San Diego rent growth skyrocketed during the pandemic but now appears to have come back down to earth and — depending where you live — there might be a deal to be had.
The average monthly rent in the first quarter was $2,402, said real estate tracker CoStar, up 0.6 percent in a year. That’s at the same time it seemed like just about everything else was going up, including home prices, which have increased 11.2 percent in a year.
Rent is still increasing, and remains one of the highest in the nation, but it is a far cry from 2022 when rent increased 14 percent in a year. CoStar’s latest numbers are based on its database of nearly 300,000 units across the county, but it doesn’t mean all renters are feeling the change.
For example, average rents in parts of downtown San Diego and UTC have dropped, but lower cost markets, like National City and East County, are up. Also, there is no shortage of stories across the county of landlords who might have held off on increases in the past three years but now are suddenly raising rents at the maximum allowed by law.
One reason housing experts say overall rent growth has slowed is accelerated apartment construction.
Like much of the nation, San Diego County has been building apartments at a much quicker rate than any other type of housing, which means some areas of the region are nearing saturation. From 2011 to 2022, the county built an average 65 percent more multifamily housing each year than single-family homes, said data from the Construction Industry Research Board.
“We’ve had an enormous amount of new apartment construction,” said Alan Nevin, a local real estate analyst with Xpera Group. “They are filling up, but there are no waiting lines.”
He said the trend of slowed rent growth might continue in the short term as renters have more options, especially downtown. There are more than 4,000 apartments opening this year, with nearly half — 1,600 — mostly in East Village and the Marina District.
CoStar predicts annual rent growth in the second quarter to be 0.9 percent and 1.9 percent in the third quarter.
Joshua Ohl, CoStar director of market analytics, said the increased number of apartments, as well as many tenants deciding to double-up with roommates to fight high costs, means a cooler than usual forecast for rent growth.
“I think it all comes down to a weaker demand environment right now,” he said.
San Diego isn’t alone with slowed rent growth after a substantial period of apartment construction. Apartment construction in the U.S. hit a 36-year high in 2023, said an analysis from RealPage, with 444,000 apartments constructed last year.
Real estate website Zumper said national rents were down 0.5 percent annually and two-bedrooms were up 0.8 percent. A major outlier was New York City with rents up 22.3 percent in a year.
San Diego was the eighth most expensive city to rent in the U.S., Zumper said, with a median $2,330 monthly rate for a one-bedroom. The top markets were New York City ($4,200), Jersey City, N.J. ($3,260), San Francisco ($2,900) and Boston ($2,850).
With rent growth slowing down, it might seem like local developers would reconsider plans for new apartments but that doesn’t seem to be happening. There are roughly 15,000 new apartments proposed, CoStar’s data says, across San Diego County. One of the biggest is Logan Yards in East Village, which has 900 units in the works and would become downtown’s largest apartment complex.
Only one developer is publicly changing strategy. British Columbia-based developer Bosa Development submitted plans in late March to change its 40-story apartment building into a 389-unit condominium tower. Bosa didn’t say exactly that the change was due to stagnating rents, just that condos were a better return on investment.
Nevin said it was likely you would see much more projects switch to condos if not for strict defect legislation. The state’s condo law, in effect since 2003, created strict liability for developers in the 10 years following condo construction, requiring substantial insurance cost for builders. The change greatly limited condo tower construction throughout California in the years following.
“Only Bosa has the guts to move forward,” Nevin said.
Even a low unemployment rate in the region hasn’t stopped some potential renters from deciding to get out of the rent race altogether. Between July 2022 and July 2023, 31,000 more people moved out of the county than moved in, said the U.S. Census. That was almost double what it was a year earlier.
Renters are fed up with high prices and just deciding to leave in many cases, said Rafael Bautista, director of the San Diego Tenants Union. However, he said that most of the people he works with at the renter advocacy union are on the low-income side and seem to be getting as many rent increases as ever. Bautista said many have reasons why leaving is not an option.
Statewide rent control has been in effect since 2020, which capped rent increases at 5 percent plus the rate of inflation, or caps increases at 10 percent. The law only applies to rentals that are more than 15 years old, which Bautista said is where many low-income renters live. In theory, low-income renters in older buildings should be the ones benefiting from the law, but Bautista said some landlords will raise the maximum every year just because of the cap.
Concessions
It is in the best interest of developers to keep a high rent even if demand for their complex isn’t super high at the moment. One way they do that is to offer one to two months free rent.
Ohl said the strategy is designed to make sure developers are getting the high rents in the future with only a temporary setback at the start of the lease. Rather than lower rents to get new tenants, it is better for them to lock in a high rate and assume a renter won’t leave when the lease is up.
He said he has heard stories from property managers of renters just jumping from complex to complex to get the initial deals and not renewing after 12 months are up.
However, Ohl said the phenomenon of complex hopping is a small part of the market because most people don’t like picking up and moving every year, especially with the headache of security deposits.
