Look, I came across some fascinating data from Realtor.com Research comparing the luxury markets in Key West and San Diego, and it really illustrates how differently coastal markets can perform even when they share similar appeal. Both places have that year-round warmth and beach access that people covet, plus they each have rich histories dating back centuries. But when you dig into the numbers, the story gets pretty interesting.
Here's what caught my attention. A decade ago, San Diego was actually the pricier place to enter the luxury tier, but that's completely flipped now. According to the research, Key West's entry point into the top ten percent of listings has climbed to roughly four and a half million dollars, while San Diego's sits around two point seven million. That's a pretty dramatic shift from where things stood back in 2016. The gap between them has been growing since late 2017, and it really accelerated after the pandemic.
The growth rates tell you something important about what's been driving this. San Diego's luxury entry point grew by about eighteen percent over the decade, but Key West nearly tripled, increasing around one hundred forty-five percent. Since the start of 2020, San Diego is up just a couple points while Key West is up more than half. Both markets had pandemic booms followed by corrections, but Key West's decline has been shallower and it's holding at much stronger levels.
Now here's where it gets really interesting from a market mechanics standpoint. Key West is tiny compared to San Diego, and that matters for how prices work. The smaller population means a higher concentration of expensive homes. Plus, Key West has a ton of vacation properties, roughly twenty-seven percent of the total, which skews everything. But the real constraint is that Key West sits in a state-controlled zone where new residential construction is basically capped by hurricane evacuation requirements. As of mid-2026, the city could barely permit a single additional single-family home. San Diego, meanwhile, is permitting thousands of new homes annually.
On the demand side, both markets pull their interested buyers primarily from within their own state, with the Los Angeles metro driving nearly thirty percent of cross-market interest in San Diego and Miami doing the same for Key West. When you look at the actual neighborhoods, San Diego's top ZIP codes do command higher prices than anything in Key West, but San Diego has ninety-nine ZIP codes to work with while Key West only has nine. Rancho Santa Fe leads San Diego's luxury landscape with a median around six point nine million, while Islamorada tops the Key West micropolitan area.
What I'm seeing locally here in the Bay Area is that these supply constraints matter tremendously. We have our own version of this story playing out. Like San Diego, we've been adding housing and that's helped moderate price growth compared to truly constrained markets like Key West. But we're also competing for that same pool of California wealth, and when other markets like Key West get so supply-constrained that prices spiral upward, it puts pressure on how we price our own premium inventory.
