A surge of apartment construction in San Diego County is expected to keep rent growth modest through 2029, according to the Casden Real Estate Economics Forecast released Tuesday by the University of Southern California’s Lusk Center for Real Estate.
The forecast projects annual rent growth of 1.5 percent for San Diego County over the next three years, well below the pace recorded during the region’s recent run-up in housing costs. Across the five Southern California markets studied, San Diego’s projected rate is near the middle of the pack: Los Angeles County is forecast at 1.4 percent, Orange County at 1.9 percent, Ventura County at 2.2 percent, and the Inland Empire at 2.4 percent, the highest rate among the five.
“Housing cannot be affordable unless we have plenty of it,” said forecast author Moussa Diop, an associate professor of real estate at the USC Sol Price School of Public Policy. “San Diego and the Inland Empire show that there is still hope for affordability, but meaningful gains take time and sustained development.”
The Inland Empire’s trajectory illustrates how supply shapes rents. The region added 12,300 rental units over the past three years, expanding its apartment stock by about 7 percent, the fastest growth rate among the five Southern California markets. That construction helped moderate rent growth to nearly 1 percent, the report found. The area’s average rent stood at $2,150 in June, the lowest among the markets studied, and is projected to reach $2,309 by June 2029, while its vacancy rate of 6.47 percent is forecast to fall to 5.83 percent.
The report cautioned that construction slowdowns could erode those gains. Apartment starts in the Inland Empire have fallen 60 percent from their 2024 peak while the market absorbs recently completed units, and the report warned the region’s affordability advantage could be threatened as a result. Most recent development was outside the luxury segment, with Class A apartments accounting for 32 percent of new supply and most remaining deliveries in the midrange Class B category.
The forecast cited persistent inflation, elevated interest rates and high construction costs as obstacles to future housing development across Southern California. For San Diego County, where vacancy has tightened and rents have climbed faster than the inland regions, the projection implies continued relief at a moderate pace rather than sharp declines.
“Southern California’s housing shortage is a problem we created, but it is also a problem we can solve,” Diop said.
For developers, the forecast suggests the multi-year delivery wave has stabilized rent growth in coastal Southern California markets, with San Diego positioned to see steady but contained increases as new apartments continue to lease up. For renters, the report offers a measured outlook: affordability remains a long-term project dependent on sustained construction rather than a market cycle that will resolve on its own.
