: instacard.co/robert-schantz/home

Agents thinking about your next move: kwsandiego.kw.com/join-our-team

Buyer and seller resources: robertschantz.com

Sources

“The New American Housing Crisis Has Landed,” YouTube: youtube.com/watch?v=Uumnx2Fo6cE (source of the new-home price gap, finished inventory, Lennar earnings-call statements, 2015 FHA example, and Austin supply growth, as cited in the video)
Greater San Diego Association of REALTORS, Monthly Indicators, August 2026
SDAR Lender-Mediated Properties Report, August 2026 (current as of September 5, 2026)
Redfin, buyers vs. sellers report, August 2026 (released September 10, 2026)
Redfin, San Diego County Housing Market Update, August 2026
Freddie Mac Primary Mortgage Market Survey, October 1, 2026
FHFA Working Paper 24-03, “The Lock-In Effect of Rising Mortgage Rates,” March 2024: fhfa.gov/research/papers/wp2403
ICE Mortgage Monitor, August 2026
Mortgage Bankers Association National Delinquency Survey, Q4 2025 (via HousingWire)
NAHB/Wells Fargo Housing Market Index, September 16, 2026
Realtor.com economist Joel Berner via Newsweek, September 17, 2026
HousingWire, Texas builder oversupply coverage, 2026
CNN, “Sweeping housing affordability bill becomes law,” July 11, 2026
Urban Institute, “Congress Has Finally Passed Major Housing Reform. The Real Work Starts Now,” 2026
Holland & Knight, “21st Century ROAD to Housing Bill Becomes Law,” August 2026 (P.L. 119-101)
NAR, 2025 Profile of Home Buyers and Sellers, November 4, 2025
NAR, 2026 Home Buyers and Sellers Generational Trends, April 15, 2026
Scotsman Guide, “MBA, NAR spar over typical first-time homebuyer age,” 2026 (MBA, National Mortgage Database, and Cotality figures)
LendingTree, 2026 Mortgage Down Payment Survey (online survey of 2,060 U.S. consumers, March 2026)
Axios San Diego, “California’s small share of mortgage-free homes is growing,” November 12, 2024 (Census ACS 1-year data, San Diego County)
Axios, “Where mortgage-free homes are most common,” November 16, 2025 (Census data, national)
Axios San Diego, “San Diego’s bigger homes tied up by boomers,” June 4, 2026 (Redfin analysis of 2024 census data)
NAR, “NAR Membership Remains Steady Notwithstanding Slower Home Sales,” REALTOR Magazine (February 2013 low of 963,478; October 2022 peak of 1.6 million)
IRS Topic No. 431, Canceled Debt (qualified principal residence indebtedness exclusion limited to discharges before January 1, 2026)
ResiClub analysis of the Zillow Home Value Index, metros with the largest declines from 2022 peaks, spring 2026
CalMatters, “Newsom’s return-to-office mandate is stricter than other states,” July 2026

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Your House Is Doing the Job Your Pension Used to Do

Robert Schantz — Fri, 02 Oct 2026 12:01:51 GMT

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Most people think they are buying a place to live.

They are not. Not anymore. They are buying the only retirement plan left that still works the way retirement plans used to work.

Last Friday the Bureau of Labor Statistics released its annual report on employee benefits. Buried in the first paragraph is a number that explains more about the San Diego housing market than any monthly indicators report I have ever read.

In March 2026, 9 percent of private industry workers participated in a defined benefit pension.

Nine percent.

In 1980, according to Social Security Administration research drawing on Labor Department and BLS data, that figure was 38 percent.

Translate that.

A generation ago, roughly four in ten private sector workers had an employer promising them a check every month for the rest of their lives. Today it is fewer than one in ten. Something had to replace that promise. For most American households, the thing that replaced it is the house.

This is the first of four Friday articles on what I call the last wealth machine. The series is not about who broke anything. It is about the door, how narrow it has become, and what widens it. That starts with understanding what the house is actually being asked to do.

What a pension actually did

A traditional pension did three jobs, and most people never noticed any of them.

It forced the saving. The contribution came out before the worker ever saw the money. Nobody had to be disciplined. Nobody had to decide.

It carried the risk. If the market dropped 30 percent the year before you retired, that was the employer’s problem, not yours. The formula paid what it paid.

It paid for life. You could not outlive it. A worker who lived to 97 collected for 32 years.

The 401(k) was not designed to replace that. Section 401(k) entered the tax code through the Revenue Act of 1978 as a fairly obscure provision, and employers discovered over the following decades that it could do much of the pension’s work at a predictable cost.

It kept one job. It lost two.

The saving is now optional, and the BLS data shows what optional produces. In March 2026, 70 percent of private industry workers had access to a defined contribution plan. Only 49 percent participated. The risk now sits with the worker, who picks the funds, absorbs the drawdowns, and decides how fast to spend it down without knowing how long the money has to last.

My read, and it is only my read, is that there is no villain in this story. Longer life spans, job mobility, funding rules, and plain arithmetic all pushed in the same direction for forty years. You can argue about the causes for a long time. The outcome is not in dispute.

The household took on the job the employer used to do.

I can count the people I know in my generation who retired on a pension. There are two.

Both are friends, and both spent about 25 years at the same well-known bank. They came in during the last year that bank offered a pension to new hires. That timing is the only reason they have a comfortable retirement today, with a check that arrives every month for as long as they live.

Everyone else I know my age is doing what you are probably doing. Watching a 401(k) balance, doing the math on how long it has to last, and counting on the house to carry a large share of the load.

I think it is a shame that pensions went away. My two friends are proof of what that promise was worth. They did not have to outguess the market or wonder whether they would outlive their money. They just had to show up for 25 years.

Most of us were never offered that deal. The house is the closest thing to it we have left.

The one machine that still runs the old way

Look at those three jobs again. Then look at a fixed-rate mortgage on a primary residence.

It forces the saving. Every payment retires a piece of principal whether the owner is disciplined or not. Nobody logs in to decide. Nobody skips a month because the market looks scary.

It uses leverage most households cannot get anywhere else. A bank will not lend a 35-year-old nine dollars for every one dollar she puts into an index fund. It will do exactly that for a house.

It carries a tax treatment no other asset gets. Under Section 121 of the tax code, a married couple can exclude up to $500,000 of gain on the sale of a primary residence, $250,000 for a single filer, as long as they owned and lived in it for two of the prior five years. The mortgage interest deduction on up to $750,000 of acquisition debt was made permanent by federal tax legislation in July 2025.

And there is a fourth job the house does that nobody puts on a spreadsheet.

It freezes the largest bill in the budget. A pension paid you a check. A paid-off house removes a bill. For a retiree, those two things do the same work. A 70-year-old renter in San Diego is exposed to every rent increase for the rest of her life. A 70-year-old owner with no mortgage is not.

Here is the leverage in plain arithmetic, using SDAR’s August 2026 median for San Diego County condos and townhomes, $670,000.

A buyer puts 10 percent down. That is $67,000 of cash controlling a $670,000 asset. If the property appreciates 3 percent in a year, that is $20,100. On the buyer’s cash, that is a 30 percent return before costs.

That is not a forecast. It is how the machine is built. The same arithmetic runs in reverse, and I will get to that.

What the Federal Reserve sees

Every three years the Federal Reserve runs the Survey of Consumer Finances, the most detailed look at American household balance sheets there is.

In the 2022 survey, the median homeowner had a net worth of $396,200. The median renter had $10,400.

That is not a gap. That is two different economic lives.

Some of that gap is age, since owners skew older and older households have had longer to accumulate. Some of it is income. But much of it is the machine itself. Principal paydown every month, leverage on appreciation, and a tax shelter on the gain, running quietly for decades while the owner goes to work and raises kids.

A word on timing. The 2025 survey was fielded last year, and the Fed has said summary results will be published in late 2026. When those numbers land, I will update this. My expectation is that the gap did not narrow. That is an expectation, not a fact, and I will tell you if I am wrong.

Why this is a retirement problem, not a shelter problem

Put the pieces together.

Nine in ten private sector workers no longer have a pension. Barely half participate in a defined contribution plan at all, according to the same BLS release. And the one asset that still forces savings, provides leverage, shelters gains, and freezes the largest monthly expense is priced at a level that keeps a growing share of households outside of it.

In San Diego the median detached home closed at $1,120,000 in August according to SDAR.

When we talk about affordability, the conversation almost always sounds like a conversation about shelter. Can a teacher afford to live near the school. Can a nurse afford to live near the hospital. Those are real questions.

The bigger question is what happens to that teacher at 70.

A household that never gets inside the machine does not simply rent for a while longer. In my opinion, it arrives at retirement with no pension, a thin retirement account, and a housing cost that keeps rising every year it is alive. That is the part of the affordability conversation almost nobody is having.

The counterweight

I would be doing you a disservice if I sold the house as a pension. It is not one. It does some of the work. It does not do all of it.

Leverage cuts both ways. The same arithmetic that turned $20,100 of appreciation into a 30 percent return turns a 10 percent price decline into the loss of the entire down payment. Anyone who was selling in 2009 does not need that explained.

It is concentrated. A pension fund owned thousands of assets. Most homeowners own one, in one zip code, exposed to one local economy, one set of fire maps, and one insurance market. The FAIR Plan rate increase of 29.1 percent takes effect October 15. That is a cost the old pension retiree never had to budget for.

It does not mail a check. Equity is not income. To spend it, an owner has to sell, borrow against it, or use a reverse mortgage, and each of those comes with costs and tradeoffs that deserve a professional conversation.

The costs do not stop. Property tax, insurance, HOA dues, a roof, a water heater. The paid-off house removes the mortgage. It does not remove ownership.

Renting is not failure. Plenty of households rent for good reasons, invest the difference with real discipline, and retire well. The machine works for people who stay in it long enough and do not break it. It is not the only way to get there.

All of that is true. None of it changes the central point. For a household without a pension, a paid-off home by retirement is the single largest piece of financial security most will ever build.

What to do with this

This series is about widening the door, not describing the room. So here is where I would start, depending on where you sit.

If you already own. Treat the house like the retirement asset it has become. Know the date the mortgage is scheduled to be paid off, and decide whether you want that date to land before you stop working. Think hard before pulling equity out for anything that does not add value to the property. Keep every receipt for capital improvements, because under Section 121 they raise your cost basis and can matter a great deal when you sell. And talk to a CPA before you assume the exclusion covers your gain, because the $250,000 and $500,000 figures were set in 1997 and have never been adjusted for inflation.

If you are trying to get in. The entry point matters more than the ideal house. Time inside the machine is the variable that does the heavy lifting, and a smaller first property bought sooner often does more for a 30-year retirement than a perfect property bought ten years later. That is why I wrote about condos the way I did in Buy the Association, Not the Condo. The due diligence is non-negotiable. The door is real.

If you are a parent or grandparent who owns. The conversation about helping the next generation get in is a retirement conversation for them, not only a housing one. It is worth having with a financial professional before it is worth having at the dinner table.

If you are an agent. Stop having only the payment conversation. Every buyer consultation is, in part, a retirement consultation now, whether the buyer realizes it or not. The payment is what gets them through the door. The retirement is why it matters that they walk through it.

Next Friday

If the house is the last wealth machine, the next question is who got inside it and when.

The honest answer is uncomfortable, because the dividing line in American household wealth is not always what people assume it is. Next Friday, Part 2 looks at the line that actually separates households that are building wealth from households that are not.

The machine still works. The door is narrower than it has ever been. That is what this series is about.

Follow the work

See my digital media feeds: instacard.co/robert-schantz/home

Agents considering KW Metro: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources

U.S. Bureau of Labor Statistics, Employee Benefits in the United States, March 2026 (USDL-26-1534), released September 25, 2026 · bls.gov/news.release/ebs2.nr0.htm
Social Security Administration, Social Security Bulletin Vol. 69, No. 3, “The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers” (1980 private sector DB participation of 38 percent, citing BLS and Department of Labor data) · ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html
Board of Governors of the Federal Reserve System, Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances (median net worth by housing status)
Board of Governors of the Federal Reserve System, press release, “Federal Reserve Board begins 2025 Survey of Consumer Finances,” February 28, 2025 (summary results expected late 2026)
Internal Revenue Code §121, Exclusion of gain from sale of principal residence (Taxpayer Relief Act of 1997)
Internal Revenue Code §163(h), qualified residence interest; Public Law 119-21, signed July 4, 2025
Revenue Act of 1978, enacting Internal Revenue Code §401(k)
San Diego Association of REALTORS®, Monthly Indicators, August 2026 (detached median $1,120,000; attached median $670,000)
California Department of Insurance, FAIR Plan rate approval (29.1 percent average increase effective October 15, 2026)

The Condo Market Is Not Booming. That Is the Opening.

Robert Schantz — Tue, 29 Sep 2026 12:03:41 GMT

The best condo deals in San Diego right now are sitting in plain sight, and most buyers are walking past them.

Not because the condos are bad. Because the headlines are. For three years the condo conversation in this county has been a list of reasons to stay away: balcony inspections, insurance carriers pulling out, special assessments, lenders tightening project approvals. Every one of those stories was real. Every one of them also did something the headlines never mention. It pushed buyers out of the attached market and left the sellers who remain with fewer people to sell to.

That is where the opportunity comes from. Not from a boom. From the absence of one.

The Two Markets Split Apart

Look at what the San Diego MLS shows for August 2026, per the SDAR Monthly Indicators report.

The median detached home sold for $1,120,000, up 4.7 percent from a year ago. Detached inventory fell 20.7 percent. There were 2.3 months of supply.

The median condo or townhome sold for $670,000, up 0.1 percent. Attached inventory rose 4.6 percent. There were 4.0 months of supply.

Now go back two years. In August 2024, the detached median was $1,050,000 and the attached median was $680,000. The gap between them was $370,000. Today it is $450,000. Single-family homes kept moving. Condos stood still, and on a year-to-date basis the attached median is actually down 0.7 percent.

Attached inventory tells the same story. In August 2024 there were 1,984 condos and townhomes for sale in the county. In August 2026 there were 2,767. That is roughly 40 percent more choice for a buyer than two years ago, while the detached side is shrinking.

Translate that. The single-family buyer is still fighting over scarce inventory. The condo buyer is shopping.

Condos are taking an average of 44 days to go under contract, compared with 35 days for detached homes. Sellers are receiving 97.2 percent of their original list price on average. And that figure does not account for seller concessions, which is where a lot of the real negotiating happens right now: credits toward closing costs, repairs, and rate buydowns.

The Neighborhoods Where It Shows Up Most

Countywide numbers hide the best stories. Two neighborhood reports from SDAR stand out.

In Scripps Ranch (92131), the attached median through August is $720,000, down 9.0 percent from the same period last year. The detached median in that same zip code is $1,650,000. Attached months of supply sits at 4.8, up from 2.7 a year ago. The sample is small, so any single month can swing hard, but the direction is clear.

In Mira Mesa (92126), the attached median through July was $595,000, down 6.3 percent year to date, with condos averaging 48 days on market. The detached median in that zip code was $1,110,000.

Same schools. Same freeways. Same commute to Sorrento Valley. Roughly half the price of admission.

That is the case for condos in one sentence. For a first-time buyer, an attached home is often the only realistic way into a neighborhood they want to be in for the next decade. For a downsizer, it is a way to stay in the neighborhood they already love without the yard, the roof, and the second story.

What Actually Happened to the Condo Market

The attached market did not soften because San Diego stopped wanting condos. It softened because owning one got more complicated, and buyers priced that complication in. Three forces did most of the work.

