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The Real Deal: Apartment rents expected to rise up to 4% through 2025 across SoCal

December 5, 2023

Apartment rents across Southern California are expected to rise up to 4 percent through 2025,
according to a new study.

Rents are projected to rise between 2 and 4 percent across the six-county region, according to the
Orange County Register, citing a University of Southern California report.

The university’s Casden Multifamily Forecast predicted below-average rent increases for Los Angeles,
San Diego, Riverside and San Bernardino counties, and average hikes in Ventura County.

Orange County, the Southland’s strongest rental market, is expected to have slightly above-average rent
increases, with a typical asking rent hitting a record $2,800 per month by late 2025.

Rent growth in 2024-25 will be nowhere near the soaring increases during the pandemic, when hikes
ranged from 12 to 18 percent a year.

But after two years, the pace of rent increases will rise during a slowdown in apartment construction,
according to the forecast, compiled by the USC Lusk Center for Real Estate.

Landlords will face financial difficulties as they try to replace low-interest loans coming due in the next
four years, the forecast said.

High interest rates and surging operating costs will hurt building owners, resulting in foreclosures and
fewer resources to boost the housing supply.

“As the industry takes time to sort out financing, new supply will dip lower and lower,” the forecast’s
authors said in a statement. “Vacancy will drop, and rents will climb.”

Vacancy rates are projected to remain between 4 and 6 percent over the next two years, according to
the forecast.

The pace of rent hikes will creep back up as high interest rates continue to thwart new apartment

“The rental housing shortage in Los Angeles County remains a chronic problem,” the report said. “Even
though the number of delivered units was above average for the last 12 months, … the county is still not
producing enough housing.”

The original article can be found here.