by San Diego, California — After more than a decade of relentless increases, San Diego rents have officially declined on an annual basis, marking a major shift in one of the nation’s most expensive rental markets.
New data from commercial real estate analytics firm CoStar shows that 2025 is ending with the first year-over-year rent drop since 2010, a change driven by rising vacancies and increased competition among landlords.
While the decline is modest, experts say it signals a clear cooling trend that renters and property owners alike are already feeling on the ground.
Rents Have Fallen for Six Straight Months
According to CoStar, rents across San Diego County have now fallen month over month for six consecutive months, a pattern not seen in more than 15 years.
The data tracks apartment properties with five units or more, covering roughly 289,000 rental units throughout the county.
“With the past three months alone, each recorded the same negative 0.4% rent growth,” said Josh Ohl, senior director of market analytics for CoStar Group San Diego. “This is the first time on an annualized basis that rents have fallen since 2010.”
While a 0.4% dip may seem small, analysts say the significance lies in the direction of the trend — particularly after years of aggressive rent hikes that outpaced wage growth.
Vacancy Rates Hit 15-Year High
At the same time rents are softening, vacancy rates are rising sharply.
CoStar data shows vacancies have climbed from 2.7% at the end of 2021 — a historic low during the pandemic housing crunch — to 5.9% today, the highest level in 15 years.
This increase reflects a surge in new apartment construction over the past several years, particularly in urban cores, combined with renters becoming more price-sensitive.
Downtown San Diego is currently the most affected area, with vacancy rates exceeding 10%, according to CoStar.
Landlord Experiences Vary by Neighborhood
Despite the broader data, some landlords say the slowdown is not evenly distributed across the county.
Rob Brown, a broker with Fantastic Realty who owns 17 apartment units in neighborhoods including Pacific Beach, Mission Beach, and Cardiff-by-the-Sea, said coastal properties remain competitive.
“It’s two to three weeks to rent an apartment out instead of like 50 people in two days like during the pandemic,” Brown said. “But it’s not as bad as those articles make it seem by the beach.”
Brown noted that larger, newer apartment buildings, especially in downtown San Diego, are facing the biggest challenges, often offering rent concessions and incentives to attract tenants.
Market Softening Creates Room for Negotiation
Industry veterans say renters may now have more leverage than they’ve had in years.
Lucinda Lilley, founder and CEO of Bridging Influence, has worked in the Southern California rental market since 1986. She said the current conditions call for open communication between landlords and tenants.
“If a renter is looking to renew their lease, communicate with the landlord and say, ‘I see the market doesn’t really bear that increase. Are you willing to negotiate?’” Lilley said.
She added that landlords are increasingly being advised to negotiate renewals rather than risk extended vacancies, especially as competition intensifies.
“We’re at a point of recommending to our clients to negotiate lease renewals,” Lilley explained. “When vacancies do happen, they’re sitting longer because there’s more product competing for the business.”
What This Means for Renters
For renters, the shift could translate into:
- More negotiating power during lease renewals
- Slower rent increases — or none at all
- Increased availability in high-density areas
- More move-in incentives, especially downtown
However, experts caution that San Diego remains one of the most expensive rental markets in the country, and prices are not expected to drop dramatically.
Read Also: Western Pennsylvania Surgeon Charged After Allegedly Illegally Prescribing Oxycodone
Outlook for 2026
Looking ahead, CoStar does not expect a sharp rebound or a major crash in the rental market next year. Ohl said current conditions are likely to carry into 2026, with rents stabilizing rather than surging.
New apartment supply, affordability constraints, and cautious renter demand are expected to keep rent growth subdued, especially in areas with heavy development.
For the first time in years, however, the balance of power appears to be shifting — even if only slightly — away from landlords.
Have you noticed rent changes in your San Diego neighborhood, or tried negotiating your lease recently? Share your experience in the comments.