The balcony law. SB 326, codified at Civil Code §5551, required condominium associations to have their exterior elevated elements (balconies, decks, walkways, stairways) inspected by a licensed architect or structural engineer. The first deadline for HOAs was January 1, 2025. There was no extension for condos; the one-year extension everyone heard about applied to apartment buildings under SB 721. Inspections now repeat every nine years, and the findings feed directly into the association’s reserve study. Associations that found problems had to fund repairs, and many funded them through special assessments or dues increases.

Insurance. A Stanford study released this year found California homeowners insurance premiums up 84 percent since 2020. Condo owners feel that twice: once in their own HO-6 policy, and again in their HOA dues when the master policy renews. The FAIR Plan’s 29.1 percent average rate increase that takes effect October 15 applies to residential dwelling policies. HOA master policies are commercial coverage and are rated separately, but the pressure is the same. When the building costs more to insure, the dues go up.

Financing. On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03, coordinated with Freddie Mac and FHFA. For loan applications dated on or after August 3, 2026, the Limited Review (and Freddie Mac’s Streamlined Review) is gone. Projects with more than ten units now need a Full Review, which examines budget, reserves, insurance, delinquencies, litigation, and special assessments. If a lender relies on a reserve study to approve a project, the association’s budget must reflect the highest recommended reserve contribution in that study. And starting January 4, 2027, the baseline reserve requirement rises from 10 percent of the budget to 15 percent.

Here is the part most people miss. Every one of those forces is a filter. The balcony inspections have been done. The insurance repricing is showing up in the budgets. The lender review is stricter than it has been in years. The buildings that come through those filters in good shape have been tested harder than any condo inventory this county has seen. The buildings that do not come through them are the ones you want to avoid, and now you have the documents to tell the difference.

The Counterweight: Cheap Is Not the Same as a Deal

I need to be direct about this. Some condos are priced low because they should be.

A building with a thin reserve fund, a balcony report full of deferred repairs, and a master policy that just doubled is not a bargain at any price. It is a special assessment waiting for a new owner. And unusually low HOA dues are not a selling point by default. Often they mean the board has been avoiding the conversation about what the building really costs to maintain.

Rates are also not helping. Freddie Mac’s weekly survey put the 30-year fixed at 7.03 percent as of September 24, the first reading above 7 percent since January 2025. A year ago it was 6.30 percent. Anyone telling you affordability is easy right now is not doing the math.

So let us do the math. On a $670,000 condo with 10 percent down at 7.03 percent, principal and interest runs about $4,024 a month. Add property taxes at roughly 1.15 percent (your actual rate depends on the tax rate area and any Mello-Roos or special assessments), and you are near $4,666 before HOA dues and your HO-6 policy. The same math on a $1,120,000 detached home lands near $7,800 a month before insurance. Dues and insurance will close some of that gap. They will not close all of it.

This is also where seller flexibility matters. In a market with four months of supply, a seller credit toward a rate buydown is a real negotiating tool. Knocking half a point off the rate on that $603,000 loan saves roughly $200 a month. Your lender can tell you what a buydown costs and what it buys on your specific loan.

These are illustrations, not quotes. Run your own numbers with your lender and your tax professional.

The Due Diligence That Separates a Good Condo From a Bad One

If you remember one thing from this article, remember this: the reserve study matters more than the countertops.

Here is the order I would do it in.

Confirm the project is financeable before you spend money. Ask your lender to check the project against your loan program before you pay for an appraisal or inspection. Under the new Fannie Mae and Freddie Mac rules, that answer is not automatic.
Read the reserve study. Compare what is in the bank with what is coming due. One million dollars in reserves is not reassuring if the roof, the plumbing, and the parking structure add up to four million over the next few years.
Get the SB 326 inspection report. Ask whether the association completed it, what it found, and whether the recommended repairs are funded.
Read at least 12 months of board minutes. This is where you find the conversations that have not reached the budget yet: leaks, litigation, insurance renewals, proposed dues increases.
Review the master insurance policy. Know the carrier, the deductible, what it covers, and what your HO-6 policy has to pick up. Then price your HO-6 before you remove contingencies.
Ask about litigation. Pending lawsuits involving construction defects or structural issues can stop financing cold.
Calculate the true monthly cost. Mortgage, property tax, HOA dues, HO-6 insurance, and any Mello-Roos. That number, not the list price, is what you are really buying.
Check the rules you will live under. Pet restrictions, rental restrictions, and limits on changing windows, doors, flooring, or plumbing.

And do not overlook the boring building. An older complex with healthy reserves, reasonable dues, assigned or deeded parking, and years of clean financial records often carries less risk than a newer building loaded with amenities. I recently bought a condo in Mission Valley myself, after years of owning one built in 1969. The age of the building mattered far less than the health of the association.

A Note for Downsizers

If you are selling a long-held home to buy a condo, two conversations come first. The first is with a tax professional about capital gains before you list, because decades of appreciation can create a bigger tax bill than people expect. The second is with yourself about lifestyle. Downsizing does not always mean spending less, especially near the coast, where attached prices can still run well above the county median. The equity advantage is real, though. A downsizer who can buy with cash or a large down payment is the strongest offer a condo seller will see this fall.

The Long Game

I will not tell you this is the bottom. Nobody can call the bottom, and the people who claim they can are usually selling something. The bottom only shows up in hindsight.

What I can tell you is that San Diego has rewarded patient owners over every long stretch I have watched in 24 years in this business. The weather, the military, the universities, the biotech corridor, and a coastline nobody is making more of do not disappear because rates went up. Markets pause. San Diego has never stopped being a place people want to live.

Right now the attached market is paused. Inventory is up, days on market are up, sellers are negotiating, and the new rules have made the good buildings easier to identify than they have ever been. That combination does not last forever. It usually ends the moment everyone else notices.

The best condo purchase is not the cheapest one. It is the one where the price, the payment, the reserves, the insurance, the building, and the location all make sense together. Find that, and you are not buying into a weak market. You are buying into San Diego before the rest of the buyers come back.

See all of my digital media feeds: instacard.co/robert-schantz/home

Agents thinking about their next move: kwsandiego.kw.com/join-our-team

Buyer and seller resources: robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Sources: SDAR Monthly Indicators, August 2026; SDAR Local Market Updates for 92131 (August 2026) and 92126 (July 2026); Freddie Mac Primary Mortgage Market Survey, September 24, 2026; Fannie Mae Lender Letter LL-2026-03 (March 18, 2026); California Civil Code §5551; California Department of Insurance FAIR Plan rate approval. All data from the San Diego MLS via SDAR. Median prices do not account for seller concessions.

Buyers Are Locking Up Houses. Then They Come Back for $60,000.

Robert Schantz — Fri, 25 Sep 2026 12:03:01 GMT

The accepted offer used to be the finish line. In San Diego this fall, it is the starting line.

Here is what is crossing my desk right now as a managing broker. A buyer writes an offer on a single-family home. The seller accepts. Escrow opens. The inspection comes back. And then the request arrives.

Not a list of repairs. A number.

Fifty thousand dollars off. Sixty thousand dollars off. On a home the same buyer agreed to pay for less than two weeks earlier.

I want to be precise about this, because precision is the whole point. This is not happening on every deal. It is not the entire market. The really good homes are still selling, and they are still selling clean. But on the homes that need work, and in San Diego that is a lot of homes, the second negotiation has quietly become the real one.

One more thing before we go further. What follows is my personal opinion. It is what I am seeing from the broker’s chair and what I feel is going on. I do not have data that proves why buyers are doing this. I have a pattern I am watching, and I am telling you what I think it means.

What my office numbers say

I pulled our production numbers this morning. I am not going to publish our unit counts, but the percentages tell the story.

In August, about 27 percent of the contracts our agents wrote were terminated. More than one in four deals that got written did not survive escrow.

In September, through the 23rd, that rate is 12.5 percent. One in eight.

Two things are true at once.

September is a better month. Our closings are already running about 15 percent ahead of all of August, with a week still left to go.

August was a fallout month. A termination rate above one in four got my attention.

And my agents are telling me the fall feels slower. That is not a contradiction. Closings reflect contracts written 30 to 45 days ago. What an agent feels reflects this week: the showings, the offers, and what comes back after the inspection.

Translate that.

The September closings are the tail end of summer. The August terminations are the early warning.

But be clear on what these numbers can and cannot tell you. They tell you how often deals fell apart. They do not tell you why. The reasons are my read, not something this report measures.

Terminations dropped in September, and I want to be honest about what that does and does not mean. It does not mean sellers are giving in. I am not seeing that yet. Several of our September escrows are still in the middle of the repair negotiation right now. Some will hold. Some will not. It is case by case, and it will be October before we know how this month really ends.

How I am coaching my agents right now

Here is what I am telling my team, and what I am coaching them to tell their clients.

To buyers: there is opportunity in this market, especially in single-family homes. Yes, rates are where they are. But if you plan to hold long term, and if you can comfortably afford the monthly payment, this is a window, not a wall.

San Diego is not building many new single-family homes. We are building almost no condos for sale. I have written about both. When supply stays that tight for that long, time tends to favor the owner.

My personal belief is that ten years from now, you will not regret getting into a home. I think there is a real chance it will be worth close to twice what you paid for it. That is my opinion, not a promise, and nobody can guarantee what any market does. But I always coach toward the long-term vision, because real estate has always been a long game. Nobody times the bottom. You only recognize it in hindsight.

To sellers: the conversation is about reality. We cannot price like it is 2021. Right after COVID, a single listing could draw 50 or 60 showings and a stack of offers. We are just not seeing that right now. Price for the market you are actually in, and price for the condition of the house you actually have.

Same market, two conversations. Buyers need the long view. Sellers need the current view. Agents who can hold both at the same time are the ones who will close deals this fall.

Why I think buyers are doing it

Three forces are hitting the buyer at the same time.

The rate moved faster than the price

On March 19 of this year, the 30-year fixed rate averaged 6.22 percent in Freddie Mac’s weekly survey. On September 17 it averaged 6.95 percent. That was the fourth straight weekly increase and the highest reading since January 2025. A year ago the same survey sat at 6.26 percent. The Federal Reserve raised its benchmark rate this month, and borrowing costs followed.

Now put that against a San Diego house.

The median detached home in San Diego County sold for $1,120,000 in August, according to SDAR. Put 20 percent down and the loan is $896,000.

At 6.22 percent, principal and interest runs about $5,499 a month.

At 6.95 percent, it runs about $5,931 a month.

That is $432 more every month. Roughly $5,180 more every year. Same house. Same price. Same buyer.

Translate that.

To get the payment back to where it was in March at today’s rate, the price would have to come down by roughly $81,500.

Now look again at the size of the requests I am seeing. Fifty and sixty thousand dollars.

I cannot prove those two numbers are connected. Nobody is writing “rate” on a Request for Repair. But my gut tells me they are related. Buyers cannot negotiate with the bond market. They can negotiate with the seller. My read is that some of them are trying to buy back the rate one inspection report at a time.

San Diego houses are old

A Redfin analysis of 2024 sales found the median home sold in San Diego was 43 years old, compared with 36 years nationally. Seventy-one percent of the homes sold here were more than 30 years old.

An inspector walking a 43-year-old house is going to find things. Plumbing. Roofs. Electrical panels. Sewer lines. Windows. None of it is unusual for the age of the home. All of it becomes leverage once it is written down in a report.

Buyer’s remorse is real

Picture the buyer. They stretched to get to the price. They are now looking at a rate that starts with a seven. And then a 40-page inspection report lands in their inbox.

That is where the math and the emotion collide. There is no survey behind this, just what I feel watching these escrows. I think that is exactly where buyers are getting scared. They look at the number, they look at the report, and they conclude that something has to give.

The seller becomes the something.

This is the K-shape, one house at a time

I have written about the K-shaped economy before. The top of the market pulls away. The middle and the bottom grind. It shows up in income, in wealth, and in housing.

This fall, I believe it is showing up at the property level.

At the top of the K sits the turnkey detached home in a good neighborhood. It still draws buyers. It still closes near asking. Countywide in August, homes sold at 97.8 percent of original list price and took an average of 38 days on market, according to SDAR.

At the bottom of the K sits the house that needs work. It sits longer. And when it finally gets into escrow, the price gets retraded.

Pending sales countywide were down 12.0 percent year over year in August. Fewer buyers are in the market, and the ones who are there are pickier.

Translate that.

This fall, condition is the dividing line. The perfect house is in a different market than the house that needs a new roof, even if they sit on the same street.

The honest counterweight

The buyer is not doing anything wrong by asking.

The standard California purchase agreement gives the buyer a 17-day investigation contingency by default. During that period, the buyer can use the Request for Repair form to ask the seller to make repairs, give a credit, or lower the price. The seller is not obligated to agree to any of it.

That is how the contract is supposed to work. It protects buyers from buying a problem they could not see when they wrote the offer.

There is a line, though. C.A.R.’s own guidance says a buyer’s right to cancel rests on a good faith dissatisfaction with the property. A buyer who finds a failing sewer line has a legitimate reason to ask for money. A buyer who wrote a full-price offer already planning to retrade it after the inspection is playing a different game.

I cannot see inside a buyer’s head. Neither can the seller.

And one more thing in fairness to buyers. A seller who priced a house that needs work as if it were turnkey invited this conversation. Sometimes the renegotiation is simply the market correcting the list price after the fact.

What to do about it

If you are selling

Get a pre-listing inspection. Put the defects on the table before the offer, not after it. A buyer cannot use a problem as leverage if it was already disclosed and priced in.

Disclose early and disclose completely.

Price for condition. A house that needs $60,000 of work should be priced like a house that needs $60,000 of work. The market is going to make that adjustment either way. The only question is whether you make it on your terms before the listing goes live or on the buyer’s terms in the middle of escrow.

Ask for inspections to happen early in the contingency period. It gives both sides time to negotiate instead of forcing a decision on day 17.

Know your walk-away number before the repair request ever arrives.

If you are buying

Do your homework before you write the offer. Read the disclosures. Look at the age of the roof and the systems. Talk to your agent about what a house of that age usually needs.

Write the offer you actually intend to close on.

Use the repair request for what the inspection actually found. It is a legitimate tool. It is not a second offer.

And talk to your lender about rate options before escrow, not after. If the rate is what is really bothering you, the house is not the only place to solve it.

If you are an agent

Have the conversation at the offer stage, not the inspection stage. On an older home, ask your buyer directly: if the inspection comes back with the typical items for a house this age, what is the plan?

Listing agents, push your sellers toward pre-listing inspections and complete disclosures. Document what the buyer knew before they wrote.

Buyer agents, set expectations on older homes before you write. A buyer who is surprised by a 1978 house acting like a 1978 house was not prepared.

The contract is only as solid as the expectations behind it.

Where this goes from here

Twenty-four years in, this feels familiar to me. In my experience, it shows up when rates move faster than prices.

Prices are sticky. Rates are not. And the gap between the two gets fought over in escrow, one inspection report at a time.

It will settle. It always does. Either rates ease, or prices adjust to condition before the listing goes live instead of after. Until then, treat the accepted offer as the beginning of the negotiation, not the end of it.

The good homes are fine. The rest need a plan.

