Market Stat: Rent Growth Slows Markedly After Average Apt. Rents Reach Highest Level on Record
Annual rent growth in San Diego’s apartment market slowed again in the third quarter of 2019 even as average rents in the region reached their highest level on record, nearing $1860 per month, a burdensomely high level that has shifted demand to more affordable units and reined in rent growth this year.
The third quarter posted rent growth below 0.5%, one of the lowest growth rates for a third quarter in the past five years and below the market’s long-term average for the third consecutive quarter. It was the only property segment in the region to finish below its respective long-term average benchmark.
After average apartment rents rose more than 2% during the second quarter, seasonality, a trait not often ascribed to San Diego’s residential market, crept into the rent outlook. And if the rent growth averages for the past three fourth quarters are any indication, apartment landlords in San Diego could expect a further slowdown at the end of 2019. Each of the past three years ended with rents falling in the final three months.
Only five of San Diego’s 14 multifamily submarkets posted annual rent growth at or above their respective historical averages at the end of the third quarter. Poway/Santee/Ramona led the market with rent growth above 5%. Others, including North-I-15 Corridor, Outlying San Diego, National City/South Central and Chula/Vista/Imperial Beach rounded out the top five.
What each of these submarkets has in common, is that they are all in the bottom half of San Diego for average rent levels. That speaks to both the demand for more affordable units in the region, and the increased cost burden faced by renters-by-necessity, as the region’s most affordable submarkets continue to post the strongest year-over-year rent increases.
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