Renters, Take Note: A Supply Shift is Reshaping the San Diego Rental Market

Jan 26

For the first time in over a decade, San Diego renters are experiencing a market shift that could give them the upper hand. A recent NBC San Diego report, based on data from CoStar Group, reveals that average rents in the region have declined for the first time since 2010 . This rare dip, coupled with a surge in new apartment construction, signals a potential "supply crunch" on the horizon that will have significant implications for both renters and landlords.

The National Trend: A Boom Before the Lull

The report highlights a nationwide phenomenon: a construction boom in 2024 led to a surplus of new apartments in 2025, providing renters with some much-needed relief . However, this boom is fading. The construction of new apartments has dropped off significantly, with starts down nearly 11% and completions down a staggering 42% year-over-year as of late 2025 .

Economists predict this slowdown will create a gap in new housing supply in 2026 and beyond. As the current surplus is absorbed, renters will likely face a more competitive market with fewer options. This is compounded by the fact that high home prices are keeping more people in the rental market for longer, further increasing demand for apartments.

The San Diego Scene: A Renter's Market Emerges

Here in San Diego, this trend has created a unique and favorable environment for renters. For the first time in 15 years, the average rent in the San Diego region ended the year lower than where it started, dipping to $2,522 per month . This decline is a direct result of a local construction boom that has outpaced demand.

In 2025, San Diego saw the completion of approximately 6,100 new market-rate apartment units, a 25-year high for the region. This new supply outpaced demand by about 40%, causing the vacancy rate to climb to its highest level since 2009 .

San Diego Rental Market Snapshot (January 2026)

Data

Average Monthly Rent

$2,522 (CoStar)

Median Rent (All Types)

$2,800 (Zumper)

Annual Rent Change

▼ 0.2% to 1.85%

New Units in 2025

~6,100

Vacancy Rate

Highest since 2009

Sources: CoStar Group , Zumper , RentCafe

This shift is empowering renters. Landlords, facing increased competition, are now more frequently offering concessions—such as a free month's rent or reduced security deposits—to attract and retain reliable tenants. The negotiating power, for the first time in years, is tilting away from landlords and toward renters.

Practical Advice for San Diego Renters and Landlords

For Renters:

This is a prime opportunity to find a great deal, but you need to be prepared.

1.Negotiate Your Lease: Don't be afraid to ask for better terms. With vacancies on the rise, landlords are more willing to negotiate on rent, lease length, or other fees. This is the time to leverage your position.

2.Look for Concessions: Actively search for move-in specials. Many new buildings are offering significant incentives to fill their units, which can save you hundreds or even thousands of dollars.

3.Know Your Neighborhood: While the regional average has dipped, rents can vary significantly by neighborhood. Research current prices in your target areas to understand what a fair deal looks like.

For Landlords:

In a more competitive market, retaining good tenants and attracting new ones requires a proactive approach.

1.Be Competitive with Pricing: Research what similar units in your area are renting for and price your property accordingly. In this market, overpricing can lead to extended vacancies.

2.Offer Strategic Concessions: A small incentive, like a waived pet fee or included parking, can make your property much more attractive than the competition.

3.Focus on Tenant Retention: Keeping a reliable tenant is often more cost-effective than finding a new one. Be responsive to maintenance requests and consider offering a renewal bonus to encourage them to stay.

Looking Ahead

While renters are currently in a strong position, the slowdown in new construction suggests this window of opportunity may not last forever. As the current supply is absorbed, the market could tighten again. For now, however, the message is clear: it's a good time to be a renter in San Diego.

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Based on "Even as rent falls, a supply crunch could be on the horizon" from NBC San Diego, read the full article here: https://www.nbcsandiego.com/news/national-international/rent-falls-many-us-cities-supply-crunch-could-be-on-horizon/3959311/