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San Diego Union Tribune: Report: San Diego rents to rise more slowly than other parts of Southern California

November 23, 2023

San Diego County rents are forecast to increase more slowly than other parts of Southern
California over the next two years, says a new report.

An annual forecast from the University of Southern California's real estate school said San Diego
County rent will increase by $119 to an average $2,540 a month by October 2025. That would
make for a 2 percent annual gain the next two years — significantly lower than the double-digit
increases seen during the pandemic.

The prediction for San Diego County puts it among the slower rent gains in the region. Orange
County is expected to grow by 4 percent annually and Ventura County by 3 percent. Los
Angeles County and Inland Empire were also predicted to increase by 2 percent.

Forecast author Moussa Diop, professor at the USC Sol Price School of Public Policy, wrote that
continued out-migration from California is likely to keep landlords from raising rent too much.

From a developer's prospective, he wrote that the overall multifamily picture is bleak if interest
rates continue to stay high — which, ultimately, could affect renters.

“Adding housing supply is one of the only reliable ways to ease rent burden," Diop wrote. "It’s
near impossible to significantly add housing if builders can’t finance projects or they have
properties nearing default. It may be a lose-lose situation for renters and landlords.”

Still, a 2 percent annual rise probably sounds OK to your typical San Diego tenant who has lived
through the past few years of rising rents. Real estate tracker CoStar said the average asking
rent in San Diego County has increased 24 percent in three years.

In the first three months of 2022, rent had increased 13.8 percent in a year, CoStar said. That
was the highest annual increase in its records for San Diego County going back to 2000.

The USC report said San Diego County won't see as big of an increase in rent in part because it
is building more than much of the region. It said the county issued 5,600 multifamily residential
permits so far this year, lower than what most pro-housing analysts would want — but still
better than the rest of Southern California.

The report said for multifamily builders, San Diego still looks good because of a diversified
economy and an unemployment rate (4.1 percent last month) lower than the state average of
4.7 percent.

A lot of Southern California rents are affected by residents moving around. In particular, Los
Angeles County is losing the most residents but it's not like they are all going to Texas. The top
destination for Angelenos was the Inland Empire with 35,400 going there in 2021. It was
followed by Orange County, 21,600, and Ventura County, 4,800. Surprisingly, more San Diegans
moved to LA — 2,300 — compared to the number of Angelenos who came to America's Finest

Renters in San Diego County aren't competing with as many out-of-towners for apartments as
they might think. USC said the majority of renters, 80 percent, lived at the same location for
more than a year. About 14 percent of renters moved from somewhere else in California, 3.5
percent came from other states and 1 percent came from abroad.
The USC report predicted the vacancy rate in San Diego County would be 4.6 percent in October
2025, compared to 3.91 percent now.

The original article can be found here.