The Southern California Rental Housing Association released its apartment rent and vacancy survey this past month. The publication reported that the City of San Diego apartment vacancy rate was at 4.3%, which is up from the same time in 2018, when the rate was 2.9%. It should be noted that apartment vacancy rates are seasonal tend to be lower in the spring and higher going into the fall. The average City of San Diego one-bedroom apartment rents were reported at $1,292, two-bedroom units at $1,850, and three-bedroom units at $2,407 per month. The report noted that apartment occupancy was more evenly distributed county wide relative to the past, as all apartment property owners are benefitting from this period of very strong demand and limited market inventory.
There has been very significant upward pressure on apartment
rents throughout San Diego County through 2018. San Diego Apartment rental rates have increased
approximately 6%, per year on a compounded basis. Month-to-month apartment tenants typically
pay rents that are approximately 10% higher than a tenant that commits to a
full year lease. Apartment managers have
commenced very high tenant screening standards, are requiring higher deposits,
proof of apartment insurance, annual walk-through inspections, and stricter
lease terms. The high cost of residing in San Diego has caused an increase in
out-migration of some residents. However,
the demand for rentals still far exceeds the supply.
According to Marcus and Millichap, developers are underway
with 7,800 apartments with delivery dates extending into 2021. More than 40 percent of this pipeline will be
finalized in the next three quarters. Most
of these new multi-family projects are high end and near the urban core.