New USC report forecasts Inland Empire rents to increase less than 2% in 2024

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INLAND EMPIRE – At the annual USC Casden Multifamily Forecast, held on November 15, researchers reported that Inland Empire rents would increase less than 2% in 2024. 

USC researchers found that the Inland Empire will see close to 450 housing units being built every quarter next year. In addition, the vacancy rate will remain at 5 and a half to 6%.

A vacancy rate of 6% can be considered moderate. It suggests a rental market where there is a reasonable balance between supply and demand. 

Past and future trends in the Inland Empire

USC Associate Professor of Real Estate Moussa Diop said that the Inland Empire economy was propelled by industrial growth during COVID.

“The growth in industrial during COVID, and the fact that also housing – it was much less – more affordable in that area than in LA for instance. And we did gain a lot of population from LA, Orange County and San Diego County,” said Diop.

He goes on to say that the Inland Empire will experience the lowest rent increase in Southern California. 

“Riverside County and Chino-Rancho Cucamonga, will be the highest – the best performance in terms of rent growth. Rent will be much higher there,” said Diop. “But again, not the kind of rent growth you see in Orange County. You’re talking about just slightly above 2% annually.”

He also said rent growth in outlying areas of San Bernardino County – including Victorville and Apple Valley, will be basically stable and even slightly decreasing.

The economy now and going forward

According to Diop, the economy is currently going strong with 150,000 new jobs in October, after adding 336,000 jobs in September. He says unemployment has been at a 50-year low, at 4%.

Diop says the bad news is that the economy is not cooling down fast enough and it’s a concern for the Federal Reserve.

“So that’s the challenge we are facing because the Federal Reserve has increased interest rates many, many times and interest rates are now standing at a 20 year high,” said Diop. 

Diop said that at the November meeting, the Federal Reserve decided to leave key interest rates unchanged and many board members have been very forthcoming about the need for another increase.

“The Federal Reserve has been very clear. They’re steadfast at targeting the 2% inflation because we are sitting now at, let’s say 3.4, 3.7,” said Diop. “If inflation has to be brought down, let’s say – to 2%, it’s going to be quite painful. We may be going through a very challenging period if that’s going to happen.”

For more information on the USC Casden Multifamily Forecast visit https://lusk.usc.edu/casden/multifamily/conference

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