California apartment vacancies near 2-year high as rents slip 3.5% from peak

A significant winner in California’s real estate chill is the renter.

The post-pandemic return to normalcy that’s decelerated California housing markets is forcing landlords statewide to compete for tenants. Meanwhile, renters are seeing the most available units in nearly two years.

Consider what my trusty spreadsheet found within ApartmentList’s March report on California rents.

The statewide vacancy rate rose to 5.2% in March, the highest level since April 2021 and a noteworthy jump from the 3.6% pandemic-era low in September-November 2021.

Those extra options are a key reason why March’s overall statewide rent fell to $1,930 a month, down 3.5% (or $70) from August 2022’s peak. Yes, that’s still not affordable for numerous Californians, and it’s still up 15% (or $253) in three years.

But at least if the price isn’t right for a tenant, they have more options.

Lots of factors are cutting demand for apartments. The fear of catching COVID-19 in crowded living arrangements has dropped. The return of workers to the office and children to classrooms has limited the need for additional home office or study space. And the previously soaring rents may have some apartment hunters rethinking their search in uncertain economic times.

Plus, developers saw 2021’s landlord-friendly conditions of rising rents and few vacancies and rushed to build. Statewide permits for multifamily housing totaled 106,000 in 2021-22 – a huge jump from the 71,000 average for two-year periods in the previous 30 years. So, landlords will have to fill up those new units, too.

And don’t forget that these trends – notably new supply of rentals coming online – occur as California’s population is shrinking. And even the in-state migration from bigger coastal cities toward inland regions that sped up in the crazy pandemic days is also cooling.

It all adds up to California looking more renter-friendly for many months to come.

Geographically speaking

Just ponder rents in California’s 12 most populous counties, as tracked by ApartmentList.

Rents are off their peaks in all 12 markets – and are even down over three years in San Francisco and Alameda counties. So when counties are ranked by their rent dip from pandemic peaks, you see prices falling faster in Northern California …

Sacramento County: $1,630 a month in March – off 5.1% (or $88) from July 2022 peak but up 24% (or $319) in three years. Vacancies? 5.1% vs. 1.9% pandemic low.

Santa Clara County: $2,493 a month – off 5.1% (or $133) from the August 2022 peak but up 2% (or $57) in three years. Vacancies? 5.5% vs. 4% pandemic low.

Fresno County: $1,313 a month – off 4.9% (or $68) from June 2022 peak but up 31% (or $307) in three years. No vacancy data.

San Francisco County: $2,184 a month – off 4.5% (or $103) from August 2022 and down 15% (or $391) in three years. Vacancies? 5.7% vs. 5% pandemic low.

Alameda County: $2,057 a month – off 4.5% (or $96) from July 2022 and down 1% (or $17) in three years. Vacancies? 6.5% vs. 5.2% pandemic low.

San Diego County: $2,338 a month – off 4.5% (or $109) from August 2022 peak but up 33% (or $574) in three years. Vacancies? 4.4% vs. 1.8% pandemic low.

Riverside County: $2,038 a month – off 4.3% (or $92) from June 2022 peak but up 39% (or $567) in three years. Vacancies? 4.9% vs. 1.3% pandemic low.

Contra Costa County: $2,040 a month – off 4.0% (or $84) from August 2022 peak but up 7% (or $135) in three years. Vacancies? 6.1% vs. 3.8% pandemic low.

Ventura County: $2,380 a month – off 3.9% (or $97) from August 2022 peak but up 23% (or $450) in three years. Vacancies? 4.5% vs. 2.6% pandemic low.

San Bernardino County: $1,832 a month – off 2.9% (or $55) from July 2022 peak but up 36% (or $485) in three years. Vacancies? 4.0% vs. 1.9% pandemic low.

Orange County: $2,594 a month – off 2.7% (or $72) from September 2022 peak but up 27% (or $559) in three years. Vacancies? 5.1% vs. 2.3% pandemic low.

Los Angeles County: $1,920 a month – off 2.1% (or $41) from August 2022 peak but up 12% (or $206) in three years. Vacancies? 5.4% vs. 4.0% pandemic low.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Source: Orange County Register