In late 2019, real estate analytics firms such as CoStar and CoreLogic determined that tenants in San Diego were paying an average of $1,852 per month to live in America’s Finest City. This represented an increase of nearly 3 percent compared to the third quarter of the previous year, but that was actually down from a 4.1 percent spike in 2016 and a 3.9 percent increase in 2017. This situation isn’t as alarming as what’s happening in other places across the Golden State. Renters in cities adjacent to Silicon Valley, where median rent prices have become exorbitant, have experienced a 28.4 percent increase in rent since 2014.
Rent Control Laws Won’t Make Rent Go Down in San Diego
The California State Assembly has debated various rent control measures that will likely be implemented in 2020, but this doesn’t mean rents will go down in San Diego. Governor Gavin Newsom is likely to sign any bill intended to avoid rent gouging, but landlords still have room to increase monthly rent between 2 and 5 percent in addition to an inflationary adjustment. The San Diego City Council has proposed capping increases at 2 percent, but this proposal has received considerable opposition from landlords and developers.
The San Diego Rental Market Has Self-Adjusted
It’s important to note that rent control legislation only applies to increases in the value of lease contracts, but landlords in San Diego haven’t gone the route of their counterparts in Stockton and other cities near the San Francisco Bay and Silicon Valley. Instead, San Diego landlords have eased up on rent increases because they realize many tenants feel rents are high enough to begin with. Still, even if rent control goes into effect in 2020, rents are likely to continue to increase as high as the cap will allow.
Rental Demand in San Diego Will Likely Keep Rising
The high quality of life and employment opportunities will continue to attract renters to San Diego, particularly the downtown districts, where they’re more likely to get more for their rental dollars. While a condominium unit in a luxury tower—complete with a rooftop swimming pool, a modern fitness center, concierge service, and panoramic balconies—will probably rent for a lot higher than the median price, it will still be a better deal compared to a single-family residence in a gated community.
Buying a Condo May Make More Sense Than Renting
Economists will tell you there are only a few situations in which homebuyers come out ahead of renters. The perfect situation that tips the scales in favor of homebuyers can be found in downtown San Diego now, with its high quality of life, low unemployment, high rental demand, and a housing market on the rise. For many homebuyers, condos and lofts in downtown San Diego are more affordable than single-family residences, and they’ll always have the opportunity to become landlords or short-time Airbnb lessors, as long as the bylaws of their condo associations allow it.
If you’re tired of paying ever-increasing rent, buying now may be your best option. If you’re looking to buy San Diego real estate, downtown should at the top of your list of areas to check out. Reach out to the agents at 92101 Urban Living—the experts on downtown San Diego condos, lofts, and penthouses—to help you find your perfect home. Give us a call today at 619-649-0368.