USC Casden Predicts Higher SoCal Apartment Rents
- Oct 09, 2014
Los Angeles—The 2014 USC Casden Multifamily Forecast reports that apartment rents are continuing to rise throughout Southern California as the demand for rental housing outpaces the completion of new units. During the 12 months that ended in June 2014, apartment vacancies declined in all four SoCal markets analyzed. San Diego County had the lowest vacancy rate at 3.2 percent (down 2.8 percent over the year), followed by Los Angeles at 3.3 percent (a 10.8 percent decrease), Orange County at 3.6 percent (a 14 percent decrease), and the Inland Empire, where vacancies plummeted 30 percent to 3.8 percent.
While the forecast projects relatively flat vacancy rates over the next two years—a slight decrease in Los Angeles and Orange counties countered by a modest increase in San Diego County and the Inland Empire—renters will pay more for housing. USC Lusk Center Director Richard Green, who co-authored the study with USC researcher Vincent Reina and California Association of Realtors senior economist Selma Hepp, says that affordability is a cause for concern.
“Though the economy and employment have improved, renters’ incomes are stagnant,” Green notes. “So while net absorption and occupancy rates are moving in the right direction, affordability continues to worsen. As more renters double up or move elsewhere, vacancies could increase and drive down rents.”
As of June 2014, renters in Los Angeles County paid a monthly average of $1,716, which was highest in the region and 3.9 percent above the previous year. The average rent in Orange County increased 3.2 percent to $1,663, while San Diego County renters paid $1,498, a 2.8 percent increase. While the Inland Empire continues to have the most affordable rental housing at $1,134 per month, it also saw the sharpest increase at 4.1 percent.
The report also forecasts rent increases every quarter for the next two years. Average rent in Los Angeles County is projected to increase 8.2 percent by June 2016, while Orange County rents are expected to increase 8.6 percent by then. Currently, Newport Beach’s average rent of $2,223 is the highest in Orange County, while Anaheim’s $1,300 average rent is the lowest.
Average rent in the Inland Empire is forecasted to increase 9.9 percent by June 2016. Rents in San Diego County are projected to increase 6.9 percent by the same time. In 2014, the Carlsbad/Encinitas/Del Mar submarket in San Diego pays the highest rent at $1,843 while the Escondido submarket pays the lowest at $1,119.