Is there good news for San Diego multifamily ahead? Keith Courtney unpacks the truth.

By Keith Courtney

The San Diego Multifamily Market has been very strong over the past year seeing significant property value increases throughout San Diego County.  USC’s Lusk Center for Real Estate released their annual Casden Multifamily Forecast last week that gives some of the details with “why” multifamily prices are going up.  The Casden Multifamily Forecast analyzes past and future rental and vacancy rates, employment as well as factors that contribute to multifamily supply and demand.

A quick summary of the report indicates that multifamily rents will continue to increase in 2016.  Vacancy rates may temporarily increase due to new supply, but then trend back down as the new units become occupied.  The San Diego economy continues to be strong with wage increases and the unemployment rate moving lower.  All the above factors are great news for the San Diego multifamily real estate market and if the current trends continue it indicates that property values should continue to increase over the next several years.

The report showed that San Diego’s apartment rents rose countywide by 5.9% to $1,422/month in 2015.  The report forecasts that San Diego apartment rents will rise a little slower in 2016 at 2.9% due to new supply of multifamily housing and the general uncertainty in the global markets.  Although rents may increase at a slower pace, the good news is the report shows that rents will continue to rise over the next few years due to lack of new supply unable to meet increasing demand, population growth and a growing economy causing average rents to reach $1,577/month by 2018.

Consistent with the slowing of rent growth due to new multifamily supply, the forecast noted overall vacancy inched up slightly from 4.6% in 2014 to 4.9% in 2015 caused by the increase in new supply. The report shows that San Diego permits issued last year increased 15% from the previous year, but the report forecasts that the permit increase will not keep up with multifamily demand and vacancy is expected to drop to 4.8% by 2018.

In addition to supply and demand factors causing San Diego rents to increase, another reason why San Diego will see annual rent hikes greater here than elsewhere in the SoCal region is SD’s very healthy economy. The report shows San Diego added 39,700 jobs over the last year, and wages are rising, which is creating greater apartment demand. The SD economy grew by 3.7% in 2015—the greatest in the state—according to a March report from the SD Regional EDC, and unemployment dropped to 4.7% from 5.4% a year ago.


Keith Courtney

Keith Courtney
Principal – ACI

About the Author: Keith Courtney is a principal at Apartment Consultants Inc. with over 20 years of experience in real estate. Keith holds a special emphasis in the sale of apartment communities, condo conversions, triple-net, and tenant-in-common properties. Please feel free to contact Keith if you want a no obligation appraisal & evaluation of your property, or if you just have a general real estate question. Keith will always give you his honest opinion whether you should sell, or hold onto your property based on his experience owning and brokering investment properties.  Contact Keith today at 619-725-3635 or