See all of my content in one place. My digital media feeds, articles, and video live here: instacard.co/robert-schantz/home

Agents: if you want to be in an office that talks about this out loud every week, take a look at what we are building at KW Metro: kwsandiego.kw.com/join-our-team

Buying or selling in San Diego? Start here: robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Sources

KW Metro San Diego internal production report, August 2026 (full month) and September 2026 (month to date through September 23); percentages calculated by the author
Freddie Mac Primary Mortgage Market Survey, weekly results for March 19, 2026 and September 17, 2026
SDAR Monthly Indicators, August 2026 (detached median price, percent of original list price received, days on market, pending sales)
Redfin analysis of 2024 home sales by age, as reported by Axios San Diego, June 2025
California Association of REALTORS®, Quick Guides: The Investigation Contingency; Negotiating Repair Requests
Payment figures are principal and interest only, 30-year fixed, 20 percent down, calculated by the author

San Diego Stopped Building Starter Homes. Washington and Sacramento Both Just Let It Stay That Way.

Robert Schantz — Tue, 22 Sep 2026 12:04:30 GMT

The single-family starter home in San Diego is not coming back. The condo that was supposed to replace it is not being built either.

After years of owning single-family homes, I bought a condo in Mission Valley this year. I was selective about which one. The building went up between 2005 and 2007, and the HOA is strong, with healthy reserves. I knew going in that I was not walking into a wave of special assessments or a surprise bill from the balcony inspections California now requires. In other words, I bought a well-run building from the last real window when California builders were willing to build for-sale condos at scale.

That timing is not a coincidence. Condo construction peaked in 2006 in four major California markets, including San Diego, and has never recovered.

This is the thesis. San Diego has run out of room for single-family, and California law has made the entry-level condo too risky to build. What gets built instead is apartments. Renters build no equity. And every year the first rung of the ladder stays missing, a generation starts building wealth later, or never.

The Land Is Gone

San Diego is boxed in. Ocean to the west, Mexico to the south, Camp Pendleton to the north, mountains and national forest to the east. Much of what remains sits in fire country, where insurance and defensible space rules now shape what a lot is worth before anyone pours a foundation.

Inside that box, the land is not empty. It is zoned and built. Berkeley researchers who categorized every parcel in the city found that single-family-only zoning covers 81 percent of residential land. Those neighborhoods are finished. Nobody is subdividing Clairemont into new tract homes.

Recently I heard a discussion at an event between two people who live on the supply side of this problem. One was a land developer, the person who takes raw ground through entitlement so it can be built on. The other was a residential builder, the person who actually gets the homes built. Their message was consistent. Impact fees alone can exceed $100,000 per home, before land, water, sewer, parking, and entitlement costs. Builders are protecting headline prices and moving homes with rate buydowns and upgrade allowances worth roughly 5 to 7 percent of the price. And there is a floor under new-home pricing. If the numbers do not pencil, the project does not get built.

Translate that. The detached single-family home is no longer a starter product in San Diego. It is a move-up product, a legacy product, or an inherited product.

The Condo That Never Came

For decades, the condo was the answer. Smaller footprint, shared land cost, a price a young household could reach. The condo was how people got on the ladder.

California broke that in 2002. A state law passed that year gives condo owners up to 10 years to sue developers or contractors over construction defects. That window covers major defects involving foundations and also cosmetic items like nail pops in drywall and bubbling paint. For rental housing, the comparable window is four years.

Look at what that does to a builder’s math.

Research commissioned by UC Berkeley’s Terner Center found developers often pay three to four times as much for insurance on condominiums as on similar rental apartments. A UC Berkeley estimate cited by Voice of San Diego puts the share of new condos sued for defects over the past 25 years as high as 80 percent. The president of the California Building Industry Association put it bluntly to CalMatters: “One hundred percent of our condos are sued for defect.”

So builders did the rational thing. They built apartments. New residential construction in California is now largely split between expensive single-family homes for buyers and apartment buildings for renters. The condo, the affordable middle, is mostly missing. Some developers went further. They build projects mapped as condos, then lease the units as apartments for the first 10 years until the liability window closes.

Translate that. The building that should have been a young couple’s first home is being rented back to them for a decade, while someone else collects the appreciation.

Washington Passed a Housing Bill. It Missed the Problem.

This summer, Congress finally acted. The 21st Century ROAD to Housing Act passed the Senate 85-5 and the House 358-32. It became law without the President’s signature on July 11. Supporters have called it the most comprehensive housing reform in at least three decades.

I read the section-by-section summary. There are good ideas in it. It directs HUD to set guidelines for single-stair residential buildings up to six stories, funds pre-reviewed designs for ADUs, duplexes, and townhouses, and streamlines federal environmental review for federally supported housing.

Now look at what it does not touch.

It does not touch the 10-year condo defect window. That is state law, and Washington did not go near it. It does not touch the capital gains exclusion that keeps longtime owners from selling. The More Homes on the Market Act, which would raise the exclusion to $500,000 for single filers and $1,000,000 for married couples with future inflation adjustments, was not part of the package. And the headline provision, restricting large institutional investors from buying single-family homes, carves out an exemption for investors buying or building homes specifically for the rental market.

Read that last one again. The flagship ownership provision of the biggest federal housing bill in decades protects build-to-rent. Even Washington’s answer to the ownership problem is more rentals.

The law also states that no additional funds are authorized to implement it. A large share of it is pilots, studies, grants, and frameworks. Useful, maybe. Transformational for a 34-year-old in Mira Mesa trying to buy a first home, no.

This is what needs to be talked about. The two policy levers that would move San Diego’s ownership pipeline fastest are condo defect reform and the capital gains exclusion. Washington passed its bill without either one.

Midnight on August 31

Sacramento came closer than Washington. Then it fumbled at the goal line.

Assembly Bill 1903 would have created a true right-to-repair process for condo defects. The Assembly passed it 70-0 in May. The City of San Diego, the San Diego Housing Commission, and the regional chamber of commerce all supported it. By the final weekend, the bill had been heavily softened. The last version simply required homeowners to document defects before suing, give the builder a chance to repair them first, and release the builder from future liability on defects that were properly repaired.

Then it died. The Senate passed it without objection after 11:15 p.m. on August 31. It never made it back to the Assembly for the required concurrence vote before the session closed at midnight. It died without a single no vote in either chamber.

The author has said she will bring it back. That means 2027 at the earliest, then a full building cycle on top of that. Any condo that benefits from reform is years away from a certificate of occupancy.

The Ladder Is Frozen at the Top, Too

Now look at the other end.

According to NAR’s 2025 Profile of Home Buyers and Sellers, the typical home seller is 64, the oldest ever recorded, and the typical repeat buyer is 62. Nationally, sellers had owned their homes a median of 11 years before selling, an all-time high. San Diego runs longer. A 2026 analysis of county records by Redfin puts the typical San Diego homeowner’s tenure at 14.5 years. In 2005, the typical U.S. owner stayed 6.5 years.

The land developer at that event described exactly who is staying. Longtime owners who are house rich but not cash rich. A 2.5 to 3 percent mortgage they do not want to trade. A Prop. 13 tax basis from another era. And a gain that blows past the federal exclusion Congress set in 1997 and never indexed for inflation. Put those together and the kids-are-gone, house-is-too-big conversation ends the same way at a lot of kitchen tables. We will just stay.

When that owner stays, the chain never starts. No downsizing purchase, no move-up buyer, no starter home released at the bottom.

Why You Will Not See a Crash

Stack it up. No land for single-family. No condos coming. Washington and Sacramento both passed on the two fixes that matter most. Longtime owners locked in place. And on top of all of it, the organized no.

I have written about this twice before. In The Original Sin Is Housing, I laid out how affordability, housing, and homelessness are rungs on the same ladder, and how the same voices blocking new homes are often the ones demanding someone do something about the tents. In Zoning Out, I took that argument national and named the NIMBY, CAVE, and BANANA crowd for what they are: the reason the next project never gets built.

This is why I argue you will not see a real estate crash in San Diego, or prices meaningfully coming down. A crash needs forced sellers and excess supply. San Diego has neither. Lender-mediated sales were 4.5 percent of closed sales in June. Supply is not coming, and the people who could add it keep voting it down.

Translate That: The Equity Clock

Put both ends together and here is the result. First-time buyers fell to 21 percent of all purchases, a record low, and the typical first-time buyer is now 40, a record high. In the 1980s, first-time buyers were in their late 20s.

A household that buys at 40 instead of 28 does not just start late. It loses twelve years of principal paydown and twelve years of appreciation it will never get back. On a 30-year mortgage, a 40-year-old buyer makes the last payment at 70. That is the real cost of a missing starter product. It shows up in retirement accounts decades from now.

The Counterweight

I want to be fair about this, because the other side has a point.

Construction defects are real. The Consumer Attorneys of California and many homeowners associations argued AB 1903 would make it too hard for homeowners to hold irresponsible builders accountable for genuinely defective work. A buyer who discovers water intrusion in year eight deserves a remedy. The reform conversation is about shortening the window and requiring a repair attempt first, not removing protection.

The cost impact may also be smaller than builders claim. One consultant’s analysis estimated litigation risk adds roughly 1.9 to 4.4 percent to condo construction costs. Supporters argue that is enough to push developers toward rentals. Skeptics argue it is not the whole story. Both can be true.

There is movement elsewhere. SB 79 now allows substantially higher density near qualifying transit stops in San Diego. The City has also implemented AB 1033, which allows ADUs to be split off as separate condominium units and sold independently of the main house. That is a small but real new source of entry-level ownership. The catch is that if the new transit-area buildings are rentals, density alone does not create owners.

The Action Step

For buyers under 40, stop waiting for the perfect starter house. It is not coming. The realistic entry point in San Diego is a resale condo or townhome, and the building matters as much as the unit. Do what I did. Read the reserve study, check the HOA’s litigation and special assessment history, confirm where the building stands on balcony inspections, and verify the project qualifies under the Fannie Mae and Freddie Mac condo review changes that took effect August 3. A strong HOA is not a luxury. It is the insurance policy on your equity. If you are looking at new construction, negotiate for the rate buydown, not the upgrade package.

For owners over 60 who have quietly thought about downsizing, run the real numbers with your CPA before you decide you cannot move. Prop. 19 base-year transfers, the current exclusion, and your actual adjusted basis may look different on paper than they do in your head.

For everyone, pay attention when the condo defect bill comes back in 2027, and ask your representatives in Washington why the capital gains exclusion was left out of the biggest housing bill in thirty years. Those two votes will decide whether the next generation of San Diegans owns anything at all.

Real estate is always a long game. The question is whether anyone in power lets the next generation start playing it before they turn 40.

Keep going:

See all my digital media feeds in one place: instacard.co/robert-schantz/home

Agents who want to build a real business in this market: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Sources: NAR 2025 Profile of Home Buyers and Sellers; Redfin homeowner tenure analysis (March 2026); CalMatters, “Why a bill to juice condo construction died even though California lawmakers voted for it” (September 1, 2026); The Real Deal (May 27, 2026); Voice of San Diego Sacramento Report (July 10, 2026); UC Berkeley Terner Center, Construction Defect Liability policy brief (2024) and EPS impact report (2025); UC Berkeley Othering & Belonging Institute San Diego zoning analysis; Bipartisan Policy Center section-by-section summary of the 21st Century ROAD to Housing Act; NPR (July 10, 2026); City of San Diego Information Bulletin 479 (SB 79); SDAR Lender-Mediated Properties Report, June 2026.

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Buy the Association, Not the Condo

Robert Schantz — Fri, 18 Sep 2026 12:03:21 GMT

The most expensive number in a San Diego condo purchase is not the price. It is the percent funded figure buried on page two of a disclosure summary that most buyers never open.

If you are shopping condos in this county right now, you are probably here because detached is out of reach. The August 2026 report from the Greater San Diego Association of REALTORS®, current as of September 5, shows a single-family median of $1,075,000 against a condo and townhome median of $665,000. That is a $410,000 gap. Twelve months ago it was $380,000. The gap is not closing. It is opening.

So the condo is not a consolation prize. It is the entry point. But it is an entry point where the entire risk profile of the purchase sits in documents the seller is legally required to hand you and almost nobody reads.

The market has split, and the data says so

From that same SDAR report, on a rolling twelve-month basis:

Single-family median rose 2.4 percent. Condos and townhomes fell 0.7 percent.
Market-wide inventory dropped 10.0 percent. The condo and townhome segment rose 4.6 percent.
Months supply: 2.3 for single-family, 4.0 for condos.
Days on market: 38 for single-family, 44 for condos.
Percent of original list price received: 98.1 percent for single-family, 97.4 percent for condos.

Two numbers I ran off that report that nobody publishes. Condos and townhomes are 49 percent of everything currently for sale in San Diego County. They are 36 percent of everything that closed.

Translate that. Half the shelf is attached product. A third of the register is attached product. Something is happening between the listing and the closing table that is not happening to houses.

How old is this stock, actually

There is no public dataset that segments San Diego County condominiums by year built. Census and ACS classify housing by structure type and tenure, not by ownership form, so a condo and an apartment in the same building look identical in the data. Anyone who tells you the exact local figure is estimating.

Here is what the reliable sources do say.

The Community Associations Institute, drawing on American Housing Survey data, puts approximately 67.4 percent of California condominiums, roughly 797,100 units, as built prior to 1990. The same dataset estimates about 185,000 condo units in San Diego.

Census data shows 20 percent of all San Diego homes were built in the 1970s, compared to 13.9 percent nationally, and 18.2 percent in the 1980s, compared to 12.7 percent countrywide. Nearly half the region’s housing stock came out of those two decades.

And a Redfin analysis found the median home sold in San Diego in 2024 was 43 years old, with 71 percent over 30 years old. Nationally the median was 36 years and 55 percent.

Put those together. Roughly two thirds of California condos predate 1990, and San Diego’s overall stock is measurably older than the country’s. The local condo number is not coming in below that statewide figure. If you are shopping attached in this county, you should assume you are shopping pre-1990 unless the listing proves otherwise.

Why the year built lies here more than anywhere else

The first instinct of most buyers is to shop by vintage. Newer building, fewer problems. It is a reasonable instinct and in San Diego it is unusually unreliable.

Between 2004 and 2006, the City of San Diego saw close to 19,000 condo conversions completed or proposed. City data from June 2006 showed 11,300 apartment units already converted to for-sale units, with another 7,400 slated.

That was the second wave. In the late 1970s, fearing the imposition of rent control in San Diego, apartment owners rushed to convert their units to condominiums, and when that market slowed many of those properties went back onto the rental market. Two conversion booms, three decades apart, both driven by something other than the condition of the buildings.

A conversion does not change the building. It changes the paperwork.

So a unit that presents as a 2005 condo may sit inside a 1972 wood-framed structure with 1972 plumbing stacks, 1972 framing behind the stucco, and balconies that were fifty years old before anyone was required to inspect them. The recorded map is twenty years old. The building is not.

There are real vintage lines worth knowing. After the 2015 Berkeley balcony collapse, the California Building Standards Commission approved emergency building standards on January 27, 2017, effective January 30, 2017, requiring ventilation beneath enclosed exterior elevated elements, sloped waterproofing surfaces, increased structural live loads for balconies and decks, and special inspections during construction. Anything built before that was not built to those standards.

And under Code of Civil Procedure §337.15, no action for latent construction deficiencies may be brought more than ten years after substantial completion. That deadline is absolute. It cannot be extended, tolled, or waived, and it runs regardless of when the defect was discovered. Any building substantially completed before 2016 has no builder left to pursue. Whatever is wrong with it belongs to the owners.

Those are useful screens. They are not the answer.

Here is the answer. A 1972 building with a board that has funded its reserves, completed its balcony inspection, and budgeted the repair is a better purchase than a 2006 building that has deferred everything for a decade. I will take the well-run 1972 project every time. Age determines how much money the building is going to need. The association determines whether that money is already there.

