Orange County Apartment Rents Pull Back

Hey guys, it's time for an update on the Orange County apartment rental market! After a decade of impressive growth, rents in the area are now starting to fall. In fact, asking rents have decreased by 3% since August 2022 and are continuing to trend downwards, even breaking seasonal patterns.

So, what's causing this shift in the market? It seems that weaker rental demand and competition from new supply are the main culprits. Property managers have responded by lowering rents over the past two quarters, and new apartment buildings are offering up to six weeks of free rent during lease-up to attract tenants.

Even upscale and luxury properties are feeling the effects of the market downturn, with asking rents down by 2.2% year over year. Three-bedroom units are now averaging around $4,300 per month, while two-bedroom apartments are going for $3,400 per month, and one-bedroom and studio units are renting for $2,800 and $2,500 per month, respectively.

The trend is a significant departure from historical patterns, where Orange County's rent growth has typically outpaced the national average. However, 2022 saw only a 2.5% gain, which was below the national average.

As vacancy rates in the area continue to climb towards historical averages from a record low set during the pandemic, rent growth is expected to slow down further. In fact, market-wide asking rent growth may even dip into slightly negative territory in the coming months.

If the economy falls into recession in 2023, it's possible that rents may give up even more gains. So, if you're in the market for an apartment in Orange County, now may be a good time to take advantage of the current rental rates before they start to climb again.