'Explosive Growth' Leads To Record-High Rents For Southern California Apartments

Landlords sought increases of 17-18% in Orange County and the Inland Empire during the first quarter of the year, apartment figures show. Southern California apartment shoppers are still struggling to find an affordable place to rent, with few units available and rent hikes in the double digits across the region, new apartment figures show.

During the first quarter of 2022, vacancy rates in the region lingered near two-decade lows, giving landlords an opportunity to boost their asking rents.

Orange County’s average rent for a vacant unit jumped 18.2% from the year before, hitting a record-high average of $2,476 per month, a Southern California News Group composite of three leading apartment indexes shows. That’s up $381 a month from the first three months of 2021 – and it’s $988 a month higher than in 2010.

The reason is more tenants are moving out on their own. Meanwhile, vacancy rates averaged 2.4% in Orange County and the Inland Empire and 3.1% in L.A. County, the SCNG composite shows.

“We’ve never seen occupancy this high,” said Chris Porter, chief demographer for Irvine-based John Burns Real Estate Consulting. “It’s young adults moving out of their parent’s home or moving out of a roommate situation. They’re living less densely than they have in the past. That’s how I’m explaining these extremely low vacancy rates.”

Porter noted that rising employment, increased wages and government stimulus checks put money in people’s pockets, giving them an incentive to move out. While household incomes have been rising, “I do think we’re reaching the point where affordability is certainly getting stretched,” he said.

The composite figures are averages for first-quarter numbers from CoStar, Moody’s Analytics-Reis and RealPage. Since their landlord surveys tend to focus on larger, professionally managed apartment complexes, their averages tend to be higher than smaller buildings operated by mom-and-pop landlords.

Southern California isn’t alone in seeing such rent hikes amid a national housing shortage, a recent report by Yardi Matrix said. But the region’s pace of rent hikes is a tad faster than the national average of 14.3%, according to Yardi.