What changed on August 3, and why it matters to you specifically

Before August 3, 2026, roughly 60 percent of condo loans were approved on limited information. If you put 10 percent or more down on a primary residence, your lender used a Limited Review and never looked at the association’s finances at all. The Community Associations Institute estimates that pathway accounted for about 40 percent of all condo project reviews.

On March 18, 2026, Fannie Mae issued Lender Letter LL-2026-03 with a coordinated Freddie Mac bulletin the same day. Here is the calendar that affects you:

March 18, 2026. The 50 percent investor concentration limit for established projects was retired. A rental-heavy building is no longer disqualified on that basis alone.

July 1, 2026. Master property insurance policies carrying a per-unit deductible above $50,000 fail eligibility.

August 3, 2026. Limited Review and Freddie Mac’s Streamlined Review are retired. Every established project with more than 10 units now requires a Full Review regardless of down payment, credit score, or borrower profile. The reserve study must have been completed within the last 36 months and must recommend and follow the highest funding level.

January 4, 2027. The minimum budgeted replacement reserve allocation rises from 10 percent to 15 percent of total annual budgeted assessment income.

Note carefully that the 15 percent figure is a share of the association’s annual budget going into reserves. It is not the same thing as percent funded. Those two numbers get confused constantly, including by board members, and they measure completely different things.

The practical effect is this. Your lender is now reading the association’s budget, insurance, delinquency rate, litigation status, special assessments, and reserve study. And your lender reads them in week three of escrow, not week one.

The reserve study, and what the numbers actually mean

Percent funded is the association’s reserve balance divided by what it should have saved by now based on accumulated wear. It appears on the Assessment and Reserve Funding Disclosure Summary, which Civil Code §5570 requires to accompany the annual budget report. Civil Code §5565 requires that summary to show the percent funded ratio, replacement cost estimates, and remaining useful life for each component.

Association Reserves published an analysis in April 2026 drawn from more than 100,000 reserve studies prepared between 1986 and 2025. The distribution:

34 percent of associations sit below 30 percent funded, where special assessment risk is high.
40.3 percent sit between 30 and 70 percent funded.
25.7 percent sit at 70 percent or above, where assessments are rare.

Another firm’s sample put the average at 59 percent funded and the median at 51 percent.

Read that honestly. Seventy percent is the benchmark, and it is worth understanding, but the median association in this country is sitting around half funded. You are not shopping for a perfect building. You are shopping to stay out of the bottom third.

Civil Code §5550 requires a reserve study with visual inspection at least every three years. That requirement now has teeth it never had before, because a study older than 36 months fails the lender independently of what the study says.

Buyers: the six documents, in the order that matters

Under Civil Code §4525 the seller must deliver the disclosure package, and §4530 requires the association to produce it within ten days of a written request. Ask for it before you write the offer, not after acceptance.

1. The reserve study and the funding disclosure summary. Check the date first. Then the percent funded. Then compare it against the figure from three years ago. Direction matters more than level. A project moving from 18 percent to 26 percent has a board doing its job. A project sliding from 31 percent to 19 percent does not.

2. The SB 326 inspection report. Civil Code §5551 required condominium associations to complete the first balcony and exterior elevated element inspection by January 1, 2025, with reinspection every nine years. Be careful with the date. AB 2579 pushed the apartment deadline under SB 721 to January 1, 2026, but it expressly excluded homeowners associations. A great deal of bad information is circulating on this point. Buildings constructed after January 1, 2020 have six years from certificate of occupancy instead. As of January 1, 2026, SB 410 expanded disclosure of these reports during transfer, so you should be receiving it. Three questions: does the report exist, what did it find, and is the repair funded inside the reserve study or waiting on an assessment nobody has voted on yet.

3. Board minutes, twelve months minimum. Water intrusion, roof bids, insurance renewal panic, and repair arguments show up in minutes long before they show up on a disclosure form.

4. The current operating budget and the insurance renewal history. Check the master policy deductible against that $50,000 ceiling.

5. Litigation and construction defect disclosure. For anything built between 2005 and 2015, ask specifically whether the ten-year window closed without a claim being filed.

6. The assessment history. A special assessment inside the last twelve months paired with an insurance renewal that came in higher is the pattern that most often precedes another one.

Sellers: this is your problem too, and it is cheaper to solve early

Everything above cuts the other direction if you own the unit.

Getting the disclosure package out of an association is not always quick and it is not always cheap. The association is entitled to charge for assembling it, and on larger associations and outside management companies I have seen bills in the $900 to $1,000 range. Turnaround can run right up against the ten-day statutory window, and sometimes past it, which lands in the middle of your buyer’s contingency period at exactly the wrong moment.

There is a simpler way to handle it, and it starts long before you list.

Most associations now run an owner portal. Mine does. Every month I download and file the board minutes, the financials, and anything the association circulates about the reserve study. It takes about four minutes. When I eventually sell, most of the package is already sitting in a folder on my drive, current and organized, at no cost.

If you are planning to sell in the next year or two, do this now:

Log into your association portal and find out what is actually available to you as an owner.
Download and save the board minutes every month as they post.
Save the annual budget report and the reserve funding disclosure summary each year when they come out.
Get a copy of your building’s SB 326 inspection report and whatever the board has said about funding the repairs.

When an offer comes in, you hand the buyer and the lender a complete, current package on day one instead of waiting on a management company and paying a four-figure invoice under time pressure. Nothing stalls. Nothing surprises the underwriter in week three.

And there is a second benefit that is worth more than the fee you saved. A seller who produces clean, organized association documents immediately signals a well-run building. A seller who cannot produce them signals the opposite, whether that is fair or not.

And now the part that gets missed

Fannie Mae expanded the Waiver of Project Review. It now covers new and established projects with ten or fewer units, up from four. Projects of five to ten units qualify only if they are not part of a master association or a larger development. Four units or fewer are not subject to that restriction. The project also cannot carry an Unavailable status in Fannie Mae’s Condo Project Manager, and it must meet applicable insurance requirements.

That reads like relief. Follow it one more step.

If you buy in a ten-unit building, no underwriter ever opens that association’s budget. No underwriter reads the reserve study. No underwriter asks whether the balcony inspection happened. You close faster and you close with zero third-party verification of anything.

Then the roof fails, and the bill divides by ten instead of by sixty.

Small projects concentrate assessment risk. They are the least likely to carry professional management, the least likely to have a current reserve study, and the most likely to be older buildings in the metro area, which is exactly the inventory a first-time buyer can afford.

Translate that. In the buildings where the lender has stopped doing your homework, you have to do all of it. Buyer beware means something specific here. It means the only diligence performed on that association will be yours.

The counterweight

None of this is an argument against buying a condo. The opposite.

The discount is being applied to the entire attached category. It is not being applied selectively to the badly run projects. A well-managed 1974 association with a current study, a completed inspection, a funded repair plan, and reserves in the fair band is priced against the same comparables as the project down the street that has deferred everything for a decade.

A buyer who can tell those two apart is buying the good building at the bad building’s price. That is the closest thing to a structural edge available to a first-time buyer in San Diego right now, and it costs a weekend of reading.

The action step

If you are buying, request the §4525 package before you write an offer. Not after acceptance. Before. If the seller cannot produce it, or the association wants three weeks and a fee to assemble it, that is data. A well-run association has this material ready, because a well-run association has already been asked for it.

Read four numbers: the date of the reserve study, the percent funded, the master policy deductible, and whether the SB 326 inspection has been completed and funded.

If those four are clean, you are buying a building. If they are not, you are buying a building plus an invoice with no due date on it yet.

If you are selling, go build the folder this month.

Want the rest of what I publish? Everything I put out, across every channel, lives here: instacard.co/robert-schantz/home

Agents: if you are reading this and wondering what it looks like to work at a brokerage where the broker writes this kind of analysis for you before you need it, start here: kwsandiego.kw.com/join-our-team

Buyers and sellers: robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

San Diego Set Its Ceiling in 1972

Robert Schantz — Tue, 15 Sep 2026 12:03:45 GMT

San Diego did not run out of housing because builders lost interest. San Diego ran out of directions.

We built east until we hit the backcountry, north until we hit Camp Pendleton, south until we hit the border, and west until we hit the ocean. That leaves one direction. In November of 1972, the voters of this city capped it at thirty feet and went home.

I am not writing this to relitigate 1972. I live here. I understand why people voted the way they voted, and I understand why their kids defend the result. What I am writing about is the arithmetic that shows up fifty-four years later, when the only remaining direction is up, the only remaining land is land we already built on once, and the decisions about both are being made in Sacramento instead of on Sports Arena Boulevard.

My last piece, Zoning Out, argued that zoning is the root of the national housing shortage. This one is the local version. Same disease, different patient, and the patient happens to be the eighth largest city in the United States with the land use policy of a beach town.

What the voters actually passed

Proposition D was a citizens’ initiative on the November 1972 ballot. It amended the Municipal Code to prohibit any building over thirty feet in the city’s Coastal Zone, defined as everything from the northern city limits south to the Mexican border, seaward to the edge of city jurisdiction and inland to Interstate 5.

The petition circulated to get it on the ballot said the point was to keep the beaches usable by all citizens and to prevent high-rise barriers from walling off access. That was the stated purpose. It is codified today at San Diego Municipal Code section 132.0505 as the Coastal Height Limit Overlay Zone.

Three things about that measure explain almost every skyline question a San Diegan has ever asked me.

Downtown was written out of it from day one. The initiative excluded the land bounded by Laurel Street on the north, San Diego Bay on the west, and National City on the south. Center City was never subject to the thirty-foot limit. That is why the towers are where they are. Downtown is not an exception that got granted. Downtown was never in.

The towers on the coast came first. Capri by the Sea in Pacific Beach, the twelve-story building that helped convince residents to gather signatures in the first place, was already standing. So were the Mission Bay hotel towers and the oceanfront buildings in La Jolla. Anything completed or permitted before the measure took effect was grandfathered. The high-rises you can see from the water are not violations. They are the reason the law exists.

Only voters can change it. Because Proposition D was a citizens’ initiative, the City Council cannot amend it. Every exception since has required a citywide vote. Voters granted SeaWorld a leasehold exemption in 1998 allowing structures up to 110 feet. Voters approved narrow carveouts for specific parcels including the old Mission Brewery and the Gateway to the Americas site in San Ysidro.

Translate that. In the coastal zone of San Diego, every foot above thirty is a ballot question.

NIMBYs then, NIMBYs now

I watch too much YouTube. My family will confirm it. Most of what the algorithm serves me is noise, and then every so often it hands me something that sharpens an argument I have been having for twenty years.

This weekend it handed me archival footage of San Diego residents in the seventies, the eighties, and the nineties talking about their own neighborhoods. Three decades, three sets of haircuts, three generations of camera equipment. One script.

They liked it the way it was. They did not want more people. They did not want more traffic. They did not want the character of the place to change. They said it politely, they said it sincerely, and most of them said it while standing in subdivisions that had been built fifteen or twenty years earlier over the objections of the people who were there before them.

I have sat in community planning group meetings this year and heard the same three sentences, in the same order, from people who were not born when the first interview was filmed.

Translate that. Neighborhood opposition is not an event that shows up when a specific project is proposed. It is a constant. It is the background condition of building anything in this county, it was the background condition in 1972, and it will be the background condition in 2072.

That matters for one reason. If you design a land use system in which a constant gets a veto, you have not built a process. You have built a wall with a suggestion box attached to it. Proposition D was a reaction to a specific set of towers on a specific stretch of sand, written by people who could see the problem out the window. What it became was a permanent instrument handed to a permanent opposition, usable in places nobody in 1972 was thinking about, against buildings nobody in 1972 could have imagined objecting to.

The people in that footage were not villains and neither are their grandchildren. They were defending what they had. Everyone does. But a city cannot make fifty-year decisions using a mechanism that asks the same question every time and gets the same answer every time.

Twice the voters said yes. Twice it did not matter.

Here is where the story stops being history and starts being a live problem.

In 2020, city voters passed Measure E to lift the height limit in the Midway-Pacific Highway Community Plan area, roughly 1,324 acres around Sports Arena Boulevard bounded by Interstate 8, the airport, Interstate 5, and Lytton Drive. A court threw it out. The city had not adequately studied the environmental impacts under the California Environmental Quality Act before putting it on the ballot.

In 2022, voters passed it again as Measure C, by a comfortable margin. The city went back, hired a firm, produced a supplemental analysis concluding taller buildings would not create significantly different impacts. In October of 2025, the Fourth District Court of Appeal ruled the supplemental analysis was still inadequate on noise, air quality, biological resources, and geology. In late December the California Supreme Court declined to review the case and declined to depublish the opinion, which makes it binding precedent. On August 24, 2026, under court order and with a unanimous vote, the City Council repealed Measure C. Councilmember Jennifer Campbell said plainly that the city had no choice, and that refusing would put the city in contempt.

So the thirty-foot limit is back in Midway. Not because the voters changed their minds. The voters said yes twice.

Consider what the fight was actually over. Midway Rising proposes roughly 4,254 homes, close to half of them designated affordable, plus a 16,000-seat arena and fourteen acres of public space, on 48 acres of city-owned land. The site is a parking lot next to a freeway. It is not a bluff, not a beach, and not a view corridor. The city had already rezoned the broader Midway district in 2018 to allow more than 10,000 homes and had done the environmental work to support it.

Translate that. An environmental statute was successfully used to stop apartments on asphalt, twice, in a district where the dominant natural feature is surface parking.

I want to be fair about this, because the people who sued are not cartoon villains. Their position is that the city cut corners on disclosure, and two courts agreed with them on the law. The city’s process was sloppy. That is a real finding. But notice what the tool accomplished regardless of intent. Fourteen years of process, two citywide elections, and zero homes.

Sacramento noticed

While San Diego was losing in court, the Legislature was rewriting the rules underneath the whole argument.

On June 30, 2025, Governor Newsom signed AB 130 and SB 131 as budget trailer bills, effective immediately. AB 130 created a statutory CEQA exemption for infill housing on sites up to twenty acres, codified at Public Resources Code section 21080.66. Statutory matters. Unlike the categorical exemptions developers used to rely on, a statutory exemption is not subject to the “unusual circumstances” argument that project opponents have used for decades. SB 131 narrowed review for projects that nearly qualify, limiting the study to the single condition that disqualified them.

Then came SB 79, the Abundant and Affordable Homes Near Transit Act, signed in October 2025 and effective July 1, 2026. It applies to counties with at least fifteen passenger rail stations, which includes San Diego. It requires cities to allow housing at set heights and densities near qualifying transit stops.

San Diego has no tier one stops. Every qualifying trolley and Rapid bus stop here is tier two. That means 85 feet within 200 feet of a stop, 65 feet within a quarter mile, and 55 feet from a quarter mile to a half mile.

The coastal limit is thirty.

The City Planning Department estimated that full SB 79 zoning changes would allow an additional 367,000 homes. The city’s housing element requires planning for 108,036. The law does not require anyone to build those homes. It requires the city to stop making them illegal.

San Diego responded by phasing it. The Council adopted an implementation ordinance on May 7, 2026. Roughly 24 percent of eligible area was upzoned on July 1, mostly around the Mid-Coast Blue Line stations in Bay Park and the UTC and UCSD area, plus Rapid bus stops in North Park and Normal Heights after SANDAG’s June 18 map added stops the city’s draft had left out. The rest is delayed to 2027, 2031, or as late as 2032, or exempted outright, on the basis of fire risk, low resource designation, historic resources, sea level rise, and walking distance. A Transit Village Plan, San Diego’s alternative plan for shifting density between station areas, is expected to reach the Council in early 2027.

