Santa Monica Rents Fell 7.5% in 2026: What It Means for Owners and Cap Rates

Published July 25, 2026

Santa Monica rents dropped further than any other LA area city this year. Here is what that means for owners and for multifamily pricing.

Santa Monica rents fell about 7.5% year over year as of March 2026, according to Apartment List data reported by the Santa Monica Daily Press, the steepest decline among the 27 LA area cities the outlet tracked. If you own here, that number matters more than the headline. Here is what it actually means for your rent roll and for what your building is worth today.

What the rent numbers actually show

I want to be careful with this figure, because the exact percentage moves depending on which month and which data source you look at. The Santa Monica Daily Press reported a 7.5% year over year decline as of March 2026, citing Apartment List, and separately reported an 8.1% decline in April data and an 8.8% decline in May data from the same source. The direction is consistent across every reading: Santa Monica rents have been falling for months, and by a wider margin than most of the rest of the LA area.

I am not going to pretend one clean number tells the whole story. Different trackers sample differently, and month to month swings of a point or two are normal in this kind of report. What I would tell any owner is this: treat the 7.5% figure as a real signal of direction and rough magnitude, not a precise number for your specific unit. Your building's actual performance depends on your unit mix, your building's age and amenities, and whether you are renewing existing tenants or filling a vacancy at market rate.

Why Santa Monica is leading the drop

A few things are compounding here. Santa Monica rents have historically run well above the LA County average, which gives them more room to come down before hitting a floor. New supply has also come online across the Westside over the past couple of years, and renters who might have stretched to be in Santa Monica now have more comparable options a few miles inland at a lower price. On top of that, the city's rent control ordinance shapes how existing leases move versus how new leases get priced, so the softening shows up faster in asking rents for vacant units than it does in your occupied roll.

None of this means Santa Monica has stopped being a desirable place to own. It means the pricing power owners had a couple of years ago has narrowed, and vacancy turns now deserve more attention before you set an asking rent.

What this means for your rent roll

If you have long tenured tenants, this rent softening is not hitting your bottom line directly today. Where it matters is at turnover. If a unit comes vacant, the market rate you can realistically ask for is likely lower than what that same unit would have commanded a year or two ago. I would rather an owner set a rent that fills the unit in two to three weeks than hold out for a number the market already left behind. Extended vacancy costs more than a modest rent adjustment almost every time.

It is also worth reviewing renewal offers with this data in mind. A modest renewal increase that keeps a good tenant in place is often the better outcome right now than pushing for a bigger jump and risking a vacancy in a softer leasing market.

What it means for cap rates and building values

The rent softening is one of the things pushing multifamily cap rates in Santa Monica wider than they have been in years. Favia Investment Group's February 2026 market analysis put fully stabilized Santa Monica multifamily properties trading at cap rates between 5.25% and 6%, with value add buildings, meaning properties with below market rents and renovation upside, trading tighter at 4.25% to 4.75% on current income. I am citing that as a brokerage source, not an independent market index, so treat it as one firm's read on recent deals rather than a citywide average.

That is a meaningful shift from where Santa Monica cap rates sat a few years ago, when this market was known for some of the lowest cap rates, and therefore highest per unit pricing, in Los Angeles. Wider cap rates generally mean lower valuations for a given level of net operating income, so an owner thinking about selling or refinancing should factor in that buyers today are underwriting with more caution on rent growth than they were in 2022 or 2023.

What I would do if I owned here right now

I would get current on where my rents actually sit versus what a vacant unit could realistically lease for today, not what it could have leased for a year ago. I would prioritize keeping good tenants in place with fair renewal terms over chasing a top of market number on turnover. And if I were weighing a sale or a refinance, I would want current comparable sales, not last year's, before I set expectations on value.

Common questions

Is Santa Monica still a good place to own rental property?

Yes, in my view. Rent softening changes the near term math, not the long term case for a coastal, supply constrained, high demand submarket. It does mean owners need to be more realistic about pricing at turnover than they needed to be a couple of years ago.

Does a citywide rent decline mean my building's value dropped by the same percentage?

Not necessarily. Value depends on your building's actual net operating income, its condition, and how comparable sales in your specific pocket of Santa Monica are pricing right now. A citywide rent trend is a useful signal, not a substitute for a current appraisal or broker opinion of value.

Should I hold off on filling a vacancy and wait for rents to recover?

Usually no. Extended vacancy almost always costs more than accepting a rent that is a bit below what the same unit fetched a year ago. A filled unit at a fair market rent beats an empty unit waiting for a rebound with no fixed timeline.

Last verified: July 25, 2026. Rent figures are drawn from Apartment List data as reported by the Santa Monica Daily Press across January through May 2026 reporting; cap rate figures are from Favia Investment Group's February 2026 market analysis. This is general information for property owners, not investment or legal advice. Confirm current pricing and terms with a broker or licensed professional before acting.

Kellie

Schofield Properties

323 Richmond Street, El Segundo, CA 90245

Topics: investing, santa-monica, westside, market-trends

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