February 10, 2026

San Diego’s multifamily inventory growth to decline following peak year

Q4 2025

San Diego multifamily market overview

Heightened supply growth in San Diego weighed on operating conditions in 2025. Total deliveries during the past year were up 52% from 2024, with projects totaling roughly 6,400 units coming online. While elevated inventory additions contributed to a higher vacancy rate, the annual increase was modest and consistent with the market’s recent trends. San Diego has historically been resilient to significant changes in occupancy. Competitive leasing conditions put downward pressure on rents. Asking rents declined by 1.9% in 2025, offsetting rent growth recorded in 2024; the bulk of the annual decrease occurred during the closing months of 2025. The Chula Vista submarket highlighted the overall market trends over the past year as it contained the greatest share of new units while rents decreased and the vacancy rate inched 10 basis points higher.

San Diego multifamily investment sales activity continues to build from the light levels recorded in 2023, though it still lags historical trends. The number of properties that traded in 2025 was 13% greater than the 2024 figure. Compared to the annual average from 2015 to 2019, multifamily sales activity is still down 21%. While market-wide pricing trended lower, some areas outperformed. In Chula Vista, the median price was $409,500 per unit in 2025, up 38% from last year. Additionally, the median sale price in the South I-15 Corridor during the past year rose by 17% from 2024, driven by high-end sales in the Mount Carmel area. Cap rates remained within a tight range during 2025, with sales recording cap rates between the low-4% to low-5% range.

Looking ahead

Elevated construction activity will remain a key driver of shifting multifamily operating conditions in San Diego. While deliveries will cool from the 2025 peak, they are forecast to outpace the trailing five-year average by 41%. Renter demand is still expected to lag the pace of inventory growth, but the gap should narrow, keeping increases in vacancy modest and reducing some pressure on operators. Still, asking rents will likely trend lower, but decreases should be light. Multifamily construction is not expected to slow drastically, though it should continue to taper off in the next few years. Once inventory growth falls closer to historical norms, vacancy should stabilize and rent growth will resume.

The pace of multifamily sales in San Diego is forecast to continue rising in 2026. Despite continued acceleration, activity is not expected to reach pre-2020 levels until 2027. There should be continued improvement in some of the areas that have been doing well already, such as the Chula Vista/Imperial Beach submarket where there has been a rise in development and increased interest from both investors and renters. Downtown San Diego is expected to return to being one of the more active submarkets in San Diego over the next year. Cap rates have held steady at 4.5% on average for the third year straight in 2025, so they are unlikely to record much change in either direction in 2026.