San Diego County apartment complexes are now the emptiest they have been this century, with vacancy rates hitting a record high of 6.2 percent at the end of June, according to real estate tracker CoStar. The figure surpasses the previous record of 5.7 percent set in 2009 during the Great Recession and represents a dramatic shift from the pandemic-era low of 2.6 percent in summer 2021.
The surge in vacancies has been driven primarily by a wave of new apartment construction. San Diego County built 6,927 apartments in 2025, the highest annual total in 25 years of data. An additional 4,000 new apartments are under construction this year, still well above historical averages. The influx of new supply has outpaced the rate at which units can be absorbed by the market, leading to rising vacancy rates across the county.
Despite the rising vacancies, rents have not dropped significantly. The average asking rent in San Diego County was $2,583 per month in late June, up 0.5 percent year-over-year. That figure combines studios, one-, two-, and three-bedroom units across nearly 300,000 units countywide. San Diego ranked as the 11th most expensive rental market in the United States, with rents unchanged from the previous year, according to Zumper’s national rent report for May.
CoStar predicts that average asking rents will drop 1.7 percent — approximately $46 per month — by the end of the year, before beginning to climb again in 2027 and 2028. That forecast is based on the expectation that apartment construction will slow in coming years, allowing supply and demand to come back into balance.
Affordability challenges are also contributing to the market dynamics. Lucinda Lilley, an apartment specialist who consults for several property management firms in San Diego County, said she has observed an increase in late rent cases, where tenants often cite economic hardship, and more renters who previously lived alone are deciding to take on roommates. “What people can afford these days has changed,” Lilley said.
A banner year for affordable housing construction has also influenced the market. The region added 3,836 rent-restricted units in 2025, according to the California Housing Partnership — the highest number of subsidized apartments added in San Diego County in a given year in records dating to 1987. Almost all of the new rental units are required to stay affordable for 55 years and are typically given to low-income tenants using Section 8 housing vouchers. At least some of those renters in new low-income units are no longer competing for market-rate apartments, further affecting the market.
New apartment complexes take time to fill, and the market is clearly feeling the effect of so many new projects opening simultaneously. The 442-unit AMLI Aero complex, which opened in September, has a 72 percent vacancy rate, according to CoStar. The property has reduced rents since opening and is offering up to 10 weeks of free rent and two free parking spaces for some lease deals. Competition among apartment complexes is often what causes rents to drop, and many landlords have launched concessions — not just new complexes — offering one month or more of free rent as a lease-signing bonus.
“We are a concession-driven market,” Lilley said. “Rent has flattened out, increases are not happening a whole lot. Concessions are often required to attract tenants.”
Vacancy and rent levels vary significantly by submarket. Downtown San Diego has a vacancy rate of nearly 12 percent and an average rent of $3,137 per month, down 0.2 percent annually. Mission Valley and North Central have a 9.4 percent vacancy rate with average rents of $2,899, down 0.9 percent. In contrast, wealthy beach communities including Del Mar, Encinitas, Solana Beach, and La Jolla have vacancy rates around 3 percent. North County cities of Oceanside and Carlsbad have seen rents rise, while downtown San Diego and Mission Valley have experienced rent declines.
The record vacancy rate, while notable, does not necessarily signal a long-term downturn. The market is absorbing an unprecedented volume of new supply, and as construction slows in the coming years, vacancy rates are expected to decline. For renters, however, the current environment offers a rare window of negotiating power, with concessions and incentives available across much of the county — at least for now.
The geographic variation in vacancy rates tells a more nuanced story about San Diego’s housing market. Downtown San Diego, with a vacancy rate of nearly 12 percent, has been hit hardest by the supply surge. Multiple large apartment complexes have opened in the downtown area in recent years, creating a concentrated oversupply that has driven rents down 0.2 percent annually. The AMLI Aero complex, with its 72 percent vacancy rate and generous concessions, exemplifies the challenges facing downtown landlords.
In contrast, wealthy beach communities including Del Mar, Encinitas, Solana Beach, and La Jolla maintain vacancy rates around 3 percent, reflecting the persistent demand for coastal living and the limited ability to add new supply in these built-out areas. North County cities including Oceanside and Carlsbad have seen rents rise year-over-year, suggesting that demand in these submarkets remains strong relative to new supply.
The construction surge that has driven vacancy rates to record levels is itself a response to San Diego’s longstanding housing shortage. For years, the region has not built enough housing to keep pace with population and job growth, leading to some of the highest rents in the nation. The current wave of apartment construction, while temporarily driving up vacancies, is ultimately a necessary correction to a market that has been chronically undersupplied. The question is whether the pace of construction will slow enough to allow the market to re-balance, or whether the current oversupply will discourage further development and perpetuate the cycle of boom and bust.
The role of affordable housing in the current market dynamics is also worth noting. The 3,836 rent-restricted units added in 2025 represent a significant investment in housing for low-income residents, but they also add to the overall supply that the market must absorb. Some of those units may draw tenants away from market-rate apartments, particularly at the lower end of the price spectrum, further contributing to the vacancy rate increase. However, the long-term benefit of providing affordable housing to households that are severely cost-burdened by market rents represents an important public policy achievement, even if it temporarily complicates the market for market-rate landlords.
For prospective renters, the current market represents the most favorable conditions in years. With concessions widespread, rents flat or declining in many submarkets, and a large pipeline of new apartments still to come, bargaining power has shifted — at least temporarily — from landlords to tenants. How long this window lasts will depend on the pace of new construction, the trajectory of the local economy, and the broader interest rate environment that shapes investment decisions in multifamily real estate.
Sources: San Diego Union-Tribune, Zumper National Rent Report, San Diego Union-Tribune – Low Income Housing, San Diego Union-Tribune – AMLI Aero Opening
