20 Jun San Diego Rental Market Update
San Diego Rental Market Update
San Diego Rental Market Update: Dramatic rent hikes are happening all over the San Diego County, the average price of a rental in San Diego at $1,618.00 a month. San Diego now lays claim to the 9th most expensive metropolitan rental market in the nation. This is 100 percent above the national average, this is despite our US census ranking the city 27th in median income. Over all, rents have been rising 5 to 8 percent for the city over the last few years. Central neighborhoods, like Hillcrest and North Park are going up even higher.
Unfortunately, the most current data from the Bureau of Labor Statics show wages are growing in the county at less than 1 percent per year. Many local renters have no choice but to over spend. Fifty five percent of renters in San Diego are considered “cost burdened” spending well over the recommended 30 percent of monthly income on housing. The key driver behind higher rents is the local growing work force. Over the last year, the county has added 40,900 payroll jobs. That has led to increased household formation through people moving here for work, and also graduates now earning enough money to move out of their parent’s homes. The problem is there are not enough residences to go around.
San Diego Becomes the Nation’s Tightest Rental Market
It is estimated that the county needs 15,000 to 20,000 new units each year to satisfy demand. Last year, the county approved 6,861 new residential units, nowhere near close to the needed amount. This lack of inventory is pressing rents. Desirable units are getting snapped up within hours. Many privately owned “granny flats”; guesthouses and garage apartments have been converted to short term vacation rentals at much higher yields. Currently, San Diego is one of the nation’s tightest rental markets with the low vacancy rate of between 1 to 3 percent.
However, a growing number of San Diegans have found sustainability across the border, enjoying a higher standard of living on the beaches between Tijuana and Rosarito for one-third the cost of similar rentals in San Diego. These newer rental properties with ocean views, average $950.00 for 3 bedrooms, $745.00 for 2 bedrooms and 1 bedroom for $650.00. After qualifying for a special SENTRI border pass, they can be in downtown San Diego in 30 to 45 minutes.
If Baja is out of the question and renters wanting lower costs, the options are to move to more outlying areas. In Escondido, the average rent for a 1 bedroom is about $1,329.00; in Ramona 2 bedroom apartments are around $1,200.00. However, with low home ownership from the great recession, significant job growth there are plenty of new tenants moving into the market. From June 2013 to July 2014 San Diego experienced a 1.5% population increase, the most of any California city. High demand will always raise prices, especially when supply is limited.
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