As the third quarter of 2023 wrapped up, the multifamily real estate market in Orange County continued to demonstrate robust health, outperforming national averages in several key indicators. This performance is a testament to the strength and resilience of the region’s real estate market, even as it navigates a complex national economic landscape, according to a recent Yardi Matrix Multifamily Report for October 2023.
The most notable trend in Orange County’s multifamily market is the significant increase in rent growth. The average rent in the county rose by 0.7 percent on a trailing three-month basis, reaching $2,759. This rate of increase is notably higher than the U.S. average, which saw a more modest rise of 0.2 percent to $1,728. The occupancy rate in Orange County stands at a healthy 96.6 percent, despite a slight year-over-year decrease. This figure places the county among the top five tightest major multifamily markets in the nation.
The underlying strength of the local economy is a key factor driving the real estate market’s success. Orange County’s unemployment rate in July stood at an impressive 3.6 percent, marginally higher than the national average but well ahead of the state and other major California metros. The only exception is San Jose, which matched Orange County’s unemployment figure. The county’s job market expanded by 2.7 percent year-over-year as of June, adding 40,200 positions across various sectors, with notable gains in education, health services, and leisure and hospitality.
In terms of development, 801 units were delivered in 2023 through August, with a significant pipeline of 10,287 units under construction. Yardi Matrix forecasts an additional 2,264 units to be completed by the end of the year. However, investment activity in the multifamily sector has been relatively subdued, totaling $216 million for the year through August. The price per unit in Orange County has dropped to $224,371, still leading the national average.
A closer look at the submarkets reveals a mixed performance. While some areas like Anaheim-West and Newport Beach have seen rent increases, others like Mission Viejo-Lake Forest witnessed declines. The single-family rental segment, however, remains steady with a 2.4 percent year-over-year rent increase.
Despite these positive trends, Orange County faced a population decrease of 0.5 percent in 2021, marking the second demographic contraction since the 2010 Census. This trend contrasts with the national population growth, presenting a unique challenge for the local real estate market.
The future looks promising for Orange County, especially with the expansion in education and health services. Massive construction projects in these sectors, such as the UC Irvine complex and expansions at Hoag Hospital and City of Hope, are expected to create thousands of professional positions and stimulate regional growth across various sectors, including housing.
