According to a recent forecast report by the University of Southern California (USC), rental prices across Southern California are set to continue rising until 2029, with Los Angeles and Orange Counties facing ongoing shortages in apartment supply.
The report, released by USC’s Lusk Center for Real Estate, indicates that in the next three years, annual rental increases in Los Angeles County will reach 1.4%, while Orange County is expected to see a rise of 1.9%.
As of June, the average rent in Los Angeles County stood at $2,362. Projections suggest that by June 2029, this average will rise to approximately $2,469. Currently, the vacancy rate for apartments in the county is recorded at 5.6%, but it is anticipated that this number will drop to 4.87% over the same period.
In light of recent wildfires, California has reformed its building permit issuance processes. In the first half of 2026, the average monthly permits granted for apartment construction in Los Angeles County increased by 60% compared to the previous year. However, the report notes that due to factors such as labor, materials, and financing costs, it remains unclear how many of these projects will ultimately break ground.
Meanwhile, in Orange County, the average rent as of June reached $2,792, marking the highest among the five markets examined in the report. By June 2029, this figure is forecasted to rise to $2,946. Moreover, it is estimated that the annual delivery of new residential units in Orange County will decrease by 40% over the next three years.
The report highlights a persistent issue of housing supply shortages in Los Angeles County, Orange County, and Ventura County. Moussa Diop, an associate professor at USC’s Price School of Public Policy and the author of the forecast report, emphasized the necessity of sufficient housing supply to achieve affordable pricing.
To illustrate the potential for alleviating housing pressure through increased apartment construction, the report refers to San Diego County and the Inland Empire region. Since the end of 2023, San Diego County has added approximately 16,000 new apartments, nearly double the supply increase in Orange County during the same timeframe. Current estimates show that the average rent in San Diego County is about 7% lower than that in Orange County.
As of June, the average rent in San Diego County was $2,592, with an anticipated annual increase of 1.5% projected by 2029.
The Inland Empire region has also seen a growth of 12,300 rental homes over the past three years, resulting in a nearly 7% overall increase in apartment numbers—the fastest growth rate among the five markets studied. The report estimates that the average rent in this area is currently $2,150, the lowest in Southern California; however, by 2029, the annual rental increase is expected to reach 2.4%.
Diop remarked, “The situations in San Diego and the Inland Empire indicate that housing prices still have the potential to become more affordable, but tangible progress requires time and ongoing housing development.”
The report further identifies persistent inflation, high-interest rates, and elevated construction costs as significant barriers to housing development. It also notes that between 2015 and 2025, the rate of housing growth in California was less than half that of Texas, Florida, and Arizona.
“South California’s housing shortage is a problem of our own making, but it is a challenge that we have the ability to solve,” Diop concluded.