San Diego Apartment Vacancy Hit a 25-Year High in 2026 — But Demand Is Turning

Last updated: September 17, 2026 · Data source: CoStar Analytics (September 2026)

San Diego apartment vacancy entered the summer at 6.2% — its highest level in 25 years, well above the 10-year average of 4.6%, according to CoStar. That's the headline. The more important signal for owners is underneath it: demand is improving and the construction wave is ending. This year the market is on pace to absorb more than 90% of newly completed units, up from just 63% last year, and new supply drops below the 10-year average in 2027 for the first time since 2022. In other words, the peak of supply pressure is passing. Elevated vacancy will likely linger near 6% — a level owners and buyers should treat as the new baseline when underwriting.

Why is San Diego apartment vacancy so high right now?

Vacancy hit 6.2% because a historic volume of new supply arrived faster than demand could absorb it. San Diego delivered 5,200+ units in 2024 and 5,600 in 2025 (a 25-year high), with 6,000+ expected this year, per CoStar. At the same time, demand was slowed in 2025 by military deployments, delayed household formation among younger renters, tighter immigration policy, and sluggish job growth against a high cost of living. Supply surged while demand stalled — and vacancy climbed.

Is apartment demand in San Diego actually improving?

Yes. Demand has steadily improved since the start of the year, and vacancy has begun to steady. Second-quarter absorption reached 0.6% of inventory — the highest since 2021 and the first time in two years it climbed back to that range, per CoStar. The clearest sign of the turn: the market is on track to absorb over 90% of this year's completions, versus 63% in 2025.

Where is the new supply — and the vacancy — concentrated?

Most of both the new inventory and the fresh demand is landing in Mission Valley and Balboa Park, the region's construction leaders.

Metric	Figure	Note
Current vacancy	6.2%	25-year high; 10-yr avg 4.6%, low 2.7%
2024 completions	5,200+ units	Most in over a decade
2025 completions	5,600 units	25-year high
2026 completions (est.)	6,000+ units	End of the current wave
2027 completions (est.)	~4,000 units	Below 10-yr average
Absorption of completions	63% (2025) → 90%+ (2026)	Demand catching up

Source: CoStar Analytics, September 2026.

Our read: The vacancy pain is concentrated. Owners in supply-heavy corridors like Mission Valley are competing hardest on rent and concessions right now; owners in supply-insulated submarkets carry far less of the vacancy the regional number implies. Where your building sits in that map matters more than the headline rate.

What does higher vacancy mean for San Diego apartment values?

(Original analysis — South Coast Commercial)

Vacancy isn't just an operating headache — it's a valuation input. A buyer underwriting your building applies a vacancy and credit-loss factor to gross rents before arriving at NOI. If ~6% becomes the region's new structural norm rather than the historical 4.6%, buyers underwrite to the higher figure, which trims NOI and, all else equal, the price they'll pay. The offset is the forward supply picture: with the pipeline emptying in 2027, the case for further rent erosion weakens, which is what typically stabilizes values. Owners who can document strong, stable occupancy against a 6% market average have a concrete story that defends pricing.

What's the outlook for 2027?

Inventory growth is set to ease to roughly 4,000 units in 2027 — below the 10-year average for the first time since 2022, per CoStar — pointing toward a more balanced supply-and-demand picture by year-end. Vacancy will likely hover near 6% even so, which CoStar suggests may become the region's new norm. For owners, the takeaway is a market moving from oversupplied toward balanced, not one still deteriorating.

Where your building stands — a current valuation

The regional vacancy rate doesn't price your building; your actual occupancy, rents, and submarket do. If you own a 2–50 unit property in San Diego County, a submarket-level valuation will show what a buyer would pay today given real supply-and-demand conditions in your area.

With $150M+ in closed San Diego apartment sales and 12+ years focused exclusively on 2–50 unit buildings, I track these shifts deal by deal.