August 23, 2021

Orange County Q2 Multifamily Market Report: Resumed Hiring Sets the Stage for a Strong Second Half

Highlights:

The economy in Orange County is recovering, with employers bringing back workers at a rapid pace. This reopening trend is supporting the local multifamily market. Vacancies inched higher in the second quarter, but the pace of rent growth accelerated, setting the stage for a strong second half of the year.
Vacancy rose 20 basis points in the second quarter, with the rate inching up to 3.8 percent. Supply growth in the first half has been modest, but absorption has lagged levels recorded in recent years. Year over year, vacancy is up 20 basis points.
After ticking lower at the end of the last year, rents have bounced back in each of the first two quarters of 2021. Asking rents ended the first half at $2,075 per month, up 5.5 percent year over year.
The median price in transactions closed year to date is $351,200 per unit, up 13 percent from the median price in 2020. Cap rates have compressed as the economic outlook has brightened; cap rates have averaged 3.8 percent in 2021, down 20 basis points from the past two years.