After witnessing a net loss of 3,800 positions last year, employment in San Diego has seen a resurgence over the last few quarters, with payrolls expanding by 7,700 workers in the third quarter of 2012 alone. Additionally, mid-year gains totaled 11,100 new hires, allaying any doubt that “America’s Finest City” is recovering and becoming a beacon for job growth statewide.
Yet one fundamental that has yet to be significantly affected by the employment expansion is apartment vacancy, with the overall rate remaining steady at 4.8 percent—the same rate as in 2011. While certain submarkets and product types are performing better, the central part of the city posted a slightly higher rate of 5.4 percent, increasing from 5.3 percent last year.
Part of this stagnation might be due to the fact that the number of single-family home sales has accelerated. Hendricks & Partners reports that there were 36,300 annualized sales in September—an increase of 14 percent year-to-date, compared to a 3.7 percent increase during the same nine-month period in 2011. As such, the median existing-home price increased 4.8 percent to $377,870.
Yet with a concurrent lag in construction activity over the last couple of years, tightening in the multifamily sector may still be possible. Only 370 units were delivered in 2011, a figure that had been declining since 2008. However, 2012 so far has seen 925 units delivered, yet this falls far short of the over 2,000 units delivered in 2006.
Permit issuances, meanwhile, have skyrocketed in recent years—rising 155 percent in 2011. So far in 2012, 3,360 units have been approved for development, up 7.6 percent from the beginning of the year. Yet for the past six years, actual delivery has fallen far behind permits, adding a layer of uncertainty to the market as to when such a backlog will be delivered.
However, with no expansion of supply imminent, rents have been steadily increasing—rising from an average of $1,396 per month in 2011 to $1,449 per month in 2012. The I-15 corridor was the only submarket to not see any increase in overall rent, and the Hillcrest/Mission Valley submarket saw the largest increase of 7.3 percent year-over-year.
The most expensive area of the city continued to be the North County coastal area, with an average rent of $1,672 per month, while the most affordable submarket was the East County area, coming in at $1,153 per month.