As a landlord in California, knowing the state of the California rental market can help you make some strategic decisions and price your rental property accordingly. So, don’t prepare your California rental agreement just yet. Consider the seven statistics for the current state of the California rental market in this article before you create a lease and rent out your property.
Which Property Location Provides a Top ROI for Property Investors?
Beachfront properties in California are high-end investments for the real estate rental market. As a property investor or landlord, you should know that beachfront properties hold a high value at all times. If you want to buy a beachfront property and rent it to a tenant, the current median list price of such properties is $5,670,000.
7 Key Statistics for the Current State of the California Rental Market
If you want to maximize rental income, tracking the California rental market is vital. An excellent landlord will know how the average home prices fluctuate, so check the statistics below for more information.
1. Home prices in California decreased in December 2022
Property prices in California were down 4.2% in December 2022 compared with October 2022. If you are purchasing a property to rent, keep in mind that the average median selling price in California was $777,500 in December 2022, compared with $801,190 in October.
2. California ranks 4th highest in rent costs
In the U.S., California ranks 4th highest in terms of rental costs according to the fair market rent statistics. Landlords expect approximately $2,275 from tenants per month for a two-bedroom apartment in Oakland-Fremont.
3. In Southern California, the rental growth rate increased
In 2023, the largest rental growth rate in the Los Angeles Metro Area occurred in Santa Monica. The rental rate increased 4.4% month on month, while in Pasadena, the rent rates increased 1.7% in December 2022.
4. One of the areas with the lowest average rental price is El Sereno
El Sereno, in Los Angeles, is one of the areas with the lowest average rental prices for property in California. The prices are lower than 76% of California neighborhoods, and real estate demand is above average in this location.
5. Newport Beach rental costs for one-bedroom properties decreased
In Newport Beach, rental costs for one-bedroom properties decreased 8% year-on-year compared with December 2022.
6. Fair market rent prices are one of the highest in San Francisco
San Francisco properties are very high compared to the average fair market rent prices. The location is more costly than approximately 99% of the fair market rent locations. Rent costs for a 2-bedroom home in 2022 in San Francisco were 3,553, and for a two-bedroom apartment, the fair market rent was $3,198.
7. Rent prices for two-bedroom homes in Modoc County have decreased
In Modoc County, in northern California, the rent prices for two-bedroom homes have decreased approximately 0.75% year-over-year. In 2021, the rental price for such properties was $807 per month, and is now $801 per month.
What is the Best Way to Invest in Rental Properties in California?
With these statistics on the current state of the California rental market, you may feel prepared to invest in rental properties in the area. To invest successfully, consider these two tips.
1. Choose an experienced investor to advise you
Not partnering with experienced investors is one of the errors you should avoid when investing in rental properties in California – especially if you lack experience. Take some time to talk with an investor to handle the many important factors of rental property investment. These processes are easier to understand from locating an agent to handling evaluators with an investor’s help.
2. Keep growth in mind when investing in property
It’s always important to consider whether your property will increase in value over time, especially if you want to sell the property in the future. Keep an eye on the California rental market and make strategic investments in the property alongside the market trends to improve your property value.
Understanding the Costs of Rental Property Investment in California is Key
If you are investing in rental property, understanding the costs and statistics related to the rental property market is critical. With this knowledge, you can understand the local market value, decide which property options are the best financially, select the right location based on property market values, align your budget to your investment, and set the appropriate rental price.
Ensure you have checked the statistics for the current state of the California rental market in this article and research the location you are interested in to make the best investment.
