San Diego Apartments Beat Houses on Yield at Every Bedroom

Apartments win on gross yield in San Diego (San Diego County) because entry prices sit far below comparable houses while nightly rates and rents don't fall in proportion. Short-term rental gross yields average 6.8% for apartments versus 4.7% for houses, a gap of 2.1% before any HOA or operating costs are taken out. These are gross figures, and San Diego's short-term rental regulations materially reshape the decision.

These numbers are city medians across 114 ZIP codes. Your specific neighbourhood may sit well above or below the county-wide figure, and prime coastal pockets in particular trade at very different price-to-rent ratios than inland suburbs.

Apartments Lead on Yield but Houses Hold the Land

City medians across 114 ZIP codes. Gross yields before HOA (apartments) and before operating costs.

The apartment advantage is consistent on short-term rental yield across every bedroom count, with the top performer overall being 4+ bed apartment at 7.2%. The long-term rental picture is flatter: rents for stabilised tenants track more closely to property value, so the house-versus-apartment spread compresses. That means investors targeting reliable monthly income face a closer call, while those modelling short-stay revenue see a much clearer yield preference for apartments, at least on paper.

Warning: short-term rental figures apply only where legally permitted. Short-term rentals heavily restricted in San Diego. Investment properties generally not permitted; may require owner occupancy, specific zoning, or other conditions (permit required, $1000). San Diego's 2022 ordinance restricts whole-home short-term rentals to primary residences in most zones. Mission Beach has a grandfathered tier. Investment property short-term rentals phased out.

Why Apartments Show Higher Gross Yields

The entry price gap drives the yield gap. A 2-bed apartment in San Diego sells for roughly $476,090 while a 3-bed house runs around $1,165,492, yet nightly rates and monthly rents for apartments do not fall by the same proportion. Guests in coastal Southern California often prioritise location, beach proximity, and walkability over square footage, so a well-placed apartment can command $200+ nightly despite costing roughly half as much to acquire as a suburban house.

HOA fees then narrow the apparent advantage. A 2-bed apartment in San Diego carries an estimated $4,677 per year in HOA costs, which is not deducted from the gross yields shown in the table. Downtown high-rises with pools, concierge services, and amenity decks can run substantially higher, while older walk-up buildings in neighbourhoods like North Park or Hillcrest tend to sit at the lower end of the range. When the HOA is subtracted, the effective yield differential shrinks materially and can invert in heavily amenitised buildings.

HOA restrictions are the bigger risk than the fees themselves. Individual condo associations in San Diego frequently prohibit short-term rentals entirely, regardless of what the city's permit system allows. Mission Beach and Pacific Beach buildings are particularly variable: some allow unrestricted short stays, others ban anything under 30 days, and some require ownership-occupancy before letting. Always read the CC&Rs and minutes of the board before purchase, because an apartment with a silent ban destroys the entire investment thesis.

The Bedroom Count Curve Works Differently for Each Type

House yields generally rise with bedroom count because larger properties can be marketed to group travellers and family trips, where the nightly rate premium outpaces the per-bed increase in price. A 4+ bed house near the coast can sleep 8-10 guests and command nightly rates that single-family 2-bed houses cannot match. This pattern is most visible in short-term rental yields and is the main reason investors chasing cash flow on houses tend to target larger floorplans despite the higher entry price.

Apartment yields behave less linearly. Small apartments (1-bed and 2-bed) dominate the short-term rental market for couples and solo travellers, where supply is deep and nightly rates are competitive relative to purchase price. The 3-bed apartment yield dips to 6.2%, larger apartments often carry disproportionately higher sale prices (more amenities, scarcer inventory) without matching nightly-rate increases. The 4+ bed apartment figure rebounds to 7.2%, but treat it with extra caution: it bundles 4, 5, and 6+ bedroom listings, and a small number of luxury outliers can pull the median in either direction.

Suburb Variation Is Large Across 114 ZIP Codes

City medians hide enormous neighbourhood variation. San Diego (92115) delivers a gross yield of 6.0% with a median house price of $990,000, while inland areas like Valley Center (92082) trade at 5.3% on $872,000. The decision between house and apartment is often driven more by which specific ZIP you're targeting than by the city-wide averages, because coastal premium suburbs and inland value suburbs operate as different markets entirely. The dashboard shows suburb-level data for every bedroom count and property type, so you can compare within the specific area you are evaluating.

View San Diego in the dashboard → Free preview · every bedroom count and property type

What the Gross Yield Table Does Not Capture

• HOA fees: Estimated at around $4,677 per year for a 2-bed apartment in this market, not deducted from the gross yields in the table above. Amenitised downtown and coastal buildings can run well above this figure.
• Capital appreciation: Houses typically outperform apartments on long-term value growth because you own the land, and San Diego's land-constrained coastal geography has historically made house appreciation one of the strongest drivers of total return in California.
• Renovation potential: Houses offer optionality (extensions, ADUs, garage conversions, pools) that apartments cannot match. San Diego's ADU-friendly zoning has made this especially valuable for house investors in recent years.
• Financing constraints: Some lenders restrict mortgages on small apartments (under 500 sq ft), non-warrantable condos, or buildings with high investor-to-owner ratios or pending litigation. These restrictions are common in older San Diego condo stock.
• 4+ bed data breadth: The 4+ bed category bundles 4, 5, and 6+ bedroom listings. A small number of outlier properties can pull the median in either direction, particularly for apartments where inventory is thin.
• Regulation risk: San Diego's 2022 ordinance restricts whole-home short-term rentals to primary residences in most zones, with Mission Beach holding a grandfathered tier. Investment-property short-term letting has been phased out in most of the city, which changes the house-versus-apartment calculus profoundly and may push investors toward long-term rental yields where apartments still lead but by a smaller margin.

San Diego Is a Premium Appreciation Market, Not a Cash-Flow Market

San Diego's median 3-bed house price of $1,165,492 sits well above the California state median of $687,000 and dwarfs the national median of $242,500. The gross long-term rental yield of 3.7% falls below the national median of 5.3%, placing San Diego firmly in the premium appreciation category rather than the cash-flow category. Investors buying here are paying for California coastal land, Prop 13 tax protection over long holds, and one of the most supply-constrained housing markets in the country.

In that context, the house-versus-apartment decision shifts. If the thesis is appreciation, houses have the historical edge because the land underneath them is what compounds. If the thesis is cash flow from short-term rental, apartments look better on paper but regulatory risk, HOA rules, and amenity fees narrow the effective advantage substantially. Investors targeting this market need to be clear about which return component they are underwriting for, and verify HOA rules and city permitting before treating any short-term yield figure as achievable.

Investors can explore rental data in the dashboard alongside methodology details on the market score methodology and data sources pages. For comparable California premium markets, see the Los Angeles and Oakland insight articles, which break down similar appreciation-over-cash-flow trade-offs.

Transaction costs in California include closing costs, title insurance, escrow fees, and transfer taxes that vary by city. Check with your real estate attorney or escrow officer for exact figures before making an offer.

Data reflects market conditions as of April 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.