Rent Expected to Rise by an Average of $100 Per Month

In their report analyzing rents, housing supply, and population growth in Southern California, researchers at USC have forecasted the average rent on an apartment will rise by at least $100 over the next two years.

 

Housing supply remains low in Southern California. You probably know this if you’re knee-deep in a home search and meeting 20 other offers on every home you see. (See our guide to beat out the competition here.) When supply is low, and demand is high, basic economic principles kick in and landlords can fetch higher rents on their units.

 

But why is demand so high? Population and employment growth are driving up demand faster than inventory can hit the market—recession recovery, economic development, and job placements all support an increase in demand. With young adults in the millennial generation entering the rental market, and the older generations still enveloped in it, the normal turnover cycle hasn’t spun over.

 

In 2015, the average rent in Orange County was $1587 per month. By 2018, USC’s Lusk Center for Real Estate expects rent to increase to an average of $1736.

 

We can expect more supply in the coming years, but not enough to satisfy the needs of most would-be renters—in 2015, more than 38,000 construction permits were issued in Southern California for new apartment units.

 

The forecast by USC also looked at the national rental market, which is beginning to cool as more renters become homeowners.