Steve Welty

Issue# 78

December 2025

Happy Saturday, Housing Heroes!

As we look ahead to 2026, Southern California’s housing market is entering a more stable but more demanding phase.

The extreme swings of recent years are easing, but affordability pressures, expanding regulation, rising insurance costs, and higher renter expectations are taking their place.

I manage properties across San Diego, Orange County, and Riverside County, and these predictions are based on what we’re seeing on the ground not just headlines or national averages.

Here’s what I expect owners should be preparing for as we move into 2026.

What to Expect in 2026

1. Rent Growth Will Be Modest

Despite new apartments and ADUs, broad rent declines are unlikely. Instead, I expect 2–3% annual rent growth, limited more by affordability than by regulation.

Many renters remain priced out of buying, which continues to support demand - even as budgets tighten.

2. Rent Control Pressure Will Continue

While Orange County is currently less affected, California housing policy rarely moves backward.

Even the possibility of future rent caps is already changing landlord behavior, pushing owners toward more rigid annual increases and longer-term planning.

3. Property Condition Will Matter More Than Ever

Renters no longer compare your home only to similar houses. They compare it to:

New apartments
Modern ADUs
Recently renovated units

Basic turnover work is no longer enough. Strategic upgrades are becoming necessary to stay competitive.

4. Mortgage Rates Are the Wild Card

If rates stay near current levels, home values should grow steadily.

If rates drop into the 5% range, buyer demand could return quickly especially in Orange County and San Diego -- pushing values faster than many expect.

5. Insurance Pressures Aren’t Going Away

Insurance availability continues to shrink, premiums are rising, and underwriting is getting stricter.

For many owners, insurance is no longer a predictable expense - it needs to be reviewed annually and budgeted conservatively.

What This Means for Owners

Heading into 2026, success will depend less on market appreciation and more on execution:

Accurate pricing
Strong property condition
Tenant retention
Proactive planning

Final Thoughts

2026 won’t be defined by a single headline. It will be shaped by how well owners adapt to affordability limits, regulation, interest rates, property condition, and rising operating costs.

Owners who plan early and stay disciplined will be best positioned to protect both cash flow and long-term value.

Watch our Predictions Video

Have questions about managing your property?

Our team proudly serves San Diego, Orange, and Riverside Counties. Schedule a call with us today, and let’s chat about how we can guide you through every step of your property management journey.

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