The fire mapping is where this gets contested. Build SD’s read is that the city’s own very high fire hazard severity map covers 35 to 40 percent of the SB 79 area, while the state map the statute points to covers something closer to 5 to 7 percent. The city intends to use its own map. That single methodological choice moves more parcels out of reach than any vote taken in this city since 1972.

The bills on the Governor’s desk right now

And Midway Rising, having lost the ballot measure it won twice, may proceed anyway.

In the final days of the legislative session, the Legislature passed two bills authored by Senator Akilah Weber Pierson and sponsored by Mayor Todd Gloria.

Senate Bill 344 declares that once the city certifies the project’s environmental impact report, Midway Rising has fully satisfied CEQA. That cuts off the argument that the review itself is legally deficient, which is the exact argument that killed Measure E and Measure C. If it takes effect, it is the first state law of its kind written for a single development.

Senate Bill 958 is the broader one. It bars increased building height from being treated as a significant environmental impact under CEQA for any non-industrial infill project with a certified environmental impact review. It was originally drafted as a Midway carveout and was later amended to apply statewide. It exists to negate the court rulings.

Governor Newsom has until September 30 to sign or veto both. He can also decline to act, in which case they become law without his signature. Project opponents are publicly asking for a veto.

The Council itself has still not voted on Midway Rising. No hearing date is set. The city and the developers do not have a deal to build. They have a deal to reach a deal by December. And Councilmember Joe LaCava’s read is that the project’s affordable component already permits a deviation from the height limit under state housing law, which would mean the developer never needed Measure C and may not need these bills either.

Translate that. The height limit did not fall at the ballot box. It is being routed around from Sacramento, project by project, and both sides of this argument should be uncomfortable with that. If you are pro housing, you are winning through preemption rather than persuasion, and preemption is fragile. If you are protective of the coastal limit, you should understand that the local law you are defending is being converted into a formality by attrition.

The infill math

Here is the part nobody in either camp enjoys.

The greenfield option is functionally closed. Newland Sierra, Lilac Hills Ranch, North River Farms, Fanita Ranch. Those were the big county projects, and they were defeated, reversed, or litigated into a decade of delay. I am not arguing they were good projects. Several were sprawl in a fire corridor, and the wildfire and evacuation objections were legitimate. I am arguing that if you close the edges, you have made a decision about the middle, whether or not you meant to.

The middle looks like this.

The Regional Housing Needs Assessment puts the city of San Diego at roughly 108,000 homes needed by the end of the decade. That is about 13,500 approvals a year.

Actual permits issued in the city: 5,033 in 2021. 5,314 in 2022. 9,693 in 2023. 8,782 in 2024.

Mayor Gloria is entitled to the credit he claims on the trend. Nearly 8,800 in a single year is more than double the annual average of the prior two decades, and San Diego permits more homes per capita than any other large California city. Both of those things are true, and the city is still at roughly two-thirds of where the long-term targets say it should be.

Meanwhile the existing rental stock is running about 97 percent full. That is not a forecast. That is a measurement.

We bought the train and zoned out the riders

The transit half of this is the part that should embarrass everyone.

The Mid-Coast Trolley extension cost two billion dollars and opened in 2021. The Clairemont Drive Station, four years in, has the third-lowest weekday ridership on the entire trolley network. Only Gillespie Field and the stadium stop do worse, and the stadium stop is event-driven.

Ethan Elkind at UC Berkeley’s Center for Law, Energy and the Environment attributes it to what surrounds the station. Most of the land within walking distance is zoned for single-family homes, and the draft Clairemont plan update would largely keep it that way. City Planning Director Heidi VonBlum’s stated reasoning is feasibility: the parcels are small, and small parcels are less likely to redevelop.

Compare Grantville on the Green Line. MTS partnered with developers to put two apartment projects on the station’s own parking lot. Boardings rose 65 percent.

Elsewhere on the Blue Line, a 380-unit project took six years to win approval.

MTS carried 42.6 million trolley trips in its most recent reported fiscal year, up from 39.6 million, and is staring at a fiscal cliff.

Translate that. We financed the infrastructure with public money, then used land use policy to guarantee that fewer people could live next to it, and now we are surprised the operating budget does not work.

Mission Valley is the answer and it is already under construction

Now put Clairemont next to Mission Valley, because the contrast is the whole argument.

The Green Line runs Fashion Valley, Hazard Center, Mission Valley Center, Rio Vista, Fenton Parkway, Stadium, Mission San Diego, Grantville, and SDSU. That is the densest run of stations in this county outside of downtown. It sits in a valley that is nowhere near the Coastal Zone. No thirty-foot limit. No bluff. No view corridor. No beach access argument available to anyone, in good faith or bad.

Two projects are converting that line into something Clairemont Drive will never be.

Riverwalk. Hines is building 4,300 homes on the 200 acres that used to be the Riverwalk Golf Club, roughly 430 of them income-qualified, alongside 150,000 square feet of retail, a million square feet of office, and close to 100 acres of parks and restored river. The project went on hold in May of 2024 and restarted in late 2025 with construction financing in place. Phase one includes 721 market rate apartments and townhomes, the 190-unit affordable Becker project by Wakeland Housing already under construction, 75,000 square feet of grocery-anchored retail, and a new Green Line station on the site. Phase one is targeted for spring of 2029.

SDSU Mission Valley. Up to 4,600 homes on the old stadium site, roughly 460 of them affordable, plus 1.6 million square feet of research and innovation space, 95,000 square feet of retail, more than 80 acres of parks including the 34-acre river park, and a 35,000-seat stadium that already opened in 2022. Full buildout is a ten to fifteen year proposition and vertical residential development is underway.

Add those two together and you have close to 9,000 homes landing on a single trolley line, next to a regional mall, a stadium, a research campus, a river park, and a station that is being built as part of the project rather than hoped for afterward.

Grantville already proved the mechanism at small scale. Two apartment projects on the station parking lot, and boardings up 65 percent.

Here is my own call, and I will label it as opinion rather than projection. Within ten years, Grantville, the Mission Valley stations, and the Stadium stop will be among the busiest on the system. Clairemont Drive will not. Clairemont Drive is ringed by single-family zoning that the draft community plan update proposes to preserve, and there is no service adjustment, no fare change, and no marketing campaign that fixes a station with nobody living around it. You cannot operate your way out of a land use decision.

So I advocate for housing in Mission Valley, and I do it without apology. That is where the stations already are. That is where the land has already been graded, paved, and built on once. That is where nobody can claim you are taking their ocean view, because there is not one. And that is where the capital is already committed and the shovels are already in the ground.

If San Diego wants to prove that transit-oriented development works here before the state finishes deciding the question for us, Mission Valley is the proof. It is the one place in this city where the argument has already been won.

The honest counterargument

I do not get to make this case and skip the other side.

The demand forecast is genuinely contested. SANDAG’s 2050 population projection has been revised downward repeatedly as birth rates fell, life expectancy gains stalled, and net domestic migration out of California turned negative in the middle of the last decade. Norm Miller, real estate professor emeritus at the University of San Diego, told inewsource that these projections tend to overestimate demand and that the region is starting to lose population, which would reduce the need for new supply. There is a serious argument, made in print in 2024, that the county has already permitted enough units to cover projected growth through 2050.

Second, upzoning is not construction. Elkind concedes this directly. Zoning capacity is permission, not product. Interest rates, insurance, construction costs, and labor decide what actually gets built, and right now all four are working against vertical projects.

Third, concentrating permission into a few parcels can backfire. When you allow height on a small number of sites instead of a broad area, you focus demand like a magnifying glass, land prices spike, and what pencils is high-end product. The people who predicted that luxury towers would be the output of Midway were not wrong about the incentive structure. They were wrong about the alternative, which turned out to be nothing.

Fourth, and this is the part my industry is worst at hearing: people who bought a home in Pacific Beach in 1979 under a rule the voters wrote are not irrational for defending that rule. They paid for a view that the law promised them. Telling them their neighborhood must absorb a state mandate they never voted on is not a persuasion strategy. It is an announcement.

There is a fifth objection worth naming, and it is the strongest one against the bills sitting on the Governor’s desk. Assemblymember Tasha Boerner, who represents part of the Midway area, declined to vote on the package and said that addressing the housing crisis requires allowing public scrutiny and allowing the public to sue when the assessment of impacts is wrong. That is a real principle, not an obstruction tactic. A statute that declares a document adequate by legislative fiat is a different thing than a court finding it adequate on the merits.

So take the counterargument seriously and it still lands in the same place. A shortage does not show up in headcount. It shows up in price and in vacancy. If population growth has genuinely stopped in a county with a Mediterranean climate, three major research clusters, the largest naval concentration on the West Coast, and a border economy, that is not proof the housing supply is adequate. That is the market reporting who already gave up and left. My own transaction files say the same thing. The people who leave San Diego rarely leave because they stopped liking it here.

What the next fifty years actually depends on

Not on whether San Diego becomes a major metropolitan region. That already happened. The population, the job base, the biotech corridor, the port, the border, and the airport traffic already describe a major metro. What has not happened is the corresponding decision about form.

The choice in front of this county is not growth versus no growth. That question was settled by geography. The choice is between two versions of the same outcome.

Version one: San Diego draws its own map. The Transit Village Plan and the community plan updates get taken seriously as the real venue. The city decides where height goes, negotiates for design quality, ground-floor retail, park space, evacuation capacity, and school siting, and trades density between station areas on purpose. Painful, slow, local, and ours.

Version two: San Diego keeps phasing, exempting, and litigating, and the state keeps preempting. Height arrives anyway, one density bonus and one single-project statute at a time, with no coherent plan behind it, no design standards worth the name, and no local leverage to extract anything in exchange.

Nobody likes change. Change is inevitable. Growth is optional.

The thirty-foot limit is not going to be repealed citywide, and honestly it should not be. There is a defensible version of that law: protect the actual beachfront view corridors, the bluffs, and the public access the 1972 petition described, and stop pretending that the parking lots along the Midway corridor and the trolley platforms four miles inland are the beach. The line was drawn with a highway because a highway was convenient in 1972, not because a highway describes a coastline.

What to do about it this quarter

If you own property near a qualifying transit stop. Check the SB 79 Eligible Sites (2026) layer in the city’s Zoning and Permit Portal before you list, refinance, or turn down an offer. Sites eligible on July 1 have a different value than sites phased to 2031, and most owners have no idea which one they hold. This is now a material fact in pricing conversations and comparable analysis, and very few listings reflect it yet.

If you are advising a seller in Bay Park, Clairemont, North Park, or Normal Heights. The buyer pool for those parcels changed on July 1. Some of your comparables are pre-SB 79 and are already stale.

If you have an opinion about Midway. September 30 is the decision date on SB 344 and SB 958, and the Governor’s office takes public correspondence on pending bills until he acts. After that the venue moves back to the Council, which still has to certify the environmental report and finalize the lease, with a December deadline on the development agreement.

If you are a resident with a broader opinion. The Transit Village Plan is being drafted right now for a Council presentation in early 2027, and the Clairemont, Mid-City, and Otay Mesa-Nestor community plan updates are open. That is the room where the map gets drawn. Showing up at the groundbreaking is theater. Showing up at the plan update is leverage.

If you are a buyer priced out of the coastal communities. Watch the station areas that were upzoned on July 1, and watch Mission Valley hardest. Product delivered near transit over the next three to five years is the closest thing to new inventory this city is going to produce, and the first buildings out of the ground in a newly activated corridor frequently price below what the same location supports once the corridor fills in. The Riverwalk and SDSU Mission Valley deliveries are the largest single block of that inventory anywhere in the city.

The people who wrote Proposition D in 1972 were not anti-housing. They were reacting to a specific thing they could see from the sand, and they used the only tool available. Fifty-four years later we are still using their tool on a problem it was never designed for, in neighborhoods they were not thinking about, and the state has quietly built a set of override levers that make the whole debate ceremonial.

We can keep having this argument in courtrooms until the Legislature finishes deciding it for us.

Or we can draw the map ourselves while we still hold the pen.

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

See where I publish, post, and film: instacard.co/robert-schantz/home

Agents considering a move: kwsandiego.kw.com/join-our-team

Buyers, sellers, and investors: robertschantz.com

San Diego Real Estate Housing Market Report · August 2026

Robert Schantz — Fri, 11 Sep 2026 15:16:20 GMT

The headline that will travel is the first one. San Diego County posted a median sales price of $965,000 in August 2026, up from $901,000 a year earlier. That is a 7.1 percent gain in a month when closed sales fell 17.1 percent and pending sales fell 12.0 percent.

Read those three figures together and the easy conclusion writes itself. Prices are surging while the market freezes.

That conclusion is wrong. And the correction is worth more to you than the headline is.

The numbers · August 2026 · San Diego County

All figures below come directly from the SDAR Monthly Indicators, Housing Supply Overview, and Lender-Mediated Properties reports, current as of September 5, 2026.

Total market, year over year

· New Listings · 3,085 to 3,125 · up 1.3 percent · Pending Sales · 2,079 to 1,830 · down 12.0 percent · Closed Sales · 2,068 to 1,714 · down 17.1 percent · Median Sales Price · $901,000 to $965,000 · up 7.1 percent · Average Sales Price · $1,219,823 to $1,249,153 · up 2.4 percent · Dollar Volume of Closed Sales · $2,510 million to $2,130 million · down 15.1 percent · Percent of Original List Price Received · 96.7 to 97.8 percent · Days on Market Until Sale · 41 to 38 · down 7.3 percent · Housing Affordability Index · 48 to 44 · down 8.3 percent · Inventory of Homes for Sale · 6,280 to 5,650 · down 10.0 percent · Months Supply of Inventory · 3.3 to 2.9 · down 12.1 percent

Detached, year over year

· New Listings · 1,832 to 1,778 · down 2.9 percent · year to date down 9.2 percent · Pending Sales · 1,347 to 1,158 · down 14.0 percent · Closed Sales · 1,356 to 1,118 · down 17.6 percent · Median Sales Price · $1,070,000 to $1,120,000 · up 4.7 percent · Percent of Original List Price Received · 96.6 to 98.0 percent · Days on Market · 39 to 35 · down 10.3 percent · Inventory · 3,635 to 2,883 · down 20.7 percent · Months Supply · 3.0 to 2.3 · down 23.3 percent · Housing Affordability Index · 40 to 38

Attached, year over year

· New Listings · 1,253 to 1,347 · up 7.5 percent · year to date up 3.6 percent · Pending Sales · 732 to 672 · down 8.2 percent · Closed Sales · 712 to 596 · down 16.3 percent · Median Sales Price · $669,000 to $670,000 · up 0.1 percent · year to date down 0.7 percent · Percent of Original List Price Received · 97.0 to 97.2 percent · Days on Market · 43 to 44 · up 2.3 percent · Inventory · 2,645 to 2,767 · up 4.6 percent · Months Supply · 4.0 to 4.0 · unchanged · Housing Affordability Index · 64 to 64

Year to date, total market

· New Listings · 27,215 to 26,061 · down 4.2 percent · Pending Sales · 15,815 to 16,151 · up 2.1 percent · Closed Sales · 15,202 to 15,464 · up 1.7 percent · Median Sales Price · $905,000 to $925,000 · up 2.2 percent

What the data is really saying

The county median is measuring composition, not appreciation

Detached homes rose 4.7 percent in August. Attached homes rose 0.1 percent. The county-wide number rose 7.1 percent.

