2023 is starting off in a way that should instill confidence in investors. The last 4 months of 2022 didn’t see a remarkable drop in rent but any decline is noteworthy when accessing your current or future properties. In the last 4 months of 22’ we saw a 2.4% decline in rental prices. Even with rents having a 4 month slump at the end of 2022 the total growth in rental pricing was up 5.1%. This growth put San Diego as the #1 performer in California in metropolitan areas (with more than 10,000 market rate apartment units). As we head into 2023 you may have leases ending or new purchases on the horizon and need to assess the market. This article should help you start determining where you should be setting your rent. With January bringing a .5% increase in rents investors should remain positive in San Diego’s state leading market.
Average apartment rent in san Diego
We highly recommend not basing your rents on “averages”. San Diego rental prices should be based on unit mix, location, star rating or class. The current market asking rent is at $2,337/unit, up about 5% (or $111) from a year ago. This currently out performs Orange County and Los Angeles. You shouldn’t see this number and set your rent though. We encourage diving deeper by completing in depth rent surveys on your property. If you just utilize average rent/unit you may end up with a rental that is undervalued or not quite keeping up with the competition. Every investor wants a unit filled but making sure it is priced appropriately is the key to a high performing asset. What is great to see is that the variance between “asking rent” and effective rent is very minimal, meaning if your investment summary pro forma’s (new property) or broker's opinion of value (sale) is done thoroughly then you should be confident in your expectations.
San Diego Rental Prices
Before we dive into rental prices in relation to unit mix we want to reiterate how important a proper rent survey is. Client’s should never take averages as gospel. Does your unit have amenities that set it apart? Parking on the street or off? Washer and dryer? When setting your rental prices make sure you have done your due diligence based on market comparables to get the most accurate information.
Average rent in San Diego for 1 bedroom
Current average rent for a 1 bedroom in San Diego County is $2,064. By the end of 2023 CoStar projects the average rent to be $2125, a 3% increase.
Average rent in San Diego for 2 bedroom
Current average rent for a 2 bedroom in San Diego County is $2,505. By the end of 2023 CoStar projects the average rent to be $2582, a 3% increase.
Average rent in San Diego for 3 bedroom
Current average rent for a 3 bedroom in San Diego County is $3164. By the end of 2023 CoStar projects the average rent to be $3,258, a 3% increase.
Summarizing the San Diego multifamily rental market is easy, it’ll continue to grow and prices will continue to rise. The San Diego Association of Governments estimates that 20,000 rental units are needed annually to keep up with demand. To put this into perspective: only 20,000 units have been added in the past 5 years. If you have a property you want to make sure is keeping up with demand please feel free to reach out for a brokers opinion of value. If you are ready to purchase a new property and want to make sure you have the best data in regards to rent San Diego Apartment Brokerage is here to help. Thanks for reading!
Data collection from CoStar Market Analytics.