Santa Monica’s multifamily market is showing clear signs of adjustment, with rents declining at the fastest pace in the Los Angeles metro. The shift reflects a combination of increased supply, moderating demand, and a broader return to more typical market conditions after several years of volatility.
Noticeable Pullback in Pricing
Rents in Santa Monica are down approximately 8.1% year-over-year, with current median rents around $2,328 per month—off from a recent peak near $2,527.
By unit type:
- One-bedroom rents are averaging about $2,203
- Two-bedroom units are closer to $2,641
While the decline is meaningful, Santa Monica remains one of the highest-priced rental markets in the region, continuing to outperform the broader Los Angeles average.
A Reset Following Short-Term Volatility
The recent drop follows a temporary rent spike in early 2025, when displacement-driven demand pushed pricing higher across the Westside. As those conditions eased, rents began trending downward again.
This marks the third consecutive year of rent declines in Santa Monica, signaling that the market is still working through a reset after the outsized gains seen during the pandemic cycle.
Supply Pressures Are Playing a Key Role
New multifamily deliveries are a primary factor in the current softening. An expanding inventory of newer product is increasing competition, particularly for smaller units that overlap most directly with new construction.
At the same time, Santa Monica’s regulatory environment continues to limit rent growth potential in older properties, making it more difficult for owners to offset rising expenses through pricing alone.
Demand Shifts Add to the Cooling Trend
Affordability constraints and migration to lower-cost submarkets are also weighing on demand. Renters now have more options both within and outside of Santa Monica, contributing to longer lease-up timelines and more pricing sensitivity.
Development Activity Continues
Despite the near-term softness, development activity has not stalled. Projects in planning and underway suggest that new supply will remain a factor in the market over the next several years, likely keeping rent growth relatively constrained in the near term.
Outlook: Stabilization Over Acceleration
Near-term expectations point toward a more stable, slower-growth environment rather than a quick rebound. For investors, this means underwriting will likely continue to favor:
- Conservative rent growth assumptions
- Focus on in-place income and operational performance
- Careful attention to basis in acquisitions
Santa Monica remains a fundamentally strong coastal market, but current conditions suggest performance will be driven more by disciplined operations and long-term positioning than by rapid rent growth in the immediate future.
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