A blended figure cannot legitimately exceed both of its components unless the mix of what sold changed. It did. Fewer transactions closed, and the ones that closed skewed higher inside the detached range.

Now look at the number that strips the noise out. The Housing Supply Overview tracks a rolling twelve-month median. Over the last twelve months the all-property median moved from $900,000 to $910,000. That is 1.1 percent. Single-family moved from $1,050,000 to $1,075,000, up 2.4 percent. Condominiums and townhomes moved from $670,000 to $665,000, down 0.7 percent.

Translate that. Over a full year, San Diego housing appreciated about one percent countywide, and attached product lost ground. The 7.1 percent is a single-month artifact of who showed up to close. Anyone forwarding you that figure as proof your equity jumped seven percent is handing you the wrong tool.

Supply is the binding constraint, and it is a detached problem

Closed sales fell 17.1 percent. If demand were the problem, you would expect homes to sit longer and sell for less against list.

The opposite happened. Days on market fell from 41 to 38. Percent of original list price received rose from 96.7 to 97.8. Months supply tightened from 3.3 to 2.9. For detached homes it tightened to 2.3 months, down 23.3 percent.

Under any conventional reading, 2.3 months of supply is a seller market. That condition existed in the same month volume hit a multi-year August low.

The explanation is on the listing side. Detached new listings are down 9.2 percent year to date, on top of a 20.7 percent drop in standing detached inventory. Sellers with a low fixed rate are not listing. Buyers who want a house are competing over a shrinking pool.

Translate that. The transaction count is falling because there is less to buy, not because nobody wants to buy.

The two San Diego markets have nearly converged in size

For years the detached market dwarfed the attached market in available supply. That gap has almost closed.

Detached inventory now stands at 2,883. Attached inventory stands at 2,767. The difference is 116 units.

The behavior of the two could not be further apart. Detached supply is down 20.7 percent with 2.3 months of inventory and 35 days on market. Attached supply is up 4.6 percent with 4.0 months of inventory and 44 days on market, and its median is down 0.7 percent year to date.

Attached new listings are up 3.6 percent year to date while detached listings are down 9.2 percent. Condominium and townhome owners are trying to exit. Detached owners are staying put.

Translate that. If you are shopping attached product in San Diego right now, you have leverage that does not exist forty feet away in a detached home. Later in this report I will explain the mechanism behind that, because it is not a mystery and it is not sentiment.

Lender-mediated inventory reached the highest level in the reporting window

This is the number most people will not see.

Lender-mediated inventory rose from 319 to 394, up 23.5 percent. That is the highest reading on a chart that begins in April 2020. Lender-mediated new listings rose 34.3 percent to 184, and the lender-mediated share of new listings rose from 4.4 to 5.9 percent. Lender-mediated properties now represent 7.0 percent of all standing inventory, up from 5.1 percent.

Where it concentrated is more revealing than the total. Lender-mediated single-family inventory actually fell 3.8 percent to 175. Lender-mediated condominium and townhome inventory rose 59.9 percent to 219.

By price band, the $250,001 to $500,000 range went from 45 to 100 units, up 122.2 percent, and now carries a 12.6 percent lender-mediated share. The $500,001 to $750,000 range rose 40.0 percent to 112.

By area, the shares are uneven and worth knowing. Nestor at 21.4 percent of local inventory. Golden Hills at 15.2 percent. El Cajon 92020 at 13.3 percent. Rancho Bernardo East at 12.6 percent, nineteen properties. Spring Valley at 12.3 percent. Coronado at 10.6 percent, eleven properties. Ramona at 10.3 percent.

One honest caveat before anyone runs with this. The MLS definition of lender-mediated is broad. It includes estate sales, probate subject to overbid, court approval required, deed-restricted programs, and an “Other/Remarks” category alongside actual REO and short sale designations. This is not a pure foreclosure count and should never be presented as one.

Two things are still true at the same time. Lender-mediated closings fell 26.0 percent to 71, and their share of closed sales fell to 4.1 percent. But the standing inventory is at its high for the series and the growth is almost entirely in attached product under $750,000.

Translate that. The stress in this market is real, it is small, and it is sitting in condominiums.

What the Housing Affordability Index actually means

Affordability is the number one concern I hear from buyers. Not rates. Not inventory. Not timing. Affordability. And the index that measures it is the most misread figure in any market report, so here is the plain version.

San Diego’s Housing Affordability Index for detached homes is 38.

That is not a percentage of buyers. It is not a percentage of homes. It is a ratio, and the ratio is between two dollar figures.

An index of 100 means the median household income in the county is exactly the income a lender would require to qualify for the median-priced home at prevailing interest rates. Dollar for dollar. Break even.

An index of 38 means the median San Diego household earns 38 cents of every dollar required.

Flip it and it gets clearer. To qualify for the median detached home in San Diego County, a household needs roughly 2.6 times the median household income. For attached product, at an index of 64, roughly 1.6 times. Countywide, at an index of 44, roughly 2.3 times.

Translate that. The typical San Diego family does not almost qualify for the typical San Diego house. The typical San Diego family is not close.

Two more points on that number.

It is getting worse, not better. Detached affordability was 40 last August. It is 38 now. Countywide it fell from 48 to 44, down 8.3 percent in twelve months. Prices rose faster than incomes and rates did not fall.

And the gap between the two halves of this market is enormous. An index of 64 for attached versus 38 for detached is the entire reason first-time buyers in this county end up in a condominium. It is not preference. It is arithmetic.

Which is why the next two sections matter more than usual this month.

Insurance is now an escrow problem, not a closing formality

For twenty years, homeowners insurance was the item nobody thought about until three days before closing. That era is over in California, and it is over in San Diego specifically.

Here is what is in front of us right now.

The California Department of Insurance approved an average rate increase of 29.1 percent for the California FAIR Plan, effective October 15, 2026, applying to both new policies and renewals. The FAIR Plan had originally requested 35.8 percent. The 29.1 percent figure is a statewide blend, which means individual properties will land above it and below it depending on location and coverage. High fire severity zones absorb the steepest dollar increases.

The broader market is not healthy either. A Stanford study released in June found California homeowners insurance premiums up 84 percent since 2020. FAIR Plan total exposure reached $768 billion as of June 2026. Several of the largest national carriers remain closed to new homeowners business in California, while Mercury, Farmers, and AAA are writing under the state’s newer catastrophe modeling framework.

Now put that against the affordability math above.

When a buyer has an impound account, and most do, the insurance premium is not a side expense. It is inside the monthly payment. A premium increase raises the payment the same way a tax increase does. It also changes the debt-to-income calculation the underwriter runs.

Translate that. A buyer who qualified in August at one premium quote may not qualify in November at another, on the exact same house at the exact same rate.

There is a local layer on top of the state layer. The City of San Diego’s Zone 0 defensible space requirements under Municipal Code section 512.0604 took effect February 28, 2026, with enforcement phased through February 28, 2029. Zone 0 is the first five feet around the structure. Carriers are already asking about it in underwriting.

What I tell agents and clients in my office, in this order:

Get the insurance quote before you remove the loan contingency, not after. Not a ballpark. A written quote on the specific address.

Ask the listing side for the seller’s current carrier and current annual premium at the time of offer. If the answer is the FAIR Plan, price the October 15 increase into the buyer’s payment before anyone signs anything.

If the property sits in or near a high fire severity zone, build the timeline around the insurance quote rather than around the appraisal. The quote is now the longer pole.

For sellers, understand that an uninsurable or expensive-to-insure property is a price problem whether or not anyone says so out loud. Buyers do not walk because of the premium. They walk because of the payment.

If it is a condominium, three separate things can kill the deal

Remember the attached market data. Inventory up 4.6 percent. Days on market up to 44. Median down 0.7 percent year to date. Lender-mediated condominium inventory up 59.9 percent.

That is not softness caused by taste. There are three specific, documentable pressures on attached product in California right now, and they compound.

One · The financing rules changed on August 3

Fannie Mae issued Lender Letter LL-2026-03 on March 18, 2026, with a matching Freddie Mac bulletin the same day. For loan applications dated on or after August 3, 2026, Fannie Mae’s Limited Review and Freddie Mac’s Streamlined Review are retired.

That matters because those two pathways were how the majority of condominium loans got approved without a deep look at the association. A buyer putting ten percent or more down on a primary residence in an established project could get financed on basic information about litigation and insurance.

That path is gone. Established projects with more than ten units now default to Full Review regardless of down payment. Full Review means the underwriter examines the association questionnaire, the master insurance policy, the operating budget, and the reserve study.

Two additional pieces sit alongside it. Effective August 3, 2026, when a lender relies on a reserve study, that study must recommend and follow the highest funding level, and it must have been completed within the last thirty-six months. And for applications dated on or after January 4, 2027, the minimum budgeted replacement reserve allocation rises from ten percent of annual assessment income to fifteen percent.

There is a small piece of relief in the same guidance. Standalone projects of two to ten units may qualify for an expanded Waiver of Project Review if they are not part of a master or phased development and meet basic master insurance standards.

Two · The balcony law is now a financial event, not an inspection

California Civil Code section 5551, enacted through SB 326, requires associations governing three or more attached units to have their exterior elevated elements inspected by a licensed architect or a licensed civil or structural engineer. Balconies, decks, stairways, walkways, and the waterproofing systems that support them.

The deadline was January 1, 2025, and the cycle repeats every nine years.

There is a persistent piece of confusion here that I want to clear up, because I hear it in the field constantly. AB 2579 extended the inspection deadline to January 1, 2026 for apartment buildings under SB 721. It did not extend SB 326. Condominium associations got no extension. Any association that has not completed its inspection is out of compliance today, not next year.

The inspection itself is not the problem. The report is.

When the report identifies deterioration or a life-safety condition, the board has a repair obligation. Repair obligations on exterior elevated elements are expensive. Expensive repairs get funded by drawing down reserves or by levying a special assessment.

Three · The two combine, and the whole building pays

Follow the chain, because this is the part that catches people.

A balcony report identifies deficiencies. The association funds the repair from reserves or a special assessment. Reserve funding drops below threshold, or a special assessment appears in the budget. Under the new Full Review, the underwriter now looks directly at exactly those documents.

If the project fails the review, the building becomes non-warrantable. Not the unit. The building.

Translate that. Every owner in that project loses access to conventional financing at the same moment, including the seller who has done nothing wrong and the buyer who has excellent credit. The buyer pool shrinks to cash and portfolio lenders. The price adjusts to that smaller pool.

Layer the master insurance policy on top of it, because associations are absorbing the same premium increases individual homeowners are, and master policy adequacy is one of the items Full Review examines.

What to do about it, practically.

Buyers: order the HOA documents immediately, not at day fifteen. Read three things first. The reserve study and its date. The most recent SB 326 report. The minutes for any discussion of special assessments or deferred maintenance. Then ask your lender to run the project through Condo Project Manager before you are emotionally committed.

Sellers of attached product: get your association’s status confirmed before you list. If the project has a problem, you want to know it in week one, not in week five of an escrow with a buyer who cannot close.

San Diego against the California forecast

The California Association of REALTORS® publishes its housing market forecast on its own website. The 2026 California Housing Market Forecast is available here:

https://www.car.org/aboutus/mediacenter/newsreleases/2025releases/2026forecast

Here is what it projected for 2026, and here is how San Diego is actually running.

Sales. The forecast called for existing single-family home sales of 274,400 units statewide in 2026, an increase of 2 percent over the 2025 pace of 269,000. San Diego’s year-to-date closed sales are up 1.7 percent, which is close to the statewide projection. But August alone was down 17.1 percent, and pending sales were down 12.0 percent, which points to a soft September.

Price. The forecast called for a California median of $905,000 in 2026, up 3.6 percent from a projected $873,900 in 2025. San Diego’s year-to-date median is $925,000 and its August median was $965,000. We are running above the statewide forecast, which is normal for this county and is the reason our affordability index sits where it does.

Rates. The forecast assumed the average 30-year fixed mortgage rate would decline to 6.0 percent in 2026 from 6.6 percent in 2025. That assumption has not held. Rates have trended up since March 2026 rather than down, and futures markets have been pricing meaningful odds of a Federal Reserve increase rather than a cut.

Translate that. The single most important input in the statewide forecast is the one that has moved in the wrong direction. Every projection built on 6.0 percent is under pressure.

Inventory. The forecast expected California active listings to rise nearly 10 percent in 2026. San Diego County inventory is down 10.0 percent. Detached inventory is down 20.7 percent.

That is a twenty-point swing between the state expectation and the local reality, and it is the cleanest evidence I can give you that San Diego is not the average California county. Our attached inventory did rise, up 4.6 percent, consistent with the forecast direction. Our detached inventory collapsed.

Affordability. The forecast projected the statewide affordability figure would improve to 18 percent in 2026 from 17 percent in 2025 and 16 percent in 2024.

Be careful here, because these are two different indexes and they cannot sit side by side.

The statewide figure counts households. Eighteen percent means roughly one in six California households can afford a median-priced home. San Diego’s index of 38 is the income ratio explained earlier in this report. Different arithmetic, same direction, and San Diego is the harder market of the two.

Headwinds. The forecast named the home insurance crisis as an ongoing challenge for the California housing market, alongside trade tensions and market volatility. That is the state association putting insurance on the same list as macroeconomics.

Everything in the insurance section above is the local version of that sentence.

National context. According to NAR figures carried in the SDAR reports, U.S. existing-home sales edged down 1.7 percent from the prior month to a seasonally adjusted annual rate of 4.06 million units. National pending home sales fell 2.2 percent year over year in July, the lowest level since January 2026, and contract signings remain roughly 30 percent below their pre-pandemic 2019 level even though payroll employment is about 5 percent above it. The national median existing-home sales price is $431,400 against a 4.6-month supply.

San Diego’s August median of $965,000 is roughly 2.2 times the national median, on 2.9 months of supply against the national 4.6.

What it means if you are buying

Affordability is the constraint, so solve for the payment rather than the price.

The leverage in this market is specific and locatable. Attached product carries 4.0 months of supply, 44 days on market, and a median down 0.7 percent year to date. The upper end has loosened as well. Months supply in the $2,000,001 to $5,000,000 band fell to 3.1, and the $5,000,001 and above band sits at 8.4 months with an average 81 days on market, up 26.6 percent over twelve months.

The tightest competition sits in the $750,001 to $1,000,000 band, which is selling in 36 days, the fastest of any price range in the county. If that is your target, come prepared and do not expect a discount.

Underwrite three costs before you write an offer, not three days before closing. The mortgage payment. The insurance premium in writing on that specific address. And, if it is attached, the HOA assessment plus any special assessment risk visible in the reserve study and minutes.

If the market is right that rates are not falling on schedule, waiting for a lower rate is a bet against what is actually happening. Buy for the hold period and refinance later if the forecast eventually proves correct.

What it means if you are selling

Sellers received 97.8 percent of original list price countywide and 98.0 percent for detached homes, up 1.4 points from a year ago. Pricing discipline is being rewarded.

Do not price to July. The detached median peaked this year at $1,143,182 in July and settled at $1,120,000 in August. Pricing to the highest month of the year is how a listing spends 60 days learning what it should have been listed at.

Have the insurance answer ready. Your current carrier, your current annual premium, and whether the property is on the FAIR Plan. If it is, expect an informed buyer to price the October 15 increase into their offer.

If you own attached product, do the association homework before you list, and understand who you are competing with. Attached inventory is up 4.6 percent, attached new listings are up 3.6 percent year to date, and lender-mediated attached inventory is up 59.9 percent. Under $750,000, some of your competition is not motivated by the same math you are.

