Rents across Southern California are expected to increase through 2029, with the Inland Empire projected to experience the region’s fastest growth as apartment construction slows and housing shortages persist in several counties, according to a University of Southern California forecast released Tuesday.
The USC Lusk Center’s Casden Real Estate Economics Forecast projects average annual rent growth of 2.4% in Riverside and San Bernardino counties, which make up the Inland Empire. That compares with 2.2% in Ventura County, 1.9% in Orange County, 1.5% in San Diego County and 1.4% in Los Angeles County.
The Inland Empire’s average rent was $2,150 in June, the lowest among the five markets studied. The forecast projects it will reach $2,309 by June 2029. Its vacancy rate, which stood at 6.47% in June, is expected to decline to 5.83%.
The region added 12,300 rental units over the past three years, expanding its apartment stock by about 7%, the fastest growth rate among the five markets. That increase in supply helped hold rent growth to nearly 1%, according to the forecast.
Most of the recent construction was outside the luxury market. Class A apartments accounted for 32% of new supply, while most of the remaining units were midrange Class B apartments.
But the region’s affordability advantage could be threatened by a slowdown in development. Construction starts have fallen 60% from their 2024 peak as the market works to absorb recently completed apartments, the report said.
“Housing cannot be affordable unless we have plenty of it,” forecast author Moussa Diop, an associate professor of real estate at the USC Sol Price School of Public Policy, said in news reports.
The forecast also projects continued rent increases in Los Angeles and Orange counties, where apartment shortages are a persistent concern.
Los Angeles County’s average rent was $2,362 in June and is projected to reach $2,469 by June 2029. Its vacancy rate is expected to decline from 5.6% to 4.87%.
Apartment permits in the county ran 60% above the previous year’s monthly average during the first half of 2026, following post-wildfire permitting reforms. However, the forecast cautioned that labor, material and financing costs could prevent some permitted projects from being completed.
In Orange County, where June’s average rent of $2,792 was the highest among the five markets, rents are projected to reach $2,946 by June 2029. Annual new housing deliveries are expected to decline 40% over the next three years.
San Diego County added about 16,000 apartments since late 2023, roughly twice the new supply added in Orange County. Its average rent was $2,592 in June and is projected to increase 1.5% annually through 2029.
San Diego rents are now about 7% below those in Orange County, according to the forecast.
The report identified Los Angeles, Orange and Ventura counties as chronically undersupplied markets and pointed to San Diego County and the Inland Empire as examples of how increased apartment construction can help ease housing pressures.
“San Diego and the Inland Empire show that there is still hope for affordability, but meaningful gains take time and sustained development,” Diop said.
Persistent inflation, elevated interest rates and high construction costs remain obstacles to building more housing, the forecast said.
The report also found that California’s housing stock grew at less than half the rate of Texas, Florida and Arizona between 2015 and 2025.
“We need to make it easier to build significant amounts of housing, at enough density, to make real progress,” Diop said. “Southern California’s housing shortage is a problem we created, but it is also a problem we can solve.”
The USC Lusk Center for Real Estate’s website has more information about the Casden Forecast.
Alan Casden is chairman and CEO of Casden Properties and a member of the university’s Board of Trustees. His biography on the Lusk Center’s website describes him as a major developer of multifamily housing in Southern California.
Data sources for the forecast include economic and demographic data compiled by federal, state and local governments including the U.S. Census, Bureau of Economic Analysis, Bureau of Labor Statistics, Office of Federal Housing Enterprise Oversight, California Economic Development Department and private industry, according to the Lusk Center.
This year Gov. Gavin Newsom and the Legislature enacted a slate of new laws aimed at increasing affordable housing.
“Every Californian deserves a fair shot at a stable home — families shouldn’t have to wait years for housing to be approved and built in their communities,” Newsom said in a statement Sept. 29. “That means continuing to push forward with smart, practical solutions that open more doors for families and strengthen communities across our state.”
Annual residential construction has increased 59% statewide since 2018, the governor’s office reported.
According to Neighborhood Data for Social Change, a Lusk Center project, the development of new homes in LA County decreased 4% in 2025 compared with 2024. While the county is mandated by the state to build 812,000 new housing units between 2021 and 2029, only about 125,400 have been built as of mid-2026.
The city of Los Angeles’ housing share during that eight-year period is 450,000 units, with a target of 184,000 affordable residences. As of September, Mayor Karen Bass — who lost her reelection bid last week to City Councilwoman Nithya Raman — announced that during her administration more than 10,000 units of affordable housing were added.