June 2025 California Rental Market Update

California’s rental market in June 2025 shows signs of a long-anticipated correction—but that headline masks a more fragmented, uneven reality. The statewide average rent has inched down to $2,787, a marginal dip from the $2,800 mark held in both May 2025 and June 2024. That $13 decline may seem trivial, but it marks the continuation of a subtle shift in rental momentum after years of sustained increases.

Beneath the averages, though, the numbers tell a more complex story—of diverging demand by unit size, persistent regional inequality, and the drag of policy inaction.

Statewide Snapshot: Median and Average Rents

According to ManageCasa, the median rent for a two-bedroom unit in California stands at approximately $2,500, a helpful benchmark for families or dual-income renters. Meanwhile, the average rent statewide rests at $2,787, down just slightly month-over-month and year-over-year.

But averages alone conceal the full picture. Data from RentHop shows significant variation by unit size, with smaller apartments bearing the brunt of price declines:

• Studios: $1,833 (↓ 10.9% YoY)

• 1-Bedroom: $2,400 (↓ 12.9% YoY)

• 2-Bedroom: $3,200 (↓ 5.5% YoY)

• 3-Bedroom: $4,200 (↑ 4.2% YoY)

The sharpest declines are concentrated in studios and one-bedrooms—units that typically serve younger renters, transient professionals, and students. In contrast, demand for larger homes remains resilient, especially among families and multi-earner households.

Market Focus: Los Angeles

In Los Angeles, rents have cooled more than most metro areas. Zumper reports a 7% year-over-year decline, bringing the median rent across all units to $2,695. Apartments.com places the city’s average even lower at $2,177, a 0.3% dip from June 2024.

Still, affordability remains elusive. In a city where many households earn under $100,000, a two-bedroom rental costing $2,800–$3,200 consumes over 35% of income—well above the federal affordability benchmark.

Key Takeaways from June 2025

1. Smaller Units Lead the Decline

Double-digit drops in rent for studios and one-bedrooms suggest a rebalancing in the wake of over-inflated urban demand during the post-pandemic era. These segments now face fewer bidding wars and greater competition from newly completed supply.

2. Larger Rentals Hold Value

Family-sized units—particularly three-bedrooms—remain in high demand, with prices continuing to rise. These units offer more flexibility for shared living and are less sensitive to economic volatility.

3. State Averages Hide Local Realities

While the average statewide rent hovers below $2,800, many urban hubs like San Diego, San Francisco, and Santa Monica regularly command $3,000+ for even modest apartments.

4. Affordability is Still a Structural Issue

Even with modest drops, the rent burden remains unsustainable for many Californians. A softening market doesn't translate into affordability when stagnant wages, limited inventory, and policy inaction remain unaddressed.

Policy Landscape: A Missed Opportunity

The defeat of Proposition 33 in November 2024—an effort to expand statewide rent control—was a pivotal moment. Its rejection paused legislative momentum and left many cities without new tools to regulate surging rents. Meanwhile, statewide housing production remains constrained by outdated zoning laws and sluggish permitting processes.

In regions where the market has finally begun to self-correct, the relief is limited—and temporary. With housing stock still failing to meet long-term demand, prices may dip for now, but the underlying pressure hasn’t eased.

June 2025 reflects a moment of pause in California’s long-climbing rental prices, but it’s not a turning point. Marginal cooling at the edges cannot mask the deeper challenges of housing scarcity, affordability gaps, and policy inertia.

For tenants, the market may feel slightly less punishing—but not yet fair. For property owners and investors, the stratification by unit size offers clues about where pricing resilience remains. And for policymakers, the data underscores what Californians already know: the housing crisis isn’t solved by market mechanics alone. Without structural change, relief will remain slow, fragmented, and out of reach for too many.