Santa Monica's housing market continues to command premium prices despite a cooling period following the pandemic-era real estate boom, with rental costs significantly outpacing both state and national averages.
The median rent in Santa Monica reached $2,478 in October, representing a 2.1% increase over the past year, according to the latest Apartment List rent report. The city's rental growth outpaced California's 1.3% average and far exceeded the national average, which declined 0.8% over the same period.
Monthly rent increases have remained modest, with September showing just a 0.2% uptick. However, the annual growth rate demonstrates the coastal city's continued appeal despite broader economic headwinds affecting housing markets nationwide.
Santa Monica's rental prices command a significant premium within the Los Angeles metropolitan area. The city's median rent of $2,478 stands 11.7% higher than the metro-wide median of $2,218. For individual unit types, one-bedroom apartments average $2,345 monthly, while two-bedroom units command $2,811.
The rental market reflects broader housing cost pressures that have characterized Santa Monica for years. Home prices in the beachside community have shown remarkable resilience despite recent market volatility, with median sale prices ranging from $1.65 million to $1.7 million in 2023, up from approximately $1.45 million in 2018.
That five-year appreciation of roughly 15% tells only part of the story. Santa Monica experienced dramatic price swings during the pandemic period, with home values jumping more than 20% between 2020 and 2021. Median home prices broke the $2 million mark during the height of the pandemic buying frenzy, when price per square foot topped $1,200.
The market's pandemic-era explosion reflected nationwide trends driven by lifestyle changes and historically low interest rates. Buyers bid aggressively for Santa Monica properties, attracted by the city's prime location and amenities during a period when remote work made proximity to traditional job centers less critical.
However, Federal Reserve interest rate hikes in 2022 and 2023 cooled the market significantly. Higher mortgage costs squeezed out marginal buyers and reduced purchasing power across income levels. The result was Santa Monica's first year of declining year-over-year prices in over a decade, with median values dipping 1% to 4% in 2022.
Rather than experiencing a dramatic crash, Santa Monica achieved what market analysts describe as a "soft landing." Prices eased from their peaks but stabilized rather than collapsing, demonstrating the underlying demand for housing in the prestigious coastal community.
Price per square foot remains among the nation's highest, averaging around $1,100 in 2023. While down from pandemic peaks, this figure places Santa Monica in the top 1% of U.S. markets and highlights the premium buyers pay for the city's location and lifestyle amenities.
The market has shifted from the "red-hot" conditions of 2020-2021, when homes sold within weeks amid multiple offers and double-digit annual appreciation, to a more balanced environment. By 2023, year-over-year price changes flattened, and buyers faced less competition, though inventory remained limited.
Higher-end segments experienced the most volatility, with a reduction in sales above $5 million contributing to slight median price declines even as mid-range homes held their value. The broader Los Angeles metro area showed annual rent growth of just 0.6%, well below Santa Monica's rate.
Within the metro area, Santa Monica's rental costs rank among the highest, though Newport Beach tops the region at $3,351 median rent. Long Beach offers the metro's most affordable option at $1,776 median rent.
Despite recent cooling, Santa Monica maintains its reputation as one of California's most expensive housing markets, with both rental and purchase prices reflecting the premium buyers and renters pay for oceanside living in Los Angeles County.