San Diego has not been immune to the recent job losses caused by COVID-19 closures. San Diego's unemployment rate was 13.9% as of June 2020, down from it's May peak of 15.2%. This compares with California's 15.1% and the nation's 11.2% during the month of June. So, while San Diego appears to be slightly better off than the state, it is still slightly more affected than the rest of the country as a whole. The Leisure & Hospitality industry was the most impacted in the county by far, with 57,300 jobs lost in June. As San Diego is comprised of roughly 45% renters, such widespread job losses would reasonably lead to rental delinquencies, and from anecdotal encounters I've had with a few San Diego property managers and owners, delinquencies are higher to some degree, but naturally depend on the submarket, asset type, and renter category. Because of laws enacted statewide that ban evictions through September 30th, (and with a 5-4 San Diego city council vote on Tuesday July 28th to extend the repayment period until the end of the year), we may have to wait until then to see the true effects of these job losses on the rental market.
From The Department of Housing & Urban Development:
San Diego rental apartment market conditions are slightly tight as of July 2020. The apartment vacancy rate during the second quarter of 2020 was 4.2%, up from 3.4% during the second quarter of 2019 (RealPage, Inc.). Apartment rents averaged $2,035, up 1% from $2,007 a year ago. A total of 4,825 multifamily units were permitted during the 12 months ending May 2020, compared with 4,725 units permitted during the previous 12 months. An average of 6,950 units were permitted annually from 2015 through 2018, up from an average of 4,175 units permitted a year from 2011 through 2014. Developments underway include the 617-unit Broadway Block Apartments, which is expected to be complete during the first quarter of 2021.
While renters in San Diego have been hit by COVID-19, so have landlords. Eviction bans from the state have made rent collections extremely difficult, and while this alleviates tenant stresses, it transfers that burden to owners, many of whom have mortgages to pay. We'll have to continue to monitor the market as well as new state and city legislation to see how these collection troubles will affect rental prices, property values, and market supply.
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