Bay Terraces is a hilly urban neighborhood in the southeastern part of San Diego, California, United States.

In 1976 and 1977 Peñasquitos, Inc, submitted revisions to the initial 1969 Plan, including adjustments to housing, open space, and circulation, resulting in the development and urbanization of Bay Terraces.

[8] Hence, from the late 1970s to early 1980s, in the interest of urban renewal, this massive, unused tract of land (formerly a canyon) between the Skyline and Paradise Hills neighborhoods underwent development.

The notion of a new subdivision built directly triangulated in what were already considered high-crime areas repelled the great majority of home-buyers.

The federally funded recovery project was only marginally successful, however, as several large portions of the development stood partially constructed and abandoned for nearly twenty years, the most noticeable example at the intersection of Skyline Dr. and Woodman Ave.[9][10] With the great influx of Filipino immigrants joining the United States Navy,[11] especially from the Vietnam War era on to the 1990s, many Filipinos inhabited the Southeast San Diego neighborhoods of Alta Vista, Bay Terraces, Paradise Hills, Shelltown, Skyline Hills, and Valencia Park, both for the relatively affordable housing prices and its close proximity to Naval Base San Diego.

[19] Commonly seen across Southeast San Diego, many homes in Bay Terraces are tract homes built in the late 1970s to early 1980's that have been outfitted with iron bars over the ground-floor windows and doors, as well as cast-iron gates and chain-link fences guarding driveways, a reflection of the perceived need for security in these historically high-crime urban neighborhoods.

[20] Additionally, it is home to the sprawling Meadowbrook Apartments, an expansive low-income housing project which has long been plagued by drug sales, violence, and homicides.

[24] The 22-acre, 448 unit complex recently underwent an extensive renovation by Seattle-based Vitus Group, which purchased the housing projects in 2013 and completed upgrades in 2015.

[27] More recently in 2019, sections of Bay Terraces recorded the greatest percentage increase in violent crimes during a five-year period reviewed by the San Diego Union-Tribune.