Pending sales fell 12.0 percent in August. Pending sales lead closings by roughly 30 to 45 days. September closings will be soft. Price for the market you are listing into, not the one you read about.

Here is what I keep coming back to this month.

Year to date, San Diego closed sales are up 1.7 percent and pending sales are up 2.1 percent. August alone was down 17.1 percent. Both statements are true, and only one of them will be in a headline.

The affordability index says the median household needs about two and a half times its income to buy the median house. The insurance market says the carrying cost is still rising. The condominium rules say the cheaper half of the market just got harder to finance.

None of that makes this a bad time to buy or a bad time to sell. It makes this a market where the details decide the outcome instead of the timing.

So the question is not whether the market is up or down. The question is whether you have priced the whole cost of the house, or only the price of the house.

Which one have you actually run?

Data notes

Three items are worth flagging rather than filling in.

A specific weekly mortgage rate figure does not appear as a printed number in the SDAR reports. The SDAR narrative refers to elevated rates qualitatively. No weekly survey figure was inserted into this report.

The C.A.R. figures cited above come from the published 2026 California Housing Market Forecast, which is a forecast for the calendar year rather than a monthly reading. It is compared here against San Diego actuals, and the difference in time frame is noted wherever the two appear together.

The insurance and condominium financing items are sourced to the California Department of Insurance, Fannie Mae Lender Letter LL-2026-03, the corresponding Freddie Mac bulletin, and California Civil Code section 5551. They are not SDAR data and are labeled as such throughout.

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

See my digital media feeds: instacard.co/robert-schantz/home

Considering a move in your real estate career: kwsandiego.kw.com/join-our-team

More from me: robertschantz.com

Zoning Out

Robert Schantz — Tue, 08 Sep 2026 12:06:04 GMT

The housing shortage is not a California problem. It is a map problem, and nearly every large American city drew the same map.

That is the part the coverage keeps missing. When people argue about housing, they argue about interest rates, institutional investors, builders, immigration, and remote work. Those are inputs. The map is the constraint. A city can want more housing, fund more housing, and campaign on more housing, and still not produce more housing, because the document that decides what is legal to build was written to prevent it.

I wrote earlier this year that housing is California’s original sin. I stand by that. But I framed it too narrowly. The sin is not Californian. The sin is a zoning map, and one is hanging on the wall in every planning department in this country.

The pun is intentional. American cities zoned housing out. Then the country zoned out.

The map was always the point

New York City adopted the first comprehensive zoning ordinance in the nation in 1916. Ten years later, in Village of Euclid v. Ambler Realty, the Supreme Court blessed the practice as a valid exercise of police power. That 1926 decision is the reason zoning exists in the form we know it. It is also the reason apartments got legally classified as a nuisance. Justice Sutherland’s opinion described an apartment building in a single family neighborhood as a parasite.

Read that again. The highest court in the country compared multifamily housing to a pig in a parlor, and every city planner in America took notes.

Zoning was not invented to plan cities. It was invented to sort them. It decided what could be built, how tall, how dense, how far back from the street, and with how many parking spaces. In practice it decided something else. It decided who could afford to live where. The exclusionary history of early single family districting is well documented and is not a matter of serious dispute among historians.

Here is the part that matters for anyone reading this in 2026. The original motives are almost irrelevant now. The machinery outlived them. The map does not care why it was drawn. It only enforces.

Frozen cities

Max Fisher made this argument better than I have seen it made anywhere, and I want to give him credit for the frame. Fisher is a career foreign correspondent. He wrote for The Atlantic and The Washington Post, was a founding editor at Vox, and spent years at The New York Times as a correspondent and columnist, where he was a Pulitzer finalist. His book on social media, The Chaos Machine, was named a best book of 2022 by NPR and The New Yorker. He now runs a show called The Bigger Picture.

He set photographs of Shanghai, Kuala Lumpur, and Mumbai against photographs of New York, San Francisco, and Chicago. The foreign cities transformed physically. The American cities did not. Their economies grew enormously. Their buildings stayed roughly where they were.

The example he uses is Clinton Hill in Brooklyn. Century old buildings, million dollar homes, rents in the four to six thousand dollar range. Under any normal market logic, a developer looks at those numbers and replaces some low density property with apartments. That is what price signals are for. In Clinton Hill, the zoning code and the preservation rules make it close to impossible.

Translate that. The neighborhood’s job market changed. Its buildings did not. So the price absorbed the entire difference.

That is not a Brooklyn story. That is San Diego. That is Boston, Seattle, Denver, Portland, and Nashville. The economy grew. The map did not move. The gap between the two became the mortgage payment.

I am glad somebody with Fisher’s reach is telling this story, because our industry has largely refused to. It is easier to sell scarcity than to explain it.

This is a national number

Zillow puts the United States housing deficit at roughly 4.7 million homes. Freddie Mac has estimated 3.7 million. Goldman Sachs has placed it between 3 and 4 million. The National Association of REALTORS® has cited approximately 4 million. Realtor.com’s 2026 Housing Supply Gap Report put the figure at 4.03 million as of 2025, up from about 3.8 million the prior year.

The institutions disagree on the number. They do not disagree on the direction.

The 2025 detail is the one I keep coming back to. Roughly 1.41 million new households formed. Roughly 1.36 million housing starts. That is a gap of about 50,000 units created in a single year, during a year when every major institution in the country was publicly saying we had a shortage.

Translate that. We agreed on the diagnosis and still went backward.

There is a fair counterargument here and I am going to put it in rather than around it. The country has roughly 148 million housing units and roughly 134 million households. On raw arithmetic that reads like surplus. It is not, and the reasons are ordinary. A functioning market requires vacancy for people to move at all. Millions of units are seasonal, second homes, or genuinely uninhabitable without major capital. The shortage is a mismatch of the right homes in the right places, not an absence of structures on the continent.

That distinction is the whole ballgame. The homes are not missing from America. They are missing from the places where the jobs are. Zoning is why.

The alphabet has a quorum

Three acronyms describe the opposition, and I used all three in the original piece.

NIMBY. Not in my back yard. CAVE. Citizens against virtually everything. BANANA. Build absolutely nothing anywhere near anyone.

These get treated as internet jokes. They are not jokes. They are a voting bloc with a meeting schedule, and San Diego has handed the country three of the cleanest case studies available.

Start with the ADU Home Density Bonus Program. The City of San Diego permitted 5,720 accessory dwelling units between 2021 and 2024. Of those, 875 came through the bonus program. According to the state Department of Housing and Community Development, 368 of those bonus units carried affordability restrictions.

In June 2025, after a seven hour hearing, the City Council voted 5 to 4 to cap that program. Of more than 600 public comments submitted, about 20 supported keeping it as written. HCD had sent the city a technical assistance letter days earlier warning that the rollback could put San Diego crosswise with state housing law and its Prohousing designation.

Translate that. The one program in the city producing deed restricted units in high resource single family neighborhoods, at no cost to the taxpayer, is the program that got cut. Not for lack of demand. For lack of political tolerance.

I am not arguing the bonus program had no flaws. Eighteen units stacked into a canyon lot on a cul de sac with no parking is a real complaint, and I have walked those streets. I am arguing about what got fixed and what got amputated. There is a version of that reform that solves the parking and fire access problems without shrinking the pipeline of income restricted housing. The council did not build that version. Six hundred comments made sure of it.

I watch this happen at dinner

I want to be honest about where I see this, because it is not an abstraction to me and it is not happening to strangers.

Most of my friends live in the metro communities. Hillcrest, Mission Hills, North Park, University Heights. Every one of those neighborhoods has apartment buildings going up right now. And every one of those friends complains about it. The traffic. The scaffolding. The parking. The cranes. The way the block does not look like it did fifteen years ago.

I get it. I understand it completely. Nobody enjoys watching a familiar street get torn up. Those are legitimate frustrations and I am not going to pretend otherwise or lecture people I care about.

But they cannot be the same people who complain about the construction and then show up at City Hall demanding somebody fix the homeless crisis. Those two positions cannot coexist. They are the same issue viewed from two ends.

The cranes in Hillcrest are the answer to the tents downtown. Not the whole answer. Not a fast answer. But the mechanism runs in one direction only, and blocking the first thing guarantees the second thing.

Somebody has to connect those dots out loud, and it should probably be the people in my business.

Two votes, two lawsuits, zero homes

If you want to understand why nothing gets built here, study Midway Rising. Not because it is unusual, but because it is the version where everything went right and it still did not matter.

San Diego voters approved a 30 foot coastal height limit in 1972 covering everything west of Interstate 5. In 2018 the city updated the Midway Pacific Highway community plan, completed the environmental review CEQA requires, and rezoned the district to allow more than 10,000 homes.

In 2020 the city asked voters to lift the height limit in that district. About 350,855 San Diegans, roughly 56 percent, voted yes. A group called Save Our Access sued, arguing the environmental review behind the ballot measure was inadequate.

The city redid its studies and went back to the ballot in 2022. Voters approved it again. Save Our Access sued again.

In 2025 the Superior Court ruled for the plaintiffs. In October 2025 the appellate court agreed, finding the city had not adequately analyzed air flow, construction noise, views, and peregrine falcon nesting. On December 30, 2025, the California Supreme Court declined to hear the city’s appeal. The height limit was restored.

The project at stake is roughly 4,254 apartments, about 14 acres of public space, and a replacement arena on 49 acres of city owned land.

Translate that. The public voted for it twice, by wide margins, and a small organized group unwound both votes in court over a period of years. That is not a conspiracy theory. That is the process working exactly as designed.

In the final days of the legislative session that ended August 30, 2026, state lawmakers approved a carveout shielding the project from environmental lawsuits. It took an act of the Legislature to build housing that voters had already approved twice on land the city already owns.

Here is the honest footnote, and it matters. The 2018 rezone already permits over 10,000 homes in that district regardless of the height limit. The exemption fight was largely about the shape and orientation of the buildings, not the raw unit count. The opponents are not wrong that the vote was framed loosely. But six years of litigation over building shape, on public land, in a housing emergency, tells you everything about which side the system is built to favor. Delay is the weapon. Delay does not need to win.

East County says no from the other direction

The metro communities get accused of blocking density. Fair enough. But the same instinct runs the other way out east, and the numbers are worse.

Voice of San Diego and KPBS analyzed state permitting data covering 2018 through 2024. El Cajon permitted about 9.9 new homes per 1,000 residents. It was the only city in San Diego County to come in under ten. Chula Vista permitted roughly 38 per 1,000, nearly four times as many per person.

Mayor Bill Wells has been straightforward about why. He points to limited available land, which is a real constraint, and he has said the relatively small number of large lot single family neighborhoods in his city should be allowed to remain that way. He described himself as a big believer in property rights. He also suggested that if the county is serious, it should open the rural backcountry instead, where fire regulation heavily restricts development.

To be fair to El Cajon, it and National City are the two most densely populated cities in the county. This is not a place with acreage sitting idle. The land argument has merit.

Then there is Fanita Ranch in Santee, which is the East County story I get asked about most.

HomeFed proposed roughly 3,008 homes on about 2,638 acres in the northern part of Santee, near MCAS Miramar. The site has been discussed for development since the 1990s. The current proposal dates to 2017. The city General Plan allowed 1,395 homes there.

The council approved it in 2020. A court ordered the approvals rescinded over an inadequate wildfire evacuation analysis. The council approved it again in 2022 using a locally created Essential Housing Program that bypassed Measure N, a 2020 voter referendum requiring a public vote on General Plan amendments. A judge ruled against that in August 2024. The council approved it a third time in June 2025 and was sued again in July. On June 4, 2026, the appellate court denied the developer’s appeal on nearly every count. Barring a petition to the state Supreme Court, that project is finished.

Nine years. Three council approvals. Three lawsuits. Zero homes.

And here is where I refuse to make this simple. The Fanita Ranch site sits in a very high fire hazard severity zone. The evacuation concerns raised by the opposition are not manufactured, and anyone who lived through 2003 or 2007 in this county understands why people get loud about a single road out. That is a real objection deserving a real answer.

But notice what happened. The objection was never resolved. It was litigated. Nine years of process produced no fire safe version of the project, no smaller version, no alternative site, and no housing. It produced a legal outcome. The system we have is very good at stopping things and has almost no capacity to improve them.

Translate that. The map does not offer a compromise setting. It has yes and it has no, and no is much cheaper to obtain.

The counterweight: upzoning is not a light switch

If I only gave you the case for reform, I would be selling you something. So here is the part that complicates it.

Minneapolis is the city everyone cites. In 2018 it adopted the 2040 Plan and became the first major American city to end exclusive single family zoning citywide. It is held up as proof.

The proof is messier than the headline. Pew found that of nearly 21,000 units permitted in Minneapolis from 2017 to 2022, about 87 percent were in buildings of 20 or more units, and roughly 1 percent were in buildings of two to four units. The famous duplex and triplex provision produced almost nothing. Researchers tracking the city have found only a few dozen two and three unit buildings built under those rules.

It gets more contested. The Federal Reserve Bank of Minneapolis looked at the slower rent growth in the city and concluded it may owe more to a demand shock specific to that market in 2020 than to supply effects from the plan. A separate synthetic control study found little measurable divergence in permits or prices in the short run. Other researchers reached the opposite conclusion. Legal challenges delayed full implementation until January 2025, which means the clock on real evidence started recently.

Translate that. Legalizing a duplex is not the same as producing one. What appears to have actually moved housing in Minneapolis was permitting apartments and cutting parking requirements near transit, not the headline that made the news.

That is a lesson, not a defeat. The details of an upzoning matter more than the press release. Modest reforms produce modest results. If a city wants units, it has to legalize the building types that actually get financed and built.

Austin is the control group

Then there is Austin, and Austin is the cleanest natural experiment we have.

Between 2015 and 2024 the city added roughly 120,000 housing units, expanding its stock by about 30 percent. National housing growth over the same span was about 9 percent. Austin did this on purpose, through vertical mixed use zoning, deep cuts to parking minimums, expanded ADU rules, and the HOME initiative that took effect in early 2024.

The results, from Pew’s analysis of the data:

Median rent in Austin was $1,546 in December 2021, about 15 percent above the national median. By January 2026 it had fallen to $1,296, about 4 percent below the national median. That happened while the city added roughly 18,000 residents.

In buildings with 50 or more units, rents fell about 7 percent from 2023 to 2024, the steepest decline recorded in any large metropolitan area that year.

In Class C buildings, the older non luxury stock that houses lower income renters, rents fell about 11 percent.

Translate that. The cheap apartments got cheaper because the expensive apartments got built.

Now the caution, because this is where the story usually stops and it should not. Austin delivered more than 31,000 units in 2024. As of June 2026, it had delivered 964 units for the year, with the Austin Apartment Association forecasting roughly 10,000 by year end. The pipeline is thinning fast. Permits are down, builders have pulled back, and the relief renters are enjoying right now has an expiration date attached to it.

Supply relief is not a trophy you win once. It is a faucet. Turn it off and the pressure returns.

The luxury objection

The most common argument I hear against new construction is that new units are expensive, so they only help wealthy people. It sounds obvious. It is wrong, and we have the data to say so.

Evan Mast at the Upjohn Institute tracked the address histories of 52,000 residents of new multifamily buildings across large American cities, then followed the vacancies they left behind, and the vacancies those moves created, through six rounds. By the sixth round, roughly 40 percent of the people moving were coming from neighborhoods with below median income.

His estimate: building 100 new market rate units leads 45 to 70 people to move out of below median income tracts, and 17 to 39 to move out of bottom quintile tracts, with nearly all of the effect landing within five years. Researchers in Finland studying moving chains found the same pattern independently.

