[IMGCAP(2)]The implications of the forecast for investors aremixed, too, since rents are a chief factor in determining pricingand a major component of the net operating income that investorsrely on to calculate cap rates. As with many if not mostdiscussions regarding investment properties these days, the outlookfor the apartment market is tied to the employment outlook.

As Tracey Seslen, co-author of this year's Casden MultifamilyMarket Forecast puts it, "The future health of the SouthernCalifornia multifamily market continues to be shaped by jobs,housing prices, the shadow market of rental homes and condos, andnew construction." Seslen says that, overall, Southern Californiawill not enjoy sustained increases in rents until the greatereconomic health of the region improves.

On the other hand, rents in San Diego may increase slightly whenjobs return―and since housing is still too costly forrenters to become buyers in San Diego, landlords should be able toachieve the increases. The reason that San Diego will outperformthe other SoCal markets in rental and vacancy rates is a steadystream of defense contracts and strong growth in the biotechindustry that buoy the region's economy, the study explains.