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San Diego Premier Property Management 5 Rental Market Changes For 2017 (1)



The San Diego rental market continues to be robust with a less then 4% vacancy rate and that trend is expected to remain throughout 2017.  Nevertheless, the rental market is fluid and poised to undergo some changes in the new year with the following 5 areas most notably impacted.


1) Interest Rates: If you’re wondering what interest rates have to do with the rental market, the answer may be more then you think. In 2017 interest rates will have an impact on the rental market as they are expected to go up, how much, well that’s anyones guess but regardless they’re expected to be on the rise or at least that’s the public’s perception.

Not knowing when or how much interest rates will increase causes uncertainty and people hate uncertainty so they tend to sit and wait for direction. What does this mean, well for tenants wanting to become homeowners the uncertainty will force them in one of two directions. Some will take the plunge and purchase that $550,000 entry level fixer in a marginal neighborhood they swore they would never live in, but at least they’ll finally exit the rental market and become homeowners.

Others, who were on the fence barely able to afford a mortgage with last years interest rates will not fare so well. Even a slight upward tick in interest rates will move the goal post once again making home ownership unaffordable forcing them to continue to rent. The icing on the cake for landlords is that more people fall into the latter scenario then the former resulting in more renters on the horizon.


2) Inventory: County wide, San Diego continues to suffer from low housing inventory with developers unable to keep up with the growing housing demand. In 2017 this trend continues with the exception of the downtown area. Downtown San Diego’s hottest neighborhood the East Village is seeing another boom similar to the 2002-07 condo expansion but this time not as crazy and the units aren’t for sale.

In 2017 more rental units are being added to neighborhoods such as The East Village, Little Italy, & Cortez Hill. These units are modern, hip and offer everything that millennials are willing to bypass pre wifi wired rental condos for.


3) Affordability: Extra Extra read all about it! No relief in sight for renters. The San Diego rental market is being mentioned along side the San Francisco & New York markets when it comes to lack of affordable rental housing. In December of 2016 the average rental rate for multifamily housing was $1,947/Month and it’s projected by December of 2017 to increase to $2,059/month according to advisory firm Berkadia in their recent 2017 projection report

The Zillow rent forecast expects the median rent value in San Diego to increase 4.6% with an end of year average rental rate of $2,540/Month.  see the chart below



Although this may seam like a win for landlords, the steep trajectory of rental rate increases coupled with flat income rate increases may have opened the door for more legislative discussion on the scary subject of rent control in the San Diego market. Let’s all take a deep breath in and slowly release out as we ponder that thought.


4) Competition: Competition in the rental market was hot in 2016 and all indicators point toward an even hotter 2017. Every landlord believes their home, condo, or apartment unit deserves the highest rental rate in the area and I happen to agree. I believe every landlord should feel that way but I’m also realistic and understand that not every landlord will receive the highest rental rate and that may be alright too. In 2017 the competition for tenants will be even tighter as newly remodeled flip homes, renovated condos, and new build apartments hit the market competing for tenants.


5) Expectations: Regardless of where your property is located, renters are now expecting a lot more in exchange for forking out a hefty rent each month. If you want quality tenants then expect to offer a quality rental property with the following features in your rental; Matching modern appliances, modern countertops (no laminate), newer flooring (carpeting, tile or laminate wood), updated bathrooms, washer/dryer and yes ample parking- Landlords please stop asking to store your belonging in the garage. 

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Written by Salvatore Friscia, owner of San Diego Premier Property Management a full service residential property management company offering Worry Free property management to the greater San Diego area since 2004 and

This Post Has 3 Comments
  1. I have been a landlord for 20 years, and am not at all suprised at the current housing crisis. We have a generation of people coming out of school who have been told they are very , very special, that they can do whatever they want, and that they will be happy and successful. PROBLEM!! When they choose, they want to make movies, be in front of the camera if they are good looking and behind the camera if they are bad…..errrr…….”interesting” looking (most actually). They want to do something fun and easy, so all those degrees with “studies” at the end of it, or those finger painting majors find they can’t actually make a living at what they studied for.
    When you give kids the choices, they make childish choices. Meanwhile, education has become femminized, like .001 percent major in something useful like science or engineering, and on the non academic side, shop classes and trade schools have disappered almost completely. In other words, nobody, not even the boys want to actually BUILD houses for a living.
    Result: very few houses built, and the ones that are are way more expensive than what all but those who come from wealthy families can afford.
    So, the offspring will have to live in some ugly desert community , hours from where they ever imagined living, and commute long distances to work, or, share a cramped studio in some dry wall joke of a unit in a central location that was once inhabited by section 8 sex workers and drug dealers and has now been rehabed into a “luxury condo”. AND I’m just talking about the girls. The boys will live in their parents basement and play video games all day, or , since the builders in Cali were too cheap to put basements will live in their old 10 by 10 childhood bedroom and take the bus to the dispensery every day because they can’t afforfd a car.
    I don’t mean to be negative, but , in a country where nobody wants to actually learn anything as difficult as the skilled trades, how do you expect any housing to actually be constructed. Oh, well, at least they will ahve a degree to put on the wall.

  2. Thanks for consistently presenting facts
    And one more trend which is characteristic not only for San Diego rental market, but for all rental market in the USA is that today’s landlords and property managers will need to use web-friendly technology and social media. Sites offering rentals or real estate need to harness localized data and advanced filtering to allow potential renters to quickly filter results based on personal preferences like price, number of bedrooms and bathrooms, as well as amenities. However, online property listings has been available for a couple of years since now. The trends which are expected to develop in 2017 are lease e-signing, online collecting of rent and online bidding. Sounds interesting for me.

    1. I agree, those are all interesting trends. Here at San Diego Premier Property Management we offer lease e-signing and online rent collection! I guess we’re ahead of the trend. Great comment, thanks for checking out our blog post.

      Salvatore Friscia, Managing Broker
      San Diego Premier Property Management

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