Despite struggles seen in the large metros, the smaller Southern California apartment markets are some of the best performers nationwide, with occupancy reaching beyond the 98% mark and rent growth hitting record levels well beyond historical norms.
In the past year, these smaller markets benefited from the trend toward a more flexible at-home workforce during the COVID-19 pandemic, as residents moved away from employment hubs in the larger, more expensive markets. This trend was especially poignant in California, which boasts some of the most expensive large markets in the nation.
Bakersfield has one of the strongest occupancy showings nationwide with a rate of 98.8%. That’s well above the five-year average in this market, which already runs notably high at 97.6%. In fact, occupancy is solidly above 98% across all product spectrums, with the Class A stock on top with a rate of 98.9%. Helping keep occupancy tight, especially in luxury stock, has been limited new supply volumes in recent years. In the past decade, the existing base here has increased by only 4%, well below the national average of 15.5%.
Rental rates in Bakersfield are the most affordable among all the California markets, with average monthly prices of just $1,222. That’s about $330 below the national average and equivalent to rates in Gainesville, FL or Fort Worth, TX. Rents are growing in Bakersfield, however, and at one of the fastest clips in two decades. Effective asking rents were up 11.4% year-over-year, towering over the last peak of around 8% seen in 2019.
The Santa Maria-Santa Barbara apartment market is also very tight compared to most markets nationwide, with an occupancy reading of 98.8%. All asset classes were tight here, with Class B units leading the pack with occupancy above 99%. Santa Maria is the smallest of the secondary metros in Southern California, and the existing base here increased by just 5% in the past decade.
Rent growth in Santa Maria was the weakest among the small Southern California markets, with an annual increase of 8.3%. Still, that was the strongest annual increase this market has seen in at least a decade. Rents in Santa Maria come in at $2,182 per month. While sizable on a national scale, those rates still come in about $220 below the Los Angeles average.
Of the small Southern California apartment markets, the Oxnard-Thousand Oaks-Ventura area is the least occupied, with a rate of 98.5%. However, that showing is up 190 bps in the past year and is one of the strongest reading this market has seen in at least a decade. Among product class, the Class A units registered the softest showing, but the rate was still notable at 98.2%. This was the fastest growing apartment market among the small Southern California locales, with the inventory up by a little over 9% in the past 10 years.
Oxnard is one of the most expensive small apartment markets nationwide, with rents near $2,330. However, that price is still roughly $70 cheaper than rates in nearby Los Angeles. Oxnard is registering some of the strongest rent growth in the state, with effective asking prices up 13.3% year-over-year.
For more information on apartment markets in Southern California, including forecasts and coverage for major metros, watch the webcast Market Intelligence: Southern California.