Orange County’s Average Rent Growth Slows in 2018, Mirrors National Trend
Orange County has seen a significant growth in population over the last few decades, now being the third most populous county in California. With popular coastal communities and major employers settling in its cities, there’s little surprise as to why Orange County is among the most expensive rental markets in California. According to apartment search website RentCafé.com, the year-over-year change in rent was 2% for the area at the end of 2018, while steady job growth and the construction of new units seem to reveal a positive overview of the market.
RentCafé.com also point out that the outlook for the apartment rental market is rather balanced. In 2017, the population growth rate in Orange County was 0.4%, which translates to roughly 12,700 new residents; this is slightly below the national rate of 0.7%. Through May 2018, OC added 17,300 jobs, most of all in the fields of education and health services, leading to a job growth rate of 1.7% year-over-year. However, the development of new rental units keeps up with the demand, with 5,480 apartments delivered in 2017, almost 2,400 units having been completed until July 2018, plus another 3,600 units to be completed by the end of 2018.
At city level, the four most populous cities in Orange County—Anaheim, Santa Ana, Irvine, and Huntington Beach—all passed the threshold of 200,000 people and, according to the latest American Community Survey data, roughly half of these people are renters. Here’s a snapshot of each local rental market:
- 2018 Average Rent – $1,781
- Y-o-Y Increase – 3.9%
- Units delivered in 2018 – 946
Home to several major companies like AT&T, Hewlett Packard, and Disneyland Resort, Anaheim is a rapidly developing city whose demand for new housing units keeps growing. Based on mid-year estimates, the number of apartments delivered in 2018 in Anaheim is greater than in the other 3 cities.
- Santa Ana
- 2018 Average Rent – $1,914
- Y-o-Y Increase – 3.8%
- Units delivered in 2018 – 128
Santa Ana is the second most populous city of Orange County and the slow pace of apartment construction in 2018 led to an increase in rent. The city is also an interest point for investors, whose 2017 primary targets were Anaheim and Santa Ana.
- 2018 Average Rent – $2,393
- Y-o-Y Increase – 0.4%
- Units delivered in 2018 – 600
Irvine sees the most constant rental market out of the 4 cities, with a 0.4% year-over-year rent growth. Being the home of several important universities and top employers such as Blizzard Entertainment, Irvine is a likely destination for young renters. This may create a rise in demand and a need for further construction in the foreseeable future.
- Huntington Beach
- 2018 Average Rent – $2,146
- Y-o-Y Increase – 7.0%
- Units delivered in 2018 – 510
Surf city saw the greatest rent increase out of the 4 cities over the past year, with a 7% or $140/month jump. This is more than double the national average rent growth of 3.1%. Being on the coastline, Huntington Beach has higher rents than other OC inland cities due to a larger number of waterfront and luxury properties.
Nationally, the average rent registered a 3.1% year-over-year increase, whereas the average for Orange County has been a 2% rent growth. Rent growth in Orange County is also slower compared to the previous 2 years, in line with the national trend, which saw a deceleration since the beginning of 2018.