Rent Expected to Rise by An Average of $100 Per Month
In their report analyzing rents, housing supply and population grown in Southern California, researchers at USC have forecasted the average rent on an apartment will rise by at least $100 over the 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 are able to 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 growth and job placements all lend support to an increase in demand. With young adults in the Millenial 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 home owners.