San Diego Rents More Affordable Than Orange County Due to Housing Supply
San Diego apartment construction surges ahead of neighboring regions, helping curb regional rental cost growth through 2029 according to forecasts.
Rental rates across the San Diego region will continue climbing over the next several years, but an influx of new multi-family housing has successfully moderated price hikes compared to neighboring areas, Telemundo 20 reported on Tuesday.
The Casden Real Estate Economics Forecast, published on Tuesday by the USC Lusk Center for Real Estate, projects that average rents in San Diego County will grow at an annual average rate of 1.5% through 2029.
Rent increases and vacancy rates rise through 2029
Researchers calculate that the average monthly rent in the county sat at $2,592 in June. Projections indicate that figure will reach $2,707 by June 2029.
Meanwhile, the regional vacancy rate stood at 6.31% in June and is expected to tighten down to 4.9% as newly constructed apartment units become fully occupied.
The report highlights that San Diego County added approximately 16,000 new apartments since late 2023. That delivery volume marks roughly double the new supply added across neighboring Orange County during the exact same timeframe.
As a direct result of this construction pace, average rental prices in San Diego County remain roughly 7% lower than those recorded in Orange County, where average monthly rent reached $2,792 in June.
Density policies drive middle-income apartment construction
“Housing cannot be affordable unless there is plenty of it,” said Moussa Diop, associate professor of real estate at the USC Sol Price School of Public Policy, as reported by Telemundo 20.
The study credits San Diego’s push for increased urban density and the municipal Complete Communities initiative with helping developers respond effectively to high regional housing demand.
Analysts said that recent construction extended well beyond ultra-luxury buildings. Mid-tier Class B apartments accounted for approximately 34% of all recently finished residential deliveries in the area.
Regional comparisons across Southern California
Different counties across the broader Southern California market face varying trajectories regarding housing costs, driven by persistent inflation, elevated interest rates, and steep construction expenses.
| County | Projected Annual Rent Growth |
|---|---|
| Los Angeles County | 1.4% |
| San Diego County | 1.5% |
| Orange County | 1.9% |
| Ventura County | 2.2% |
| Inland Empire | 2.4% |
“San Diego and the Inland Empire show that there is still hope regarding affordability, but significant progress takes time and requires sustained development,” Diop told Telemundo 20.
Potential slowdowns in future housing supply
Despite current positive indicators, the forecasting model warns that incoming housing deliveries are slated to slow down in the coming years.
“The housing shortage in Southern California is a problem we created ourselves, but it is also a problem we can solve,” Diop said.