SAN DIEGO COUNTY, Calif. — Renting an apartment in Southern California is about to get a lot more expensive, with a USC Casden Economics Forecast released Tuesday predicting sharp increases in rent across the region, with Orange County renters seeing an average monthly jump of $410 over the next two years.
"COVID-19 caused a large-scale move from central cities to the suburbs that resulted in a sharp rise in apartment vacancies in Downtown L.A., Koreatown and Beverly Hills and historically low vacancies in Rancho Cucamonga, North City San Diego and Oxnard," USC Lusk Center for Real Estate Director Richard Green, co-author of the forecast, said in a statement. "While vacancies are coming back down in urban areas, the outskirts remain low and supply and will see rents go up at a much higher rate than the cities."
The forecast predicts that by the end of the third quarter in 2023, rents will increase by $252 over the current level in Los Angeles County, $410 in Orange County, $348 in San Diego County, $310 in Ventura County and $241 in the Inland Empire, including Riverside and San Bernardino.
Even after Governor Newsom recently passed legislation allowing for more multi-dwelling properties to be built, USD’s Burnham-Moores Center for Real Estate says builders will still face challenges like zoning regulations and covenants that making developing communities in urban areas more difficult.
“San Diego is a haven for wealth. We’re going to have people with second, third and fourth homes here in expensive areas. We have a lot of people that have done very well and they’re not going to welcome new, dense development," said Norm Miller, a Professor at USD Burnham-Moores Center for Real Estate.
According to the report, rental markets with vacancy rates below 5% can anticipate rent increases. Downtown Los Angeles, Koreatown and Beverly Hills are all currently above 5%, but those areas can expect to see moderate rent increases thanks to "high absorption rates," the report found.
Areas with exceedingly low vacancy rates -- such as Rancho Cucamonga at 1.69%, Oxnard at 1.86% and North City in San Diego County at 1.56% -- can expect to see triple-digit rent hikes, according to the report.
The report offered predictions in rents and vacancy rates in Southern California's major market areas.
“Unless we can find more space inland and build more complete communities so that we have the jobs and the homes, we’re going to have a persistent affordability problem,” Miller said regarding San Diego County housing.
Los Angeles County has a current average rent of $2,073, with a 3.9% vacancy rate, with the average rent predicted to rise to $2,325 by 2023, with the vacancy rate holding steady. The Orange County average rent is predicted to rise from the current $2,439 to $2,849, with the vacancy rate rising from 2.1% to 3.7%.
In San Diego County, the current $2,144 average rent will rise to $2,492, according to the report, with the vacancy rate going from 2.5% to 3.4%. The Inland Empire's average rent will rise from $1,827 to $2,068, with the vacancy rate holding steady at 1.9%, according to the report.
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