America’s Finest City features some of America’s highest prices for homes. But a new report from online real estate company Zillow reveals San Diego is now among the most expensive places to rent.
The headline from the new report says average rent prices surpassed San Francisco.
Zillow senior economist Orphe Divounguy said it all boils down to supply and demand.
“Higher population growth creates new demand for housing and a tight labor market will also tend to result in higher rents," he said.
But higher than San Francisco? Rent in the Bay Area was nearly 30% higher than San Diego before the pandemic.
Divounguy said the pandemic played a significant role in the rent reversal.
“You saw a lot of people leaving San Francisco who had the ability to work remotely during the pandemic … So you have this pandemic shock, this effect of people leaving San Francisco to move to more affordable areas," he said.
San Diego may now be the third-most expensive rental market in the country, but not by much. The average monthly rent in San Diego is now $3,175 — just seven more dollars a month than the city by the bay.
“Rent growth in San Diego actually peaked at 19% in June of 2022. It’s now down to 5.3% when compared to a peak of only 10% in San Francisco," Divounguy said.
So where is rent more expensive? San Jose comes in second. And perhaps it's no surprise that it costs more to rent in New York City than anywhere else in these United States.
As for California, Divounguy said rent and home prices will only fall so much unless we build more housing.
“It’s clear people still want to love California and want to live here. And so new construction has to be able to pick up the slack," he said.
Looking ahead, there is some good news when it comes to renting. Zillow predicts that they’ll continue to inch downward as we get into the second half of the year. But when it’s as expensive as it is to live here, that’s cold comfort.
