Apartment rent growth may slow down this year in all SoCal markets, according to a study recently released by Zillow, an online real estate site.
The study predicts that SD rents will only rise by 1.4% in 2016, the lowest of major California cities. Comparably, rents in LA and SF are expected to rise 2.8% and 5.9%, respectively. Zillow based its prediction on the continuing uptick in apartment construction, as well as the fact that rents have nearly reached the rent limit most renters can afford to spend.
Zillow economist Skylar Olsen says at a certain point, the ability to pay more starts pulling back. According to a report from RentRange, a provider of multifamily rental intelligence, rents escalated last year 13.6% in SD, 16.3% in LA and 17% in SF. According to a 2014 Apartment List Rentonomics report, rent represents about 50% of total income for at least 25% of renters.
Locally based London Group Realty Advisors president Gary London believes Zillow’s prediction is too low. While rent hikes could slow down this year, he told the SD Union Tribune he doubts rent increases will be as low in 2016 as Zillow predicts. He pointed out most new apartment construction is occurring in Downtown, not in North County, where there is still a wide gap between demand and supply. [SDUT]
