Report: Suburbs To Lead SoCal Rent Surge Over Next 2 Years
The coronavirus pandemic saw a reshuffling of many urban renters to more suburban — and affordable — markets. Regardless of where renters are in Southern California, a new report predicts they will see rents rise over the next two years by $241 to $410.
The University of Southern California Casden Economics Forecast, an annual report presented Tuesday in Beverly Hills, predicted triple-digit-dollar increases on rent across SoCal, according to a release for the report, with suburban markets like Orange County expected to lead the pack in terms of rent increases.
“COVID-19 caused a large-scale move from central cities to the suburbs that resulted in a sharp rise in apartment vacancies in Downtown LA, Koreatown, and Beverly Hills and historically low vacancies in Rancho Cucamonga, North City San Diego, and Oxnard,” said USC Lusk Center for Real Estate Director Richard Green. Green co-authored the forecast with Eunha Jun, a postdoctoral scholar and research associate with the Lusk Center.
Now, vacancies in urban areas are starting to drop, Green said, while rents in what he called the outskirts remain low. These fringe areas are now slated to see rents rise at a higher clip than rents in cities. For example, vacancy rates in Rancho Cucamonga, North City San Diego and Oxnard are all below 2% — a low the report predicted will drive rent increases over the next two years.
The Inland Empire, hailed as a pandemic-fueled haven for LA County renters seeking more space for less money, is averaging rents of $1,827 with a 1.9% vacancy rate — the lowest of any of the SoCal regions studied. By 2023, USC anticipates a $241 rise in rents in the IE, which includes San Bernardino and Riverside counties, with the average rent hitting $2,068 and the vacancy rate holding firm at 1.9%.
LA County rents currently average $2,073, the report found, with a 3.9% vacancy rate. The forecast anticipates rents will rise $252 to $2,325 on average by 2023, with the 3.9% vacancy rate remaining the same.
Orange County’s average rent is $2,439 with a 2.1% vacancy rate, the report found. By 2023, the average is expected to go up $410 to $2,849 — the greatest dollar increase of the five regions included in the report. USC predicts the OC vacancy rates will rise to 3.7% by 2023.
Affordability, an issue prior to the pandemic for Southern California renters, remains an issue. The pandemic hit renters hard in more expensive markets like Los Angeles.
Much of SoCal may see new inventory come online in the coming years, boosting vacancy rates in Orange, San Diego and Ventura counties to the levels now seen in LA County and the Inland Empire, the report’s authors predict.
“The question now becomes whether this historic move from the cities to the outskirts will remain permanent or return to pre-pandemic levels. This will have an impact on the entire region should multifamily construction ramp up,” Green said.
