New study says SLO County rents will go down in 2025. What do local experts think?
Renters in San Luis Obispo County may be in for some relief in 2025 after several years of rising costs.
According to a new report from data aggregator Construction Coverage, San Luis Obispo County may be one of only a handful of U.S. locations that could see rents decline in the near future.
In a year in which California’s median rent is forecast to rise by around 4.5%, the San Luis Obispo-Paso Robles metro area may be one of a handful of coastal locations that could see rents drop by a little over 5%, according to the report.
However, local leaders in property management said while prices may be wavering in the moment, the report’s projections likely won’t come to pass.
Era Management Company vice president Anthony Aurignac said only a few markets have truly seeing any real changes in rental price recently.
“In Paso Robles and Atascadero I’ve noticed a slight drop in pricing,” Aurignac said in an email. “In my opinion it seems that this could be due to oversupply in the market. In the rest of SLO County I haven’t seen a decrease.”
Where are rents going down the most?
While rent is expected to increase in many places — an anticipated median increase of 4.8% nationally from 2024 to 2025, according to the U.S. Department of Housing and Urban Development — some places will see bigger negative or positive swings than others.
According to the Construction Coverage report, rent saw the most acceleration in early 2021, when economic pressures caused by the pandemic started to outpace government stimulus and renter protections.
Between February 2021 and February 2022, median rents spiked by 16% nationwide, but year-over-year rent increases have since slowed to a more manageable rate that’s more in line with the 2% growth in price that was observed between February 2020 and February 2021, according to the report.
While California rents are likely to follow more recent national median rent trends — with an estimated 4.5% increase statewide in median rent — that increase is squarely middle-of-the pack, ranking 28th overall.
Practically speaking, that’s an increase from $2,683 to $2,803 — still the second-highest median rent in the country, second only to Hawaii’s median of $2,909.
But in terms of year-over-year change, California’s change in median price is a far cry from both extremes; Montana’s median rent is expected to increase by as much as 20.7% from last year to 2025, whereas Rhode Island rents are projected to decline by around 4.8%, according to the report.
Just five states — Colorado, South Dakota, Wyoming and Rhode Island — were predicted to see declines in median rent in the report.
On a local level, it’s a different story.
In the San Luis Obispo-Paso Robles metro area, median rent is expected to fall by around 5.1% year-over-year, from a median of $2,564 to $2,434, according to the report.
That change in median rent ranked 380th out of 387 metro areas surveyed by the Construction Coverage report. No. 387? The Santa Maria-Santa Barbara metro area, which is projected to see a 15.1% decrease in median rent year-over-year from $3,347 to $2,843.
Why might rents be decreasing?
Rents were initially reported to be on the decline in several California cities in late 2024.
An October California Apartment Association brief drew on data from the Apartment List National Rent Report, which showed that in September, rents started to decline gradually in major metro areas.
Los Angeles median rents dropped by 2.2% year-over-year — though these declines are almost certain to be undone by the significant loss of rental and owned homes in the Pacific Palisades fire.
Nationally, the Apartment List report found that in January, rents were down month-over-month in 88 of the 100 largest cities and down year-over-year in 47 cities.
The Apartment List report said 2024 marked the second straight year in which national median rent ended the year lower than it started, attributing the decrease to an overall increase in supply.
San Luis Obispo-based broker Derek Banducci with California West Real Estate Management said after rents stabilized in the past 18 months, there have been few changes in the city of San Luis Obispo itself.
Banducci, whose company largely serves Cal Poly students and properties near the university, said he’s not sure the decreases will fully impact his part of the market.
“I would say that I have seen the greatest volatility near the campus over the years, because when they bring a whole lot of new dorms online, which they’ve done two or three times in my career, you see some price adjustments there in that micro market,” Banducci said. “In the broader Central Coast market, though, I’ve never seen — outside of the great financial crisis — anything that dramatic.”
In San Luis Obispo, Banducci said he’s anticipating stable rents in 2025, meaning a 0-2% increase overall.
Aurignac said a significant amount of projects would need to finish construction and enter the market this year to have any chance of decreasing meaningfully.
“Usually this is a supply-and-demand issue,” Aurignac said. “When lots of new projects get built, you end up bringing prices down. It’s only been recently where prices have come down — and really only in Paso Robles.”
He similarly predicted some rent growth this year.
“I’m very bullish on the SLO County rental market and in my opinion we have one of the strongest housing markets in California,” Aurignac said. “I believe that rents will stay at their current level or slightly go up.”
