Today we are sharing with you a recent publication regarding the future of the multifamily sector in Southern California. In partnership with the University of California, the Casden Economic Forecast reports are highly regarded for taking current economic data and trends and projecting a long-term expectation of how the market will be changing in the coming year and beyond. What follows is an excerpt from the San Diego portion of the report. To read the forecast in full it can be found HERE.
San Diego County has had one of the better performing economies in Southern California in recent years. The unemployment rate decreased to 5.2% last year, the lowest since 2007, as County wage and salary jobs grew by a solid 3.0%. Half of the 39,900 new jobs added in 2015 were concentrated in three industries: Health Care, Leisure & Hospitality, and Construction. Notably, the Manufacturing sector added jobs at more than double the statewide pace over the past year, a sign of that sector’s continued strength in the region. With sound economic fundamentals, San Diego County’s economy will expand over the next two years and the housing market will heat up with further increases in prices, sales, and rents.
The trend in the San Diego County multifamily market has been marked in recent years by rising rents and generally lower vacancy rates. The average rent in 2015 was $1,422/month, rising 5.9% from one year earlier. Multifamily construction in the County has increased sharply in recent years, with a 15% increase in permits last year alone. In turn, the vacancy rate edged up from 4.6% in 2014 to 4.9% last year. North San Diego County led the County’s submarkets with the highest rent last year ($1,471/ month), followed by the City of San Diego ($1,457/month) and Chula Vista-National City ($1,159/month). The City of San Diego experienced the fastest growth in rental rates at 5.8% in 2015, slightly ahead of North San Diego County (5.1%) and well ahead of Chula Vista/ National City (1.6%).
Vacancy rates were generally low among the County’s submarkets. The lowest average vacancy rate was in the City of San Diego at 4.9%, followed by Chula Vista-National City at 5.8%, and North San Diego County at 6.5%. Vacancy rates rose in all the submarkets last year.
Over the past year, the total stock of housing increased. Ongoing growth in San Diego County’s population will drive housing demand with both the rental and single-family owner-occupied markets expanding. San Diego County will continue to add to its stock of multifamily units over the next two years, with permit counts approaching or exceeding levels that prevailed before the recession.