In June, San Diego’s apartment rents fell by 0.1%, marking the end of a monthly growth streak that began in January. This decline pushed annual rent growth into negative territory for the first time in a decade. Over the past 12 months, rents in the region have decreased by 0.1%.
The second quarter of 2024 saw the lowest rent growth in a decade at 0.7%. In contrast, between 2015 and 2019, rent growth averaged 1.7%, and between 2021 and 2023, it surged to an average of 3.2%.
As of mid-year 2024, the average monthly rent in San Diego stands at $2,457, a slight decrease from $2,460 in mid-2023. Despite being the sixth most expensive rental market in the country, San Diego is the only one among the top six where rents have fallen year over year.
In June, mid-tier properties experienced the largest monthly drop, with rents falling 0.3%. Luxury properties saw a 0.1% increase, while naturally occurring affordable housing remained stable. Luxury properties led the second quarter with a 1.1% rent increase, compared to a 0.5% rise in one-, two-, and three-star properties.
Neighborhood performance varied across the region. Mission Valley and the North Shore cities saw rent increases in June, with Mission Valley’s rents rising 0.6% to an average of $2,800 and the North Shore cities experiencing a 0.8% increase to an average of $3,540. University Town Center, despite a 0.1% drop in June, had a strong second quarter with a 4.9% rent increase and a 5.7% rise since January, although annual rents fell 0.8% due to weaker performance in the latter part of last year.
In Chula Vista, new lease-ups led to rent decreases, with June rents falling 0.6% and second-quarter rents down 0.9%, averaging $2,350.
Property managers had anticipated that the spring leasing season would reduce concession rates, but concessions remained high, with over 25% of properties reporting their use in June. To attract new renters, landlords have been offering specials such as free rent and gift cards.
As the challenging second half of the year approaches, property managers are hoping for a return to historical rent growth benchmarks by 2025.
SOURCE: CoStar Analytics