San Diego, Southern California to see modest rent hikes by 2026, study says

Tenants still can expect to pay more for their apartments over the next two years, although rent hikes will be modest compared with double-digit percentage jumps during the pandemic, a recent forecast said.

Rents are expected to rise $133 per month in San Diego County by mid-2026, and between $110 and $148 a month in the rest of Southern California, USC’s Casden Multifamily Forecast predicted. 

A housing shortage compounded by insufficient construction has contributed to the region’s persistently rising cost of leasing, which has gone up continuously for almost 14 years.

“Though the economy has proven quite robust, new housing supply and affordability remain on shaky ground,” forecast co-author Moussa Diop, an associate professor of real estate at the University of Southern California, said in a statement.

“We’ve experienced a construction slowdown in an area dangerously tight on new supply. Meanwhile, states like Florida and Texas are outbuilding us. When it comes to housing, California is falling behind,” he said.

Developers have completed 20,709 rentals in L.A., Orange, Riverside, San Bernardino and San Diego counties in the past year, the forecast said. That amounts to about 1% of the region’s 1.7 million apartments.

Construction in states like Georgia and North Carolina, for example, amounts to 1.5% to 2% of their apartment stock.

To be sure, rent hikes in the region are slowing. But those increases come on top of a bruising, 15-month period of double-digit hikes from 2021 to 2022.

Here’s a breakdown by market:

San Diego County

Average apartment rent: $2,471 a month last summer.

Forecast: $2,604 a month by mid-2026, a 5% gain over two years.

Vacancy rates: 2.1% over the summer; forecast to rise to 3.7% by mid-2026.

San Diego provides a striking contrast to Orange County, the forecast said.

Both counties experienced double-digit rent increases during the pandemic. Since 2021, however, San Diego County added twice as many apartment units as Orange County — 15,500 vs. 7,500 — resulting in an average rent that’s almost $200 per month cheaper.

Orange County

Average apartment rent: $2,676 a month last summer.

Forecast: $2,786 a month by mid-2026, a 4% gain over two years.

Vacancy rates: 4.1% over the summer; forecast to rise to 4.6% by mid-2026.

The north county and Anaheim-Santa Ana areas lead the county in rent growth (up 4% and 3% in the last year, respectively).

Orange County’s coastal communities have the market’s lowest rent growth at 1% over the past year.

Los Angeles County

Average apartment rent: $2,276 a month last summer.

Forecast: $2,334 a month by mid-2026, a 3% gain over two years.

Vacancy rates: 5.5% over the summer; forecast to drop to 4.5% by mid-2026.

Pasadena, the San Gabriel Valley and Inglewood have posted the highest rent growth in the past year, averaging above 3%, the forecast said.

By contrast, rents have been flat in the Hollywood-Studio City submarket, due to a high level of new construction.

Inland Empire

Average apartment rent: $2,063 a month last summer.

Forecast: $2,211 a month by mid-2026, a 7% gain over two years.

Vacancy rates: 5.9% over the summer; forecast to drop to 5.4% by mid-2026.

Steady economic growth from e-commerce boosted rental demand, leading to vacancy rates in the 2-3% range and rent emerging in the double digits in 2021 and the first half of 2022, the forecast said.

The strongest rent growth is expected in areas near L.A. and Orange counties: Redlands, Fontana, the Chino-Rancho Cucamonga area and West Riverside County, the report said.

Inland Empire rents are about 10% cheaper than L.A. County, but the difference is expected to shrink in the next two years since rents in Riverside and San Bernardino counties are rising faster.