The 2013 USC Casden Multifamily Forecast projects two more years of rent increases as the region’s rental housing market continues to absorb units faster than it completes them.
Demand for multifamily rental housing increased across Southern California, with positive net absorption and increased occupancy rates in the four metro areas: Los Angeles, the Inland Empire, Orange County, and San Diego. Between the second quarters of 2012 and 2013, almost 6,700 multifamily rental units were completed across these four markets, with the most units completed in Los Angeles County. This represents a 113 percent increase in completions from the previous year and the highest number of completions across the four markets in the past three years. In addition, almost 11,900 multifamily units were absorbed across all four markets. Orange County and the Inland Empire absorbed more units than the previous year while Los Angeles and San Diego absorbed fewer units than the previous year.
Our forecast shows rising rents for all four metro areas over the next two years. We believe that the growth rate for rents will be slower for Los Angeles and Orange County, but will increase slightly for the Inland Empire and San Diego. We expect vacancy rates will decrease across all four markets, however, they will decrease at a slightly slower rate in Los Angeles, the Inland Empire, and San Diego, and at a higher rate in Orange County.