Southern California, December 5, 2025
Southern California’s rental market is set to see steady rent increases over the next two years, driven by housing shortages and construction slowdowns. County-specific forecasts show varying average rents and vacancy rates, with the highest increases expected in Orange County at 2.52% annually. This trend implies significant challenges for housing affordability in the region.
San Diego, CA
Steady Rent Increases Loom for Southern California
Southern California’s rental market is projected to experience steady rent increases over the next two years, according to a recent report from the University of Southern California’s Lusk Center for Real Estate.
Key Findings
- Los Angeles County: Average rent of $2,336 as of October 2025, with a forecasted increase of 0.64% annually, reaching $2,350 by October 2027. Vacancy rate stands at 5.37%.
- Orange County: Average rent of $2,776 as of October 2025, with a forecasted annual increase of 2.52%, reaching $2,859 by October 2027. Vacancy rate is 3.84%.
- San Diego County: Average rent of $2,535 as of October 2025, with a forecasted annual increase of 1.1%, reaching $2,563 by October 2027. Vacancy rate is 5.54%.
- Inland Empire: Average rent of $2,112 as of October 2025, with a forecasted annual increase of 4.6%, reaching $2,210 by October 2027. Vacancy rate is 6.4%.
Contributing Factors
The report attributes these projected rent increases to several factors:
- Housing Shortage: A persistent lack of new housing development has led to low vacancy rates across the region.
- Construction Slowdown: A significant decrease in new housing projects is expected to result in higher demand and rising rents.
- Economic Conditions: Elevated interest rates and rising federal debt may further constrain housing production, impacting affordability.
Regional Variations
The report highlights differences across Southern California’s counties:
- Los Angeles County: Despite a 0.5% rent increase this year, the market remains undersupplied, with rent growth projected to remain nearly flat over the next two years.
- Orange County: Characterized by chronic undersupply and high demand, leading to higher rent increases compared to other counties.
- San Diego County: Noted for its responsive rental market, with steady development helping to keep rents competitive.
- Inland Empire: Maintains the most affordable rental market in the region, though rents are expected to rise as new construction slows.
Implications
The forecast indicates that without substantial development of both market-rate and affordable housing, Southern California will continue to face challenges in improving housing affordability. The report emphasizes the need for sustained efforts to increase housing supply to meet growing demand.
Frequently Asked Questions (FAQ)
What is the projected rent increase in Los Angeles County over the next two years?
The average rent in Los Angeles County is projected to increase by 0.64% annually, reaching $2,350 by October 2027.
Which county in Southern California has the highest projected rent increase?
Orange County has the highest projected rent increase, with an annual increase of 2.52%, reaching $2,859 by October 2027.
What factors are contributing to the projected rent increases in Southern California?
The projected rent increases are attributed to a persistent housing shortage, a significant slowdown in new housing construction, and economic conditions such as elevated interest rates and rising federal debt.
How does the rental market in San Diego County differ from other counties in Southern California?
San Diego County’s rental market is noted for its responsiveness, with steady development helping to keep rents competitive compared to other counties in the region.
What is the current vacancy rate in Orange County?
The vacancy rate in Orange County is 3.84% as of October 2025.
Key Features of the Report
| Feature | Details |
|---|---|
| Projected Rent Increase in Los Angeles County | 0.64% annually, reaching $2,350 by October 2027 |
| Projected Rent Increase in Orange County | 2.52% annually, reaching $2,859 by October 2027 |
| San Diego County’s Rental Market | Responsive, with steady development keeping rents competitive |
| Inland Empire’s Rental Market | Most affordable in the region, though rents expected to rise as new construction slows |
| Contributing Factors to Rent Increases | Housing shortage, construction slowdown, economic conditions |
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