For next two years, San Diego rent will continue to climb
SAN DIEGO (KUSI) — Apartment rent in San Diego County is going up again. Over the next two years, rent is projected to be at its highest in Southern California, thanks to an increase of demand and a decrease in vacancies, a report released Tuesday said.
Average rents in the county are expected to rise by $155—to $1,577—over the next two years, the study prepared by Beacon Economics for the USC Lusk Center for Real Estate said.
Even though there are 38,000 new apartments being built in Southern California counties, the 2016 USC Casden Multifamily Forecast found, rent hikes continue due to high demand.
The increase in construction is providing relief but “Population and employment growth are driving up demand faster than new inventory can hit the market,” Raphael Bostic, interim director of the USC Lusk Center for Real Estate said.
In other places around Southern California, rents are projected to climb by $109 in Los Angeles County and $149 in Orange County. The Inland Empire is expected to see increases of $84.
The report notes that the improving national economy and recovery of the housing market should generally provide some relief in the rental market,
California home prices are still twice the national average, making apartments a more accessible option for many people in search of a place to live.
“At a national level, it is clear that the great apartment bull market that started at the end of the great recession is coming to an end,” said
Christopher Thornberg, Beacon Economics founding partner. “Local supply constraints combined with solid economic growth implies that the softening will not be experienced locally.”
Pressures on the rental market in San Diego County include the region’s lowest unemployment rate since 2007 and strong population growth, which offset increased construction. According to the report, nearly 6,300 units were authorized by building permits last year, but the vacancy rate is expected to be 4.8 percent, similar to what it is now.
Bostic also noted that most multifamily construction in Southern California, particularly in Los Angeles and Orange counties, targets higher-income renters.
“While new inventory tends to favor higher incomes and more affluent neighborhoods, there is hope for other classes of renters,” Bostic said.
“High-end renters are the first to become homebuyers. As the demand for high-end dwellings slows, savvy developers will seek more projects built for people of more modest means.”