About the Region

A continued pattern of uneven growth in Q2 2026 underscored the persistent tension between economic activity and how San Diegans actually work and live.

San Diego continued to add jobs in Q2 2026, but that growth remained uneven. Total non-farm employment was up 16,200 jobs from June 2025 to June 2026. However, the majority of this year-over-year growth was concentrated in healthcare and social assistance, which added 16,600 jobs, as well as leisure and hospitality which added 7,200 jobs. Though critical parts of our economy, wages tied to these jobs tend to be lower than the regional average—significantly lower for occupations in the leisure and hospitality sector, which make an estimated average of $7,000 per year below EDC’s quality wage threshold. Here, we see this limited economic growth has not yet translated to felt growth.

There were, however, signs of potential momentum in the innovation industries. After three consecutive years of decline, professional and business services added 3,600 jobs between June 2025 and June 2026. In parallel, San Diego saw continued VC movement as startups attracted roughly $1.6 billion across 30 deals in Q2 2026, spanning consumer, life sciences, and technology companies. Despite this funding influx, professional and business services employment remained 20,500 jobs below the sector’s October 2022 peak.

San Diego’s real estate market offered another view of this uneven economic landscape. On the commercial side, the region continued to experience negative net absorption of office space for the sixth straight quarter, meaning more space was vacated than newly occupied. Yet, notable new leases such as Industrious (26,000 square feet in Downtown), Bosch Building Technologies (25,000 square feet in Scripps Ranch), and San Diego Lighting Associates (17,000 square feet in Kearny Mesa), suggested that there were pockets of continued demand for office space. At the same time, office asking rents increased 5.7% year-over-year in Q2 2026, the largest annual increase since 2020.

Together, these trends suggest that the office market is not simply contracting but reflecting a shift in where and how businesses use space. Downtown San Diego, for instance, had its lowest leasing activity since Q1 2024 and the highest vacancy in the region, at 24.4%, driving the region to use space creatively with some high-rises being prepared for conversion to residential use. San Diego simultaneously saw an increase in companies choosing suburban space elsewhere in the region—North County saw its highest leasing volume since Q2 2024.

On the residential real estate side, San Diegans’ ability to afford housing remained a source of strain. In Q2, the average annual wage within the region’s growing healthcare services industry was approximately $81,003—above the region’s quality wage threshold of $24.48 per hour, but still far below the income needed for a typical household to comfortably afford a median-priced home or sustain the average apartment rent.

June 2026 saw San Diego’s median single-family home price reached a record high at $1.09 million. For San Diegan households, Zillow estimated a monthly all-in mortgage payment for a single-family home would be roughly $7,200 per month, which would require a household income of approximately $290,000 per year to keep costs at 30% of earnings. That is more than three and a half times the average annual wage for healthcare services roles.

For many San Diegans, renting remained the more accessible option. Average apartment rent across unit types was approximately $2,453 per month in Q2 2026, requiring an annual household income of roughly $98,000 to remain within the conventional 30% housing-cost threshold. While considerably more attainable than homeownership, this cost still consumes a substantial share of household income.

As businesses change where and how they use space and housing costs remain high relative to wages in higher-growth sectors, a more pressing picture has begun to emerge: San Diego is generating limited economic activity that doesn’t necessarily translate into broad-based economic security. Sustaining and expanding growth will mean ensuring more people can afford to continue to live and work here.

What we’re watching in Q3 2026:
In the first half of 2026, San Diego saw investment growth driven largely by innovation technologies tied to the defense industry. A $2.3 billion deal with drone maker Shield AI dominated Q1, followed by drone maker Aevex’s $320 million IPO in Q2, both the largest deals of their respective quarters. As investment continues to be concentrated in defense-related technologies, the question will be whether this capital investment translates to durable economic momentum and quality jobs, or if it is a short-term concentration of capital around a moment of heightened focus in the defense industry.