Here’s a look at some concessions across San Diego County. Deals are subject to change and may have restrictions, such as g a 12-month lease, or limited to certain floor plans:
Denizen
This 151-unit apartment complex in Hillcrest opened in March and is offering up to six weeks free. CoStar said average rent at the building is $2,450 a month for a studio; $2,999 for a one-bedroom; and $4,164 for a two-bedroom. Denizen is a T-shaped building that faces Sixth Avenue and the popular Hillcrest shopping district on Fifth Avenue.
Kelvin
This newly opened Lemon Grove apartment complex has 66 units and a modern design. It is offering up to a month free and an additional $500 for a look-and-lease visit. Average rent is $1,950 for a studio; $2,514 for a one-bedroom; and $2,980 for a two-bedroom.
The Commodore
National City’s newest apartment complex, The Commodore, is offering the first month free. The 92-unit complex has an average studio rent of $2,060 a month; for a one-bedroom, $2,543; and for a two-bedroom, $3,099.
Mason
The Mason complex in Otay Mesa has a bit of a different take on the rent specials, offering the second month of a lease for free. Opened in late 2023, it has an average rent of $3,557 a month for a two-bedroom and $3,780 for a three-bedroom.
Radian
Downtown San Diego’s most expensive apartment complex, which opened in late summer, has one of the biggest deals in the county. It is offering up to six weeks free and $2,000 for a look-and-lease visit. Average monthly rent at the complex is $3,706 for a one-bedroom and $6,822 for a two-bedroom.
High vacancy
It can take a long time for an apartment complex to fill up, because renters are different than condo or home shoppers — it is much less likely they are making long-term plans for a rental.
Nevin said a good rule of thumb is one signed lease per day after opening. That could mean more than a year to fill up for big projects, and can vary by area. For instance, Little Italy apartment complexes fill up much quicker than those in East Village.
When researching apartment complexes with the highest vacancy, The San Diego Union-Tribune looked at apartment buildings using CoStar data that had been open at least since 2022 and limited it to complexes with at least 100 units. Here is a list of some of the apartment buildings with the most vacancies.
Broadway Towers (South Tower)
This 333-unit apartment complex in East Village was completed in late 2021 and has a vacancy rate of 26.4 percent. Average rent for a one-bedroom is $3,010; for a two-bedroom, $3,869; and $4,207 for a three-bedroom.
4th and J
This 168-unit complex in the Gaslamp Quarter, completed in 2020, has a vacancy rate of 21 percent. It has an average asking rent of $2,382 for a studio, $2,735 for a one-bedroom and $3,965 for a two-bedroom.
Gema
This 230-unit complex in downtown San Diego, on Eighth Avenue across from the El Cortez, has a vacancy rate of 16.5 percent. The building was built in 2002 and renovated in 2015. It has an average rent of $2,643 for a one-bedroom and $3,269 for a two-bedroom.
Prominence Luxury Apartment Homes
This 566-unit San Marcos apartment complex, built in 1984, has a vacancy rate of 15 percent. Average monthly rent fis $1,837 for a one-bedroom and $2,908 for a two-bedroom.
The Madison
This 110-unit complex in El Cajon has a 14.5 percent vacancy rate. It was built in 1976 and renovated in 2021. It has an average monthly rent of $1,807 for a one-bedroom and $2,297 for a two-bedroom.
Neighborhood differences
Not all of San Diego County is seeing slow growth, said CoStar data, perhaps prompting some renters to move around. It could still get tricky to find deals because even if you want to, for example, avoid rent increases in East County and move downtown, there’s a chance it will still be more because of higher average rents in much of downtown. Still, rates vary from complex to complex.
La Jolla/UTC: Average monthly rent of $3,180, down 2.5 percent in a year.
Downtown San Diego: Average rent of $3,001, down 2.1 percent annually.
South Interstate 15 Corridor (Sorrento Valley, Miramar, Mira Mesa): Average rent of $2,937, down 1.2 percent annually.
Mission Valley/North Central (Clairemont, Kearny Mesa, Allied Gardens): Average rent of $2,758, down 0.8 percent in a year.
Central Coast (Pacific Beach, Mission Beach, Ocean Beach, Point Loma, Coronado): Average rent of $2,312, down 0.4 percent annually.
North Shore Cities (Del Mar, Encinitas, Solana Beach): Average rent of $3,456, down 0.1 percent annually.
Balboa Park (North Park, University Heights, Hillcrest, South Park): Average rent of $1,909, up 1.1 percent annually.
North County (Oceanside, Carlsbad, Vista): Average rent of $2,418, up 1.2 percent annually.
Outlying San Diego County (Julian, Campo, Jacumba Hot Springs, Alpine): Average rent of $2,145, up 1.6 percent annually.
East County (La Mesa, El Cajon, Grossmont, Rolando Village, Talmadge, College Area): Average rent of $1,918, up 1.7 percent annually.
Chula Vista/Imperial Beach: Average rent of $2,361, up 1.8 percent annually.
National City/South Central: Average rent of $1,861, up 2 percent in a year.
Poway/Santee/Ramona: Average rent of $2,171, up 2.9 percent annually.
North Interstate 15 Corridor (Escondido, San Marcos): Average rent of $2,366, up 3.2 percent annually.
