The San Diego rental market is crazy right now—I’ve never seen a rental market like this one! Are landlords just being greedy with their high prices, and how can any tenant afford to pay them?
Rental units have been an extremely hot commodity this year. On average, there are 24 prospective tenants for each vacant rental. That’s the highest level of competition in the state, and it’s why we also have the lowest vacancy rate in California. It’s currently at 2.8%, which is down from 4.1% in 2020. For reference, a healthy vacancy rate is around 5.5%. At Penny Realty, we typically sign agreements with high-quality tenants in around just seven days.
We’re still shocked at the rental market. Our clients are delighted, but how can their tenants afford these rates? We’re not seeing any relief in rising rents, and the recent interest rate increase has created another obstacle for potential homebuyers. So many people are turning to renting as a result. When rental demand is high, and the supply is low, that’s a classic recipe for continued price increases.
Of course, when rental prices increase, so does homelessness. That’s clearly not what we want, so how can we solve this rental crisis? First of all, we need more construction. This will increase the housing supply, but it will take time and won’t completely solve the problem. It won’t do anything to help incomes keep up with rental increases. The second thing we can do is loosen up on zoning regulations. San Diego has already made some inroads with the recent ADU, or accessory dwelling unit, changes, but there’s still more that can be done.
This is good news for property owners of course, and as we head into fall, rental inventory should start to increase slightly and give potential tenants a few more choices. If you have any questions, just call or email me. I’m here to help.