Around 4,000 new apartments are set to open throughout San Diego County this year, 2025, coming near or matching totals of the past few years. But many of the new complexes will be charging well above the average, with some hitting $3,000 a month.
So, they’re not really a solution to the affordable housing crisis.
A few weeks ago, the U-T ran this story and reported:
The largest complex will be in Convoy District, the 531-unit Alexan Camellia, expected to open late this year. Rents are not set yet but, like most new projects this year, prospective tenants might experience sticker shock.
“(Developers) need to charge high rents because of the high cost of construction,” said Nathan Moeder, principal with real estate analysts London Moeder Advisors.
He said new apartments are spread more evenly across the county than in recent years — when several large complexes opened next to each other downtown and in Chula Vista — so competition for tenants won’t drag rents down as much.
Moeder said competition for renters will still be there, but developers are more likely to offer concessions than come out of the gate with a lower price. For example, many new complexes are offering several weeks, or even up to two months, free.
Average rent in San Diego County in early February was $2,497, said real estate tracker CoStar, up 0.8% in a year. That’s the flattest rent increase since 2011, during the Great Recession, and a momentary pandemic blip in March 2020.
The vacancy rate in San Diego County was 5.3% in early February, down from 5.45% in the second quarter of 2024. It hit a low point for the last decade of 2.63% in the third quarter of 2021.
The high costs are blamed on higher costs of borrowing, construction labor and materials — which thanks to Trump’s tariffs, are more expensive than they were.
Moeder said it’s likely most projects got financing in place before November 2023, and the region is just experiencing the tail end of that.
If all projects under construction finished on time, there would be more than 5,000 new apartments opening this year. Given the scale of the construction and delays that often come up, a safer bet is probably closer to 3,500, said Joshua Ohl, CoStar director of market analytics.
Last year was rare because a conservative estimate of 4,000 new units at the start of 2024 turned into 4,600 apartments by the end.
Ohl said CoStar are seeing fewer new projects starting this year, perhaps finally reflecting the current rent slowdown. However, Ohl said, apartment complexes starting construction now are likely betting on a better environment when they open. CoStar predicts rents will rise closer to historical norms in 2026 and 2027.
San Diego County wasn’t isolated in its apartment-building frenzy. Multifamily construction nationally surged in 2024, said real estate website RentCafe, which calculated more than 500,000 apartments to be completed for the first time in history. Final numbers are still being calculated for the year.
An increase in multifamily construction has been cited as a reason for rent slowdowns across the nation. In January, Zumper said national rents for a one-bedroom were down 0.3% annually, and two-bedroom rents were flat.
In that report, San Diego ranked as the 10th most expensive rental market. New York was the most expensive, followed by San Francisco, Jersey City and Boston.
Even with a rent slowdown, some developers are going to push forward because it’s what they do, said Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association.
“If they can make it pencil, they will go ahead,” she said. “Our builders are passionate about building housing. Building housing is their life. They take pride in being able to do it. They have to have that kind of attitude because you’re hitting your head against the wall every day to get the financing, get through the process.”
My friend’s rent was up for renewal. He got offered $200 off monthly rent for the year and one month of rent free for renewing for another year. That’s a huge savings! The increased number of apartments being built is working.
The high costs are blamed on higher costs of borrowing, construction labor and materials — which thanks to Trump’s tariffs, are more expensive than they were.
I call BS here.
Which part? The Rag added the part on the tariffs to the original article.
The very next sentence said, “Moeder said it’s likely most projects got financing in place before November 2023, and the region is just experiencing the tail end of that.”
Which is before the tariffs were begun. The Fed was lowering rates and refis in borrowing would have been the case except the tariffs froze the system. Regardless a construction project would have materials locked into place in advance. A confusing add on I’d say.
More housing supply means prices go down. This is supply and demand 101. Current apartments that are also $3,000 but not as new or nice will have to lower their prices. Let’s say they lower them to $2,750. Well, other apartments that are already $2,750 now have more competition. Someone will choose to lower their prices. And on it goes. More housing means lower prices. Keep building.
Actually, Matt, that doesn’t happen. It’s a simplistic notion — and seems reasonable — but scientists who have studied trends in major cities have discovered that it is not true – more housing supply does not mean prices go down. And San Diego is a perfect example. We have had plenty of housing built over the last few years — but wait! San Diego prices are some of the highest in the land. This article explains it somewhat. Here’s 4,000+ units coming to SD Co this year, but most are market or higher rate.
Actually, Frank, building more houses can lower prices when you add affordable units. The idea that building more never lowers prices ignores the basic rule of supply and demand. If new homes are all expensive, then they don’t help those looking for affordable options. But if you build a mix that includes affordable housing, you increase supply, ease competition, and help lower prices. Saying that more housing never brings down prices oversimplifies a complex issue. Also, 4000 units in one year still isnt enough to fix decades of underbuilding.
Thank you Mr whiffed yes absolutely more housing supply will lower rental prices
Lawrence — not true. Sorry. (See earlier comments)
Thank you GAIL AND MR WHIFFEN WE MUST CUT BACK NIMBYISM AND HOUSE PEOPLE
To Will: I neither have the time nor inclination to get into a pissing contest with you over what’s affordable housing and the effects of market-rate housing being built. There’s plenty of resources just here at the Rag (see Search Bar) that validate the fact that just building more housing at market rate does not equate into more affordable housing.
SAN DIEGO (KGTV) – 1,894 new homes were built in 2024 right here in Downtown San Diego.
That’s according to the City.
However, only 174 of them are affordable, income-restricted housing.
Frank hasn’t drunk the YIMBY Koolaid, hence, speaks the truth. Usually the only folks who buy into that supply-and-demand argument aren’t from here, or are more recently arrived. Building more housing in San Diego has NEVER meant lower prices–EVER! I’ve watched this trend ever since I was born here in 1958. Built it and they will come, and prices keep spiraling up, always!
The YIMBY narrative is on wash, rinse, repeat. They try to legitimize their astro-turf talking points by purporting to care about affordable housing, such a tiny percentage of which is required in new developments, can be built offisite, and up to 5 years later. I watched this in San Francisco–required affordable housing often never getting built!