Apartment rents in San Diego are forecast to rise by 1.7 percent in 2016, but the good news is the rate of increase is slowing, Zillow reported Friday.
The online real estate company is forecasting a decrease in the rate of rental appreciation amid an affordability crisis that has renters in some markets spending almost half of their income on rent.
Zillow reported the average monthly rent in San Diego is expected to rise from $2,316 in December 2015 to $2,348 in December 2016. The figure is an average across all rental units, from apartments to condominiums to single-family homes, listed in Zillow’s database.
San Diego’s projected 1.7 percent increase is above the national average of 1.1 percent, but Los Angeles, Sacramento, San Jose and San Francisco will all see bigger increases.
Zillow forecasts rents in the San Jose metropolitan area, which includes Silicon Valley, will grow by 7.8 percent — the highest rate in the nation.
“Hot markets are still going to be hot in 2016, but rents won’t rise as quickly as they have been,” said Zillow Chief Economist Dr. Svenja Gudell. “The slowdown in rental appreciation will provide some relief for renters who’ve been seeing their rents rise dramatically every single year for the past few years. However, the situation remains tough on the ground: rents are still rising and renters are struggling to keep up.”
The slowdown in rental appreciation indicates that supply of new multi-family homes is catching up to demand, Zillow said, adding that substantial new housing supply is becoming available in Atlanta, Denver, Portland and Seattle among other markets.