First dip in California rents in 2 years comes as vacancies hit 2-year high
”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: California renters are finally getting a break: a 24-month streak of rising rents is over and the number of empty units has hit a two-year high.
Source: My trusty spreadsheet looked at rent and vacancy data for May, compiled by ApartmentList. The stats track trends statewide and in 15 heavily populated counties, using yardsticks that combine rental units of various sizes.
Topline
If you didn’t realize the crazed pandemic rental market had ended, this report is a noteworthy mile marker.
Rents statewide averaged $1,946 in May – that’s a drop of 0.7% over the past year. And rents have dipped in 13 of the 15 counties tracked over the past 12 months.
Yes, this is a meager statewide price decline – but the last time rents were dropping on a year-over-year basis was April 2021.
Plus, ponder the speed and depth of this reversal. Rents were rising at a 15% annual rate in May 2022. Yes, 15%!
Details
Vacancies are returning to levels last seen before the coronavirus upended the economy, creating more options for apartment seekers.
In May, 5.4% of units were vacant statewide – the most empty units since March 2021. Vacancy rates in all 15 counties have risen in the past year.
California’s supply of empty units bottomed at 3.6% in the autumn of 2021 and averaged a 4.6% vacancy rate during the last 12 months. Vacancies are now on par with the 5.5% levels of pre-pandemic 2018-19.
These added choices helped mute rents during 2023’s seasonal spring rush.
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Rents statewide rose just 1.7% from January to May, compared with an average 2.7% gain in the same period in 2017 through 2022. And just two of 15 California large counties tracked had spring rent gains greater than their six-year averages.
Bottom line
Landlords are being forced to compete hard for customers for the first time in two years.
Pandemic-linked demand for more living space ebbed. Many workers are back at the office. Schooling at home – from kindergarten to college – essentially ended.
Meanwhile, some tenants who are nervous about shaky economics are doubling up since renting remains pricey. Do not forget that California rents are still up 22% in six years.
In addition, a modest upswing in apartment construction means even more options for renters.
So the grand question is: How deeply will landlords discount their units and how long will it last?
Geographically speaking
Renting remains financially painful for many Californians.
Yes, the past year’s rent dips and vacancy increases are nearly universal across the 15 California counties. But the pandemic era helped produce intense rent inflation in inland markets with many workers moving away from major job hubs.
Look at county results, starting in Southern California ranked by rent change since 2017 …
Riverside: $2,040 average rent in May – off 3.9% in a year but still up 50% in six years. A vacancy rate of 5% in May was up from a 4.3% average during the last 12 months.
San Bernardino: $1,860 in May – off 0.6% in a year but up 50% in 6 years. Vacancy was 4.1% in May – up from 3.5% last 12 months.
San Diego: $2,392 in May – up 1.3% in a year but up 42% in 6 years. Vacancy was 4.4% in May – up from 3.9% last 12 months.
Orange: $2,592 in May – off 2.1% in a year but up 31% in 6 years. Vacancy was 5.1% in May – up from 4.6% last 12 months.
Ventura: $2,409 in May – off 0.8% in a year but up 22% in 6 years. Vacancy was 4.7% in May – up from 4.3% last 12 months.
Los Angeles: $1,927 in May – off 0.7% in a year but up 18% in 6 years. Vacancy was 5.8% in May – up from 4.7% last 12 months.
Then turn your eyeballs to the north …
Sacramento: $1,641 in May – off 3.9% in a year. Still, rents have risen 35% in 6 years. Vacancy was 5.2% in May – up from 4.5% last 12 months.
Placer: $2,098 average rent in May – off 5.2% in a year but up 32% in 6 years. Vacancy of 4.8% in May – up from an average of 4.5% during the last 12 months.
San Mateo: $2,459 in May – off 0.8% in a year but up 27% in 6 years. Vacancy was 5.2% in May – up from 4.8% last 12 months.
Solano: $1,975 in May – off 4.5% in a year but up 26% in 6 years. Vacancy was 6% in May – up from 4.7% last 12 months.
Sonoma: $1,959 in May – off 2.3% in a year but up 23% in 6 years. Vacancy was 4.3% in May – up from 3.5% last 12 months.
Santa Clara: $2,529 in May – up 0.6% in a year but up 9% in 6 years. Vacancy was 5.7% in May – up from 4.9% last 12 months.
Alameda: $2,067 in May – off 1.9% in a year but up 3% in 6 years. Vacancy was 6.4% in May – up from 5.9% last 12 months.
Contra Costa: $2,041 in May – off 1.2% in a year but up 3% in 6 years. Up 10% in 6 years. Vacancy was 7% in May – up from 4.7% last 12 months.
San Francisco: $2,185 in May – off 1.9% in a year but up 12% in 6 years. Vacancy was 5.8% in May – up from 5.3% last 12 months.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com