Demographic Shifts Pick Up Speed in Orange County

By Adriana Pop

Orange County rent evolution, click to enlarge

Employment gains, a moderate supply of new development and a high barrier to homeownership have bolstered strong multifamily demand in Orange County, pushing up rents and keeping occupancy over 96 percent.

Despite a slowdown, which followed a broader, national trend, the labor market remains stable, sustained by a resurgent construction industry. Major projects underway include LT Platinum Center, a $500 million transit-oriented development, which is set to bring retail, residential and hotel space to Anaheim. Tustin Legacy, the most significant ground-up office development in Orange County’s recent history, is going up in Santa Ana. Employment is also growing in the professional and business sector, mostly in technology and creative industries.

Housing prices, especially near the coast, have become unaffordable for many middle-class and younger families, producing a net out-migration among those segments. Over the next 25 years, residents age 65 and older are projected to be the highest-growing segment of the population.

Both local and foreign investors are drawn to the region’s stability, leading to record-low acquisition yields. Going forward, the rental market may soften, as a significant amount of supply is scheduled to come online in the near future. For 2017, Yardi Matrix expects a rent increase of 5 percent.

Read the full Yardi Matrix report.