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Buzz: California renters can finally breathe a sigh of relief: the 24-month streak of rising rents has come to an end, and the number of vacant units has reached a two-year high.
Source: I have compiled rent and vacancy data for May from ApartmentList, which provides insights statewide and for 15 densely populated counties, using various criteria to measure rental units of different sizes.
Topline
If you haven’t realized that the frenzied rental market during the pandemic has subsided, this report is a significant milestone.
In May, the average rent statewide was $1,946, a decrease of 0.7% compared to the previous year. Furthermore, rents have declined in 13 out of the 15 counties analyzed over the past 12 months.
While this decline in prices is relatively modest, it is worth noting that rents had been increasing at an annual rate of 15% in May 2022.
Details
Vacancy rates have returned to pre-pandemic levels, providing more options for those searching for apartments.
In May, 5.4% of units were vacant statewide, marking the highest number of empty units since March 2021. Vacancy rates have increased in all 15 counties over the past year.
California’s vacancy rate hit a low of 3.6% in autumn 2021 and averaged 4.6% over the past 12 months. Vacancy rates are now comparable to the pre-pandemic levels of 5.5% in 2018-19.
These additional choices have helped stabilize rents during the seasonal spring rush of 2023.
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From January to May, statewide rents only increased by 1.7%, compared to an average gain of 2.7% during the same period from 2017 to 2022. Only two out of the 15 large counties in California saw higher rent increases this spring compared to their six-year averages.
Bottom line
Landlords are now facing increased competition for tenants for the first time in two years.
The demand for more living space driven by the pandemic has subsided, as many workers have returned to the office and in-person schooling has resumed. Additionally, some tenants are choosing to double up due to lingering economic uncertainties, as renting remains expensive. It’s important to note that California rents have still increased by 22% over the past six years.
Furthermore, a modest increase in apartment construction means there are even more options available for renters.
The question now is how much landlords will lower their rents and how long this trend will continue.
Geographically speaking
Renting is still financially challenging for many Californians.
Although rents have dipped and vacancy rates have increased across all 15 counties in California over the past year, the pandemic has driven intense rent inflation in inland markets as many workers have moved away from major job hubs.
Let’s examine the rent changes since 2017 in Southern California counties…
Riverside: The average rent in May was $2,040, a 3.9% decrease over the past year but still a 50% increase over six years. The vacancy rate in May was 5%, up from an average of 4.3% in the past 12 months.
San Bernardino: The average rent in May was $1,860, a 0.6% decrease over the past year but still a 50% increase over six years. The vacancy rate in May was 4.1%, up from 3.5% in the past 12 months.
San Diego: The average rent in May was $2,392, a 1.3% increase over the past year and a 42% increase over six years. The vacancy rate in May was 4.4%, up from 3.9% in the past 12 months.
Orange: The average rent in May was $2,592, a 2.1% decrease over the past year but still a 31% increase over six years. The vacancy rate in May was 5.1%, up from 4.6% in the past 12 months.
Ventura: The average rent in May was $2,409, a 0.8% decrease over the past year but still a 22% increase over six years. The vacancy rate in May was 4.7%, up from 4.3% in the past 12 months.
Los Angeles: The average rent in May was $1,927, a 0.7% decrease over the past year but still an 18% increase over six years. The vacancy rate in May was 5.8%, up from 4.7% in the past 12 months.
Now let’s shift our focus to Northern California…
Sacramento: The average rent in May was $1,641, a 3.9% decrease over the past year. However, rents have still risen by 35% over six years. The vacancy rate in May was 5.2%, up from 4.5% in the past 12 months.
Placer: The average rent in May was $2,098, a 5.2% decrease over the past year but still a 32% increase over six years. The vacancy rate in May was 4.8%, up from an average of 4.5% in the past 12 months.
San Mateo: The average rent in May was $2,459, a 0.8% decrease over the past year but still a 27% increase over six years. The vacancy rate in May was 5.2%, up from 4.8% in the past 12 months.
Solano: The average rent in May was $1,975, a 4.5% decrease over the past year but still a 26% increase over six years. The vacancy rate in May was 6%, up from 4.7% in the past 12 months.
Sonoma: The average rent in May was $1,959, a 2.3% decrease over the past year but still a 23% increase over six years. The vacancy rate in May was 4.3%, up from 3.5% in the past 12 months.
Santa Clara: The average rent in May was $2,529, a 0.6% increase over the past year and a 9% increase over six years. The vacancy rate in May was 5.7%, up from 4.9% in the past 12 months.
Alameda: The average rent in May was $2,067, a 1.9% decrease over the past year but still a 3% increase over six years. The vacancy rate in May was 6.4%, up from 5.9% in the past 12 months.
Contra Costa: The average rent in May was $2,041, a 1.2% decrease over the past year but still a 3% increase over six years. The vacancy rate in May was 7%, up from
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