The real estate market in North County San Diego has shifted in recent months. Home prices are beginning to come down, and properties are sitting on the market longer than we’ve seen in years. Naturally, the question arises: does this mean rental prices are also on their way down?
Let’s explore how sales trends impact rentals — and what that means for both property owners and tenants in North County.
Real Estate Sales vs. Rental Market: Two Different Dynamics
It’s important to understand that the housing sales market and the rental market don’t always move in lockstep. Just because home prices are dropping doesn’t automatically mean rents will follow. Sales prices are influenced by mortgage rates, buyer confidence, and available inventory, while rents are driven by supply and demand for housing people can live in today.
Why Rents Could Come Down
- More Inventory: If more homeowners decide to rent out their properties because they can’t sell for the price they want, rental supply increases, which can put downward pressure on rents.
- Economic Slowdowns: If job growth cools or layoffs increase, fewer people may be able to afford premium rents, leading landlords to adjust pricing.
- Tenant Mobility: If people can suddenly buy homes more easily due to lower prices, demand for rentals can soften.
Why Rents May Stay the Same or Increase
- High Mortgage Rates: Even if prices drop, many buyers still can’t qualify or afford monthly payments at today’s interest rates. That keeps them renting.
- Limited Rental Stock: North County San Diego has a relatively fixed supply of rental homes — strict zoning and limited new construction mean demand still outweighs supply.
- Strong Job Market: San Diego’s economy, biotech sector, and coastal lifestyle continue to attract tenants who want to live here, propping up rental demand.
- Inflation & Costs: Landlords are facing rising insurance premiums, maintenance costs, HOA fees, and property taxes, which often push rents upward over time.
What We’re Seeing in North County San Diego Right Now
At FPM Group, we’re monitoring the rental market daily. While home prices in Carlsbad, Encinitas, and Oceanside have softened, rental demand has stayed relatively stable. Homes that are priced correctly are still leasing quickly, and long-term tenants remain eager to renew.
That said, we are noticing:
- Luxury rentals (higher-end homes) may take a bit longer to lease, with tenants negotiating concessions.
- Entry- to mid-level rentals (condos, townhomes, and smaller single-family homes) remain highly competitive, with little to no sign of rent drops.
What This Means for Owners and Investors
For property owners, the good news is that rents aren’t falling in step with home prices. Your investment remains strong, and in many cases, tenants are staying longer due to affordability challenges in the sales market. However, this is the time to:
- Price your property competitively.
- Keep up with maintenance to retain quality tenants.
- Stay flexible in lease terms if you want to fill a vacancy quickly.
Bottom Line
While real estate sales prices in North County San Diego are softening, rents have remained stable and are unlikely to drop dramatically in the near term. High interest rates, limited rental inventory, and strong demand are keeping the rental market resilient.
For both owners and tenants, the key is staying informed. At FPM Group, we’re committed to helping you navigate these changing market conditions with confidence.
