Forecast Sees Single-Digit Rent Growth in Southern California
A new forecast is projecting modest single-digit apartment rent increases in Southern California counties through the middle of 2026, with Inland Empire rents posting the largest rent growth in the region at 7%.
USC’s Casden Multifamily Forecast, which projects rent increases through mid-2026 in comparison to rent levels in the summer of 2024, said a persistent housing shortage will keep rents on an upward trajectory in SoCal, the Orange County Register reported.
“We’ve experienced a construction slowdown in an area dangerously tight on new supply. Meanwhile, states like Texas and Florida are outbuilding us. When it comes to housing, California is falling behind,” said Moussa Diop, an associate professor of real estate at USC and a co-author of the Casden report, in a statement.
“Though the economy has proven quite robust, new housing supply and affordability remain on shaky ground,” Diop added.
USC’s report said the average apartment rent in Los Angeles County will grow to $2,334 a month by mid-2026 from $2,276 last summer, a 3% increase over two years, while it expects vacancy rates in the county to drop to 4.5% by mid-2026, down from 5.5% over the summer.
The forecast said Pasadena, the San Gabriel Valley and Inglewood have posted the highest rent growth in L.A. County the past year, averaging above 3%. It said rents have been flat in the Hollywood-Studio City submarket due to a high level of new construction.
In Orange County, the forecast projects the average rent to grow to $2,786 per month by mid-2026, up from $2,676 last summer, a 4% increase. Vacancy rates in OC are expected to rise to 4.6% by mid-2026, up from 4.1% over the summer.
The north county and Anaheim-Santa Ana areas have led the county in rent growth, up 4% and 3% in the last year, respectively, while Orange County’s coastal communities had the lowest rent growth during the same period, at 1%, the Casden report said.
The forecast is projecting that Inland Empire, which encompasses Riverside and San Bernardino counties, will see rent growth of 7% by mid-2026, rising to $2,211 a month from $2,063 last summer, with vacancy rates expected to drop to 5.4% from 5.9% during the same period.
The strongest rent growth is expected in parts of the Inland Empire closest to L.A. and Orange counties, including Redlands, Fontana, the Chino-Rancho Cucamonga area and West Riverside County, the USC report said.
In San Diego County, the Casden forecast expects average apartment rents to grow to $2,604 per month by mid-2026 from $2,471 last summer, a 5% increase, while vacancy rates are expected to increase to 3.7% from 2.1%.
San Diego and Orange counties both experienced double-digit rent growth during the pandemic. Since 2021, San Diego County has added twice as many apartment units as Orange County.
Source: GlobeSt/ALM