Asking rents have gone up 19.5% in the past 12 months for the San Diego multifamily market compared to the national average of 14.3%. San Diego rents have also increased 2.2% in the second quarter alone up to $2,275 per month (as seen in the graph below). High demand to live in San Diego has been causing these increases in multifamily unit rents. Lifestyle rates have increased 1.3% to $3,083 in Q3 whereas necessity rates have increased 1.4% to $2,153.

Since 2021 the median sales price has gone up 11% to $357,000 per unit. Along with this, now the cap rates have gotten higher to 3.5% (40 basis points up from late 2021) in the second quarter. Vacancy during the second quarter has gone to the lowest in 4 years in San Diego which is a likely cause of the ever-increasing price per unit as seen with the below graph.

San Diego’s employment has been doing well throughout this year. Over the past year, 85,000 more jobs have been created (a 5.9% increase from 2021). Because of this there is a need for more multifamily units to come into play for the future. 315 units have been completed in the second quarter of this year while 5,900 units are under construction (a 34% increase from last year). 2,500 units are expected to be completed in 2022. Along with this, as of April of this year, vacancy has dropped to 3.7% (as depicted below) this quarter in San Diego. This is the lowest since 2017, and 60 basis points down since last year. Local vacancy is projected to be at 3.9% at the end of this year (40 basis points below what it was at the end of 2021).