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Monday, Mar 18, 2024
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Renters Stay Put Rather Than Face Tough Local Market

Demand for rental apartments has reached near record highs in San Diego, even as the market for single family home sales continues to soften.

San Diego was among 17 metro markets where apartment occupancy rates were at their highest in the third quarter of 2018, higher than they’ve been in the past 15 to 20 years, according to a survey by RealPage, a national property management and software company.

Occupancy rates in San Diego were the highest they’ve been in about 15 years.

“San Diego tends to maintain apartment occupancy that is among the tightest performance seen across the country,” said Greg Willett, chief economist at RealPage.

“The local apartment stock stays full because new supply is difficult to deliver in this market and because the high cost of for-sale product caps the number of renters who can afford to purchase,” Willett said.

The highest demand was for Class C, older lower-priced apartments, with a third quarter occupancy rate of 98.7 percent.

“Occupancy in those Class C properties has really been run up in recent years, as rising rents have pushed the Class B segment out of reach for more and more households,” Willett said.

For top-of-the-line luxury apartments such as the Palisade at Westfield UTC, the occupancy rate was 95.8 percent while mid-range apartment complexes had an occupancy rate of 96.9 percent.

“Annual rent growth in San Diego has run between 4 percent and 5 percent during the past few years. November stats show the metro rent growth pace at 4.7 percent, compared with the U.S. average of 3.3 percent.”

In November, the average monthly rent in San Diego among all classes of apartments was $1,959 while the national average was $1,352.

As occupancy and demand are ratcheting up at a robust pace, construction of new apartments is chugging along a more modest rate of 1.6 percent, Willett said, with about 5,100 apartments under construction.

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