Translate that. A new building nobody in the bottom half can afford still opens up units that people in the bottom half can afford, within about two to five years. The chain is real. Blocking the building breaks the chain at round one.

That is the answer to my friends in North Park, and it is the answer to the comment queue at City Hall. The building you are annoyed by is doing something you cannot see from the sidewalk.

The bottom rung

I made this argument in the original piece and the national research supports it more strongly than I did.

Gregg Colburn and Clayton Page Aldern, in Homelessness Is a Housing Problem, tested the conventional explanations for why homelessness rates vary so dramatically between American metros. Mental illness. Drug use. Poverty rates. Weather. Generosity of public assistance. None of them explain the regional variation. What does explain it is absolute rent levels and rental vacancy rates.

Seattle does not have roughly five times the homelessness of Chicago because it has five times the addiction. It has five times the rent pressure and a fraction of the vacancy.

One of their more counterintuitive findings is that homelessness rates tend to be lower in places where poverty rates are higher. That single fact should end the argument, and it has not.

Individual factors explain who becomes homeless. Housing market conditions explain how many. Those are two different questions and this country keeps answering the second one with data that only applies to the first.

This is not a partisan fight anymore

If you still think of zoning reform as a coastal progressive project, the 2026 legislative sessions should retire that idea.

Kansas passed Senate Bill 418, the HOME Act, allowing single family homes, duplexes, townhomes, and ADUs by right where they are zoned, reducing minimum lot sizes, and permitting third party inspection review when the local authority does not act within 30 days.

Idaho adjourned in April having passed four contested housing bills covering starter home subdivisions, ADUs, short term rentals, and a single stairway apartment exception. The starter home bill passed the House by one vote.

Virginia passed ADUs by right in single family districts, capped ADU permit fees at $500, and required qualifying manufactured homes to receive the same zoning treatment as site built homes.

Colorado’s House Bill 26-1001 requires many local governments to allow housing by right on qualifying nonprofit, school, transit, and public agency land.

By mid 2026, eight states had put land use reform on the books in that session alone.

Translate that. Red states and blue states arrived at the same conclusion from opposite directions. One side calls it property rights. The other calls it housing justice. They are voting for the same bill.

What this means if you live here

San Diego is not going to zone its way to Austin’s numbers. Our geography does not permit it and our politics do not want it. But the mechanics do not care about our feelings.

If you own here, understand what you are actually holding. Your equity is partly a product of scarcity, and the scarcity is a policy choice that gets renewed at meetings you are not attending. That cuts both ways. It protected your value. It is also why your adult children cannot buy within 40 miles of you.

If you are buying here, stop waiting for a price correction that supply constraints will not allow. The math pricing you out is structural, not cyclical. Rates move. The map does not.

If you are selling, the scarcity is working for you right now, and you should understand which parts of it are durable and which parts are one legislative session away from changing.

And if you are an agent reading this, this is the conversation your clients need and almost nobody in our business is competent to have. Learn your city’s zoning code. Learn what SB 9, the state ADU statutes, and Complete Communities actually permit on the parcels you list. That knowledge is now a listing advantage. An agent who can tell a seller what their lot legally supports is selling a different asset than the agent who can only tell them what is standing on it today.

Here is the practical action step, and it is smaller than you expect. Find out when your community planning group meets. Go once. Sit through it. You will learn more about your property value in two hours than in a year of reading market reports, because you will be watching the map get drawn in real time by roughly eleven people, most of whom are retired, all of whom already own.

That room decides what your city is allowed to become. It is almost always half empty.

We built a country that needs housing to be scarce enough to make owners rich and abundant enough to keep everyone else housed. Those two goals cannot both be served by the same map. We have spent a century choosing the first one and then acting surprised at the consequences of the choice.

The shortage is not a mystery. It is a document. Somebody wrote it, somebody enforces it, and somebody can amend it.

Which of those three are you?

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.

Let’s connect and see everything I am publishing: instacard.co/robert-schantz/home

Know an agent ready for a better brokerage: kwsandiego.kw.com/join-our-team

More market intelligence: robertschantz.com

Recruiting Harder Is Not the Problem. What You Are Recruiting On Is.

Robert Schantz — Fri, 04 Sep 2026 12:03:14 GMT

One correction before I start. In an earlier piece on the thirty year game behind the brokerage mergers, I put the 2024 HomeServices loss at $113 million. The verified figure is $107 million. I am correcting it here rather than quietly editing the original.

This goes out on the Friday morning of Labor Day weekend, which is either poor timing or exactly right.

Labor Day exists to honor people who work. This industry is working. In 24 years I have never watched it labor as hard as it is laboring right now.

It is simply not getting paid for the effort.

Every Team Leader and Operating Partner I talk to is putting in more than they did three years ago and bringing in less production.

More appointments. More career nights. More follow-up. More outreach than any of us ran in 2019.

Fewer results.

The instinct is to read that as an execution problem. Work the phones harder. Book more appointments. Tighten the presentation.

That instinct is wrong, and the data says so plainly.

The Industry Is Recruiting at Nearly Double Replacement Rate to Stand Still

Courted studied brokerage movement across 2025 and published the findings this year. The numbers deserve to be read slowly.

Roughly 16 percent of active agents changed brokerages in a single year. That is approximately 230,000 agents carrying about $590 billion in sales volume.

The market is not frozen. Agents are moving in enormous numbers.

Across the top 100 brands, the recruit-to-loss ratio ran 1.9 to 1. Nearly two agents in for every one out.

And those same top 100 brands produced net sales volume growth of 1.8 percent.

Translate that. The industry recruited at almost double replacement rate and moved the needle less than two points.

Then comes the number that explains it. Departing agents averaged roughly $2.11 million in annual production. Incoming recruits averaged roughly $1.44 million. A 46 percent productivity gap.

Eighty-one of the top 100 brands recruited replacement agents who produced less than the agents they lost. Sixteen traded up. Three came out flat.

I am not going to soften that and I am not going to pretend it is somebody else’s problem. It is nearly the entire industry, and it is a structural outcome, not a competence outcome.

This Is a Filter, Not a Failure

Here is the part of this that has not been said out loud, and it is the reason the harder-work instinct keeps failing.

Recruiting on a split does not underperform randomly. It selects.

A split pitch can only attract an agent for whom the split is the deciding variable. And an agent for whom the split is the deciding variable is, almost by definition, an agent who is not running a business.

Watch both ends of the roster and it becomes obvious.

At the bottom, an agent closing two sides a year runs 70/30 against 80/20 and finds a difference of a couple thousand dollars. Not enough to move for. Not enough to stay for either. When that agent does move, it is for the next number, and then the one after that. You did not recruit an agent. You rented one.

At the top, an agent running a real operation cannot move for a split even if she wanted to. The switching cost buries the difference. Database migration. Staff retraining. Vendor relationships rebuilt from scratch. Active listings re-papered. Marketing reset. Weeks of degraded output while systems get stood back up.

That is not a small tax. That is moving houses while you are still living in one.

No producer with a real operation absorbs that friction for margin points. And more to the point, she is not optimizing margin points in the first place.

So the pitch fails at the bottom because the number is too small to matter, and it fails at the top because the number is too small to overcome the cost of leaving.

What is left in the middle is exactly the $1.44 million agent.

The machine is not broken. It is working precisely as designed, at every brand, every month, and it will keep delivering the same result for as long as the pitch stays the same.

Your Scorecard Already Changed. Your Pitch Did Not.

In July I wrote about the five leadership appointments at KWRI and argued that the unit of optimization had moved from agent count to profit per market center.

I stand by that read. What I did not say then is the uncomfortable corollary.

If the metric moved from headcount to production and profitability, then a recruiting conversation built to attract headcount is now actively working against the scorecard the leader is measured on.

That is not a KW observation. Every franchisor in America is staring at the same math. Commission compression squeezed the revenue per transaction while the cost of carrying a non-producing licensee stayed exactly where it was.

The scorecard moved. The pitch did not move with it.

Capital Already Knows the Difference

I want to step outside brokerage for a minute, because the clearest illustration of what I am about to argue happened this summer and almost nobody in our business connected it.

On July 24, Berkshire Hathaway completed its acquisition of Taylor Morrison at $72.50 per share, roughly $6.8 billion in equity value and $8.5 billion in enterprise value. Combined with Clayton Properties Group, that operation delivered nearly 23,000 site-built home closings in 2025 across 21 states and 52 markets, which makes Berkshire the fourth largest homebuilding operation in the country.

Now set that next to what the same parent company has been doing with the brokerage it already owned.

I have written before that I left HomeServices off my list of four brokerages left standing on purpose, and that the reason was structural rather than sentimental. Berkshire describes that business in its annual report every year, and the five year comparison is not subtle.

Company owned brokerage offices went from 923 at the end of 2020 to roughly 840 at the end of 2025. Company owned agents went from roughly 43,500 to roughly 38,000.

The franchise network moved the same direction and moved faster. Franchisees went from 357 to roughly 290. Franchise offices went from 1,540 to roughly 1,400. Franchise agents went from roughly 53,500 to roughly 44,000.

Put the two networks together and that operation carried about 97,000 agents at the end of 2020 and about 82,000 at the end of 2025.

Fifteen thousand agents gone in five years, disclosed by the parent, in the parent’s own filings.

And in the middle of that, the same parent wrote an $8.5 billion check.

Not for a better share of a transaction. For the asset that creates the transaction, with mortgage, title, escrow, and insurance already attached to it.

Translate that. When the most patient capital in American housing decided where to put real money, it did not go looking for a better cut. It went and bought something it could own.

Broker Compensation Is Income. It Is Not Wealth.

That is the whole thing, and it is the sentence I would put on the wall of every recruiting office in this country.

Broker compensation is income. Income is what an agent earns while working.

Wealth is what works while the agent does not.

A split is a share of broker compensation. Which means every brokerage in America is competing over slices of the one revenue line that has been compressing for two straight years, pitching it to agents as the reason to uproot an entire operation.

The producer you actually want is not running that math. She is running a different one. What is this business worth in ten years. What happens to my income the quarter I get sick. Is there anything on the other side of this, or do I work until the day I stop and then it simply ends.

Nobody is having that conversation with her on a recruiting appointment, because a split is easy to compare and a wealth conversation requires the person across the table to actually know something.

I will say the quiet part about profit share and growth share too, because leaving it out would make this piece dishonest.

Both were real value adds in a growth market. In this one they are a hard sell, and every leader reading this already knows it. The model asks an agent to help solve the company’s growth problem at precisely the moment the company cannot solve it either. An agent trying to survive a shrinking unit market is not going to go recruit for you, and she should not have to.

That is not an argument against those programs. It is an argument that they cannot carry the recruiting conversation by themselves anymore, and most leaders stopped leading with them a while ago without ever saying why.

The wealth conversation that does work is the one that does not require the agent to recruit anybody.

Ownership. Acquisition of actual assets. Rental property. Real estate investment trusts. Delaware Statutory Trusts for the agent or the client who is exiting a long-held rental. Equity positions in real estate related entities. A business with written process and a portable database that somebody would eventually pay to acquire, because agents do sell books of business, quietly and for real money, and the thing being purchased is never the agent.

None of that shows up on a split sheet. All of it shows up on a balance sheet.

This is not new territory for my company. The Millionaire Real Estate Investor has been in the KW library for two decades, and the brand tagline launched at Mega Camp in August 2022 is Where Entrepreneurs Thrive. Not where agents get a better split. Entrepreneurs.

An entrepreneur is somebody who owns something. If that word is going to sit in the tagline, it has to sit in the recruiting appointment.

What This Looks Like on Monday

Three things, and none of them require permission from anyone above you.

Target before you dial. Predictive MLS analytics let a leader set appointments with agents at or above the market center’s existing average production. That single change converts recruiting from mass outreach into a quality-filtered pipeline. If you do not know a prospect’s production before the appointment, the appointment is a coin flip and the odds are the ones in the Courted study.

Count the back door. A market center that books ten appointments with lower-tier agents and loses one top-quartile producer is running net negative and celebrating the wrong number. Retention is a recruiting metric. Courted found Howard Hanna ranked first among the top 25 United States brokerages in sales volume retention, giving up only five percent of its volume. Whatever they are doing over there is worth more study than another script.

Change the first question. Not what are you making now. Try what do you want this business to be worth in ten years, and what are you building right now that would still be working if you stepped away for a quarter.

That question does two jobs at once. It opens the only conversation a real producer finds worth having, and it tells you inside five minutes whether the person across the table is building an asset or riding deal to deal.

Both of those are legitimate ways to make a living and I have no judgment about either one. I have written before that the easy version of this argument is contempt, and contempt is wrong. Most of the agents riding deal to deal were never taught anything else. This industry replaced long apprenticeships with a license and a logo and then acted surprised at the results. That is a training failure, and we own it.

But you should know which one you are recruiting, because they require completely different conversations and only one of them changes your production numbers.

The Honest Counterweight

I am not going to write this without arguing against myself.

Productivity is the answer the research points to, and it is a good answer. Tools, systems, coaching, and career development that raise an agent’s volume are real and they are measurable. I am arguing that wealth sits one level past productivity, not that productivity is wrong.

A split still matters. It matters enormously to an agent whose margins are thin, and dismissing it entirely is a luxury position taken by people who are not worried about their own November.

The Berkshire comparison has limits. A homebuilder acquisition is not a verdict on brokerage economics. Homebuilding and brokerage run on completely different capital cycles, different risk profiles, and different time horizons, and I am using it as an illustration of how capital thinks rather than as proof of anything about brokerage margin.

And the Courted data measures the top 100 brands. It is directional for the industry. It is not a census of your market.

Finally, a wealth conversation only works if the leader having it is credible. An Operating Partner who has never bought an investment property is going to sound like a brochure. If you intend to recruit on this, you need to be doing it yourself first.

The Long Game Read

Twenty four years in this business and every real shift I have watched has followed the same shape. The old answer stops working, everyone doubles down on the old answer, and the people who come through intact are the ones who changed the question early.

The industry moved 230,000 agents last year and generated 1.8 percent net volume growth for its trouble. That is an enormous amount of motion producing an almost invisible result.

Working harder inside that system will not fix it. The system is doing what it was built to do.

If your pitch is a split, you will keep getting the agent a split attracts. Changing the outcome requires changing the filter, not the effort.

Do I have all the answers here? No. I do not think anybody does yet, and I am suspicious of anybody selling certainty about an industry this far into a disruption.

What I am confident about is smaller than that. I have read everything Wayne Dyer wrote and I have followed his teachings for a long time, and the line of his I keep coming back to is that when you change the way you look at things, the things you look at change. I have never found it more useful than I do right now. We are running a playbook built for a market that rewarded headcount, inside a market that has stopped rewarding it. The effort is not the issue. The playbook is.

That is a fair thing to think about over a long weekend that exists to honor labor. Not whether we are working hard enough. Whether we are working on the right thing.

So here is what I would sit with, whether you lead a market center, run a team, or carry a license.

If broker compensation is income and income is what you earn while you are working, what are you building right now that keeps working when you stop?

And if you are the one recruiting, when was the last time you asked an agent that question instead of showing them a number?

→ Connect with me and find all my feeds in one place: instacard.co/robert-schantz/home → Agents exploring KW Metro San Diego: kwsandiego.kw.com/join-our-team → Consumer questions or to interview a top San Diego agent: robertschantz.com

Robert Schantz / Managing Broker, KW Metro | San Diego / 24 years in real estate.