San Diego Apartment Rents Drop for the Fourth Month in a Row

The largest monthly decline in rent in over three years occurred in October.

In October, San Diego’s apartment rents decreased for a fourth consecutive month. That is equivalent to the four-month drop at year’s end for the longest monthly run in the previous ten years.

In the region, rentals decreased by 0.9% in October, but this is hardly a novel trend. In five of the previous six Octobers, rents have decreased.
However, October of this year showed the biggest monthly fall in this place in over three years. Rents have decreased, and that matched the decline from the third quarter 1.8% in San Diego from July forward.

The competitive environment has been cited by neighborhood landlords and property managers as the cause of the recent decline in rent. Numerous people have observed that there is now much more competition in the leasing market for front-door demand, with many choosing to lower rentals on available apartments to draw in tenants. In contrast to properties that have chosen to hold out for higher rents, that has benefited ll units. This frequently results in longer vacancies for property managers who are less responsive.

Despite the fact that homes under lease-up have been driving the biggest demand for luxury properties at the top of the market, rents fell by over 2% in October. While naturally occurring cheap properties witnessed a little increase in rent, mid-tier properties saw a 0.5% decrease in rent.

With a few notable exceptions, rents decreased in almost every part of San Diego in October. Rent increased by 1% in the cities of Poway, Ramona, and Santee and by 0.3% in National City.
The priciest neighborhoods in San Diego, especially those near the ocean, kept falling behind in terms of average rent. At University Town Center, asking rents in the center, where monthly rates average over $3,210, decreased by 2.3% in October. The previous year’s rent was as high as $3,400. Since June, rents in this area have decreased by 5.3%.

In the neighborhoods of the North Shore Cities, where the average monthly rent exceeds $3,350, there was a 1.5% decrease in October and a 6.3% decline since June. Earlier this year, the average rent had peaked at almost $3,600 per month.

An increasing number of property managers are resorting to concessions, making it more common for tenants to receive up to a month of free rent spread out over the lease duration. Although only around 10% of properties are providing such incentives, it mirrors the overall trend of property managers becoming more adaptable to current circumstances.

Certain individuals involved in the market have proposed that this is a component of the typical seasonality that San Diego usually experiences towards the conclusion of each year, but the commencement of this trend is earlier than usual. However, the average rent growth during the fourth quarter from 2015 to 2019 only saw a minor change of 0.2%. San Diego is currently heading towards experiencing its most challenging fourth quarter in a decade, following the poorest third quarter in the same time frame.

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