Written By Lily Leung
April 4, 2012
Average rents in the San Diego area rose 4.3 percent in 2011 and are expected to rise at a slower rate in the next year, according to a preview of USC's multifamily report on Wednesday. Vacancy rates locally also are expected to go up.
Some of the factors in play that may impact rental rates this year include high gas prices and an overall decline of San Diego home prices, based on a presentation by Tracey Seslen, an assistant professor of clinical finance at USC's school of business.
"Things are not doing well for SoCal for the first couple of months in employment; we have to keep an eye on that," said Seslen, who presented a sneak peek of the multifamily report from USC's Lusk Center for Real Estate, at the Lodge at Torrey Pines on Wednesday.
The report said vacancies in the San Diego area are expected to rise 0.7 percentage points over the next year and 1.3 percentage points over the next two years.
Last year, San Diego showed a stronger growth in rental demand as unemployment fell. Average rents increased 4.3 percent, the second largest increase in the Southern California markets analyzed in the report. Los Angeles was first, with an increase of 6.2 percent. San Diego had the highest occupancy rate at 96.8 percent.
That was the case in almost all of the 40 submarkets tracked in the report, which shows a vast improvement in rental demand from two years ago, when only 3 out of 40 submarkets showed rental increases, Seslen said.
It's still unclear if falling home prices will take away from rentership. A key factor is employment.
The full Casden report will be available next week as preliminary numbers are ironed out.
Source: UT San Diego
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