California Rent Increases Slow in Areas With High Supply

According to Zillow Research, California communities with the most new housing have seen the lowest rent increases over the past two years.

In California cities with strong rental unit permitting saw 11.5 new apartments for every 100 existing multifamily units at the median. These communities saw average annual rent increases slow by 2.0 percentage points. Cities with the fewest new rental permits saw the average pace of annual rent appreciation slow by only 0.9 percentage point over the past few years.

This comes as the state debates how to handle its current housing crises, including Proposition 10, repealing a statewide ban on local rent control. The proposed law could pave the way for some local governments to place limits on rental increases.

For example, Silicon Valley communities Milpitas and Pleasanton experienced the most aggressive permitting activity between 2014 and 2016 – respectively permitting a total of 28 and 26 apartments for every 100 existing multifamily units. Annual rent growth in those areas has since fallen approximately 8 percentage points, to the current annual pace of 2.4 percent and 0.2 percent, respectively.

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