2024 North County Multifamily Market Report
Highlights
- Vacancy rose by more than 100 basis points in 2024, as 600 market-rate units opened in the second half of the year.
- North County is one of San Diego’s most active construction zones. Only a few apartments are scheduled to launch this year, with approximately 620 units under construction.
- Rent growth has been 0.1% year-over-year, compared to an average of 4.7% between 2015 and 2019, and San Diego’s average of 0.7% over the last 12 months.
San Diego Demographics
- Unemployment Rate: 4.7%
- Current Population: 3,289,446
- Households: 1,190,791
- Median Household Income: $107,401
Construction
North County has been one of the San Diego’s most active pipelines in recent years. While older areas in Oceanside’s interior are frequently targeted for development, particularly single-family development on farmland, ballot measures frequently fail to advance proposals beyond the planning stage due to opposition over a lack of
infrastructure, traffic congestion, and fire risk. Ballot measures are laws, issues, or questions that appear on a local or statewide ballot for voters to decide on. There are around 620 market-rate units in the pipeline. Although few units are expected to launch in 2025, over 1,600 market-rate units have opened in the previous five years, including 680 last year.
North County By the Numbers
- Sales Volume: $365M
- Cap Rate: 4.7%
- Market Sale Price Per Unit: $387K
- Vacancy Rate: 4.8%
- Rent Growth: 0.9%
- Market Asking Rent Per Unit: $2,482
- Units Under Construction: 624
- Units Delivered: 676
- Units Absorbed: 320 | 2024 | Source: CoStar Group
Rent
The submarket’s overall rent growth stood at 0.9% by year-end 2024. Rentals are increasing by 27.2% cumulatively over the last five. In recent quarters, property managers have been proactive in modifying rents due to increased competition and lower household formation rates. Rent growth is not likely to return to long-term levels before the end of 2025. Local landlords say that renters have become significantly more price-conscious since the end of 2022. According to property managers, more renters are asking to downsize into smaller flats to save money on rent, while others are giving up their one-bedroom homes to live with a roommate.
Sales
Investors have frequently targeted North County for value-add opportunities. The submarket has seen activity from both private local capital and national investors, with 1970s and 1980s vintage houses along the 76 and 78 corridors in high demand due to their value-add potential. In the last 12 months, the average sale price per unit has been roughly $410,000, compared to $400,000 in San Diego. Institutional and REIT organizations own 10% of the market, with fund-level equity accounting for less than 5%. Some buildings are now trading at higher cap rates, while 4% returns are still relatively uncommon. Following multiple institutional sales, sales volume increased to more than $350 million in the fourth quarter. These sales increased annual sales volume to $642 million in 2024, compared to a 10-year average of $401 million.
Mesirow purchased MG Properties’ 410-unit Preserve at Melrose in Vista for $185 million, or approximately $450,000 per unit, at a 4.8% cap rate at the end of 2024. Orsett Properties invested $14.1 million, or approximately $240,000 per unit, for the Pine View Apartments at 900 Phillips Street in Vista during the third quarter, with a 5.1% cap rate. The 59-unit property was 97% occupied, and the buyer planned to make capital improvements after obtaining $11.2 million in debt to fund the purchase. The property had been owned by the same family for several decades.
