San Diego’s rental market is turning a corner, as CoStar reports the first annual rent decline in 15 years, a shift that could ripple through the city’s housing landscape.
The data, compiled by CoStar Group San Diego, tracks properties with five units or more and covers roughly 289,000 units countywide.
Over the past six months, month-over-month rent growth has slipped into negative territory, a trend that has persisted for three consecutive months.
Josh Ohl, senior director of market analytics for CoStar, highlighted that each of those three months recorded a -0.4% rent change, marking the first annual decline since 2010.
The same data set also shows vacancy rates climbing from a low of 2.7% at the end of 2021 to 5.9% today, the highest level seen in 15 years.
Vacancies are especially pronounced in downtown San Diego, where the current rate tops 10%, according to CoStar.
Despite the county-wide trend, individual landlords report a more nuanced picture.
Rob Brown, a broker with Fantastic Realty who owns 17 units across Pacific Beach, Mission Beach, and Cardiff-by-the-Sea, said larger, newer buildings in downtown take longer to fill and require more concessions.
In contrast, smaller beach-area properties remain more competitive, with rentals moving from a two-to-three-week turnaround to roughly 50 people in two days during the pandemic, Brown noted.
Brown added that the current market is “not as bad as those articles make it seem by the beach,” emphasizing a relative resilience in those neighborhoods.
Lucinda Lilley, founder and CEO of Bridging Influence and a Southern California rental industry veteran since 1986, described the market as softening overall.
Lilley urged landlords and tenants to communicate openly, especially during lease renewals, to avoid extended vacancies.
She said, “If a renter is looking to renew their lease, communicate with the landlord and say, ‘Hey, look, I know you’re trying to raise my rent, but I’m looking, and I see the market doesn’t really bear that. Are you willing to negotiate with me?'”
Lilley also advised that landlords negotiate renewals proactively, noting that vacancies, when they do occur, tend to sit longer due to increased competition for units.
Looking ahead, Josh Ohl expressed confidence that the current trends will persist into 2026, stating he does not expect significant changes next year.
Ohl added that the downtown vacancy rate remains the highest in the county, just over 10%, and that this pattern is likely to continue.
The data suggests that while rents are slipping, the market is not experiencing a sudden crash but a gradual shift toward softer pricing and higher vacancy competition.
Landlords and tenants alike will need to adapt to this new equilibrium, balancing supply and demand in a city that has seen rising prices for more than a decade.
For investors and property managers, the key will be to adjust expectations for rent growth and to anticipate longer lease cycles.
The shift also signals a potential opportunity for renters to negotiate more favorable terms, as landlords seek to fill units quickly in a competitive environment.
As the city moves forward, stakeholders will watch closely how the rental market evolves, especially in downtown and beachside districts where dynamics differ.
In sum, CoStar’s data paints a picture of a San Diego rental market in transition, with declining rents, rising vacancies, and a call for greater communication between landlords and tenants.
Key Takeaways
- Rents fell month-over-month for six consecutive months, first annual decline in 15 years.
- Vacancy rate climbed to 5.9%, highest in 15 years, with downtown above 10%.
- Landlords report mixed experiences; beach units remain competitive, downtown units slower to fill.
- Landlords and tenants are encouraged to negotiate lease renewals to avoid longer vacancies.
- Current trends expected to continue into 2026.
Stakeholders should prepare for a market that is softer yet still competitive, with opportunities for both sides to negotiate and adapt.
