There’s a chance it might be easier to be a San Diego renter next year.
San Diego County rents are ending the year down from previous highs, following a national trend. The average monthly rent for a county apartment is $2,397 a month, said real estate tracker CoStar. That’s down from $2,406 a month to start the year.
A 0.4 percent drop in rents in a normal market would be hardly notable, but this is San Diego we’re talking about. Rent was up 13.4 percent in a year to start 2022, and it’s rare to find much historical precedent for drops. In CoStar records going back to 2000, the biggest drop was a 2.2 percent annual reduction in the third quarter of 2009.
Most of the rent reductions have only happened in the last half of this year, with December marking five months of rent declines in San Diego County.
Joshua Ohl, CoStar director of market analytics, said this year featured a correction in asking rents after a substantial surge near the end of the pandemic.
“Right now, I think we are just correcting for that huge surge we saw in rent,” he said.
CoStar forecasts San Diego County rent will continue to drop through the first six months of next year, and then start rising again, finishing the year around $2,490. The prediction is not because of some geopolitical reason, interest rate change or anything specific. It’s just more likely when looking at San Diego’s history that we get back to the usual 3.5 persent to 4 percent annual rise.
Rent changes can vary a lot across the county. For instance, the La Jolla and UTC area has seen rents drop 4 percent in a year, but Chula Vista is up 3.3 percent. Still, even the areas with increases aren’t matching the blistering increases of the past few years.
Rental website Zumper also predicts a sluggish start to next year for landlords, according to its recently released annual rental report. It said the national rent median for a one-bedroom was $1,496 a month, down a tenth of a percent annually.
Zumper said 55 cities — including San Diego — were down year-over-year in its list of the 100 largest cities. There were also 17 cities that were flat. Outliers were New York City, up 11.2 percent, and Chicago, up 16.7 percent.
It predicted rent gains would be sluggish next year in the Sun Belt and other areas of the nation where multifamily construction greatly picked up. Those same type of oversupply issues aren’t expected on the West Coast.
Zumper also surveyed renters and found many aren’t as thrilled about the prospect of buying a home, which has seen its price rise despite higher mortgage rates. It reported 69 percent of renters said rising interest rates have deterred them buying or looking into buying a home. It cited a report from CBRE that found the average monthly new mortgage payment was 52 percent higher than renting.
The monthly mortgage for a San Diego County median price home, $850,000 in November, is around $4,799, considerably more than the region’s $2,397 average rent. That assumes 20 percent down on a fixed-rate mortgage, with a 6.67 percent interest rate — the average Thursday morning, said Freddie Mac.
CoStar breaks down the rent by unit size. It said the average for a San Diego County studio is $1,854 a month; $2,107 for a one-bedroom; $2,581 for a two-bedroom; and $3,246 for a three-bedroom.
Here’s how rent breaks down by region:
La Jolla/UTC
Average monthly rent: $3,161
Annual decrease: -4 percent
This is San Diego County’s second-most expensive neighborhood, which has a vacancy rate of 4.2 percent.
Central Coast
Average monthly rent: $2,252
Annual decrease: -2.4 percent
This area includes Pacific Beach, Mission Beach, Ocean Beach, Point Loma and Coronado. The vacancy rate is 6.8 percent.
Downtown San Diego
Average monthly rent: $2,946
Annual decrease: -1.4 percent
Downtown has the highest vacancy rate in the county at 8.1 percent.
North Shore Cities
Average monthly rent: $3,387
Annual decrease:: -0.1 percent
This area includes Del Mar, Encinitas and Solana Beach and is the county’s most expensive rental market. The vacancy rate is 4.4 percent.
Mission Valley/North Central
Average monthly rent: $2,746
Annual increase: 1.1 percent
This area includes Mission Valley, Clairemont, Kearny Mesa, and Allied Gardens and has a vacancy rate of 5.1 percent.
South I-15 Corridor
Average monthly rent: $2,923
Annual increase: 1.5 percent
This area includes Sorrento Valley, Miramar and Mira Mesa and has a vacancy rate of 5.1 percent.
Balboa Park
Average monthly rent: $1,880
Annual increase: 1.7 percent
This area includes North Park, University Heights, Hillcrest and South Park. It still has some of the oldest rental supply in the region, keeping averages low, and a vacancy rate of 4.6 percent.
Poway/Santee/Ramona
Average monthly rent: $2,081
Annual increase: 2.1 percent
This East County area has a vacancy rate of 3.7 percent.
North County
Average monthly rent: $2,398
Annual increase: 2.4 percent
This area includes Oceanside, Carlsbad and Vista and has a vacancy rate of 3.4 percent.
East County
Average monthly rent: $1,894
Annual increase:: 2.5 percent
This includes La Mesa, El Cajon, Grossmont, Rolando Village, Talmadge and College Area. The vacancy rate is 3.7 percent.
National City/South Central
Average monthly rent: $1,894
Annual increase: 2.7 percent
This area has a vacancy rate of 2.8 percent.
North 1-15 Corridor
Average monthly rent: $2,332
Annual increase: 3 percent
Vacancy is 3 percent in this area, which includes Escondido and San Marcos.
Chula Vista/Imperial Beach
Average monthly rent: $2,326
Annual increase: 3.3 percent
This area has a vacancy rate of 5.8 percent.
Outlying San Diego County
Average monthly rent: $2,181
Annual increase: 5 percent
Neighborhoods in this sector include Julian, Campo, Jacumba Hot Springs and Alpine. The vacancy rate in this area is 5.1 percent.
