San Diego is quietly surpassing San Francisco to become the nation's third most expensive city for renters, marking a significant shift in regional economic dynamics and changing preferences in residential choices. According to a new Zillow report , the typical monthly rent in San Diego has reached $3,175, while San Francisco drops to fourth place at $3,168.

This reversal highlights evolving trends in the rental market over recent years. While San Francisco's rental prices have remained stagnant over the past three years, San Diego has seen steady growth, fueled by its desirable climate and quality of life. In February 2020, just before the COVID-19 pandemic, San Francisco rents were 29% higher than those in San Diego.

"This contrast reflects nationwide trends in the rental market," said Jeff Tucker, senior economist at Zillow. "Many are choosing to settle in smaller cities with warmer climates, and the rise of remote work post-pandemic has created interesting shifts in rental demand."

The trend is not only boosting cities like San Diego but also intensifying competition in traditional metropolitan rental markets. Among major U.S. cities, San Jose maintains its position as the most expensive rental market with a typical monthly rent of $3,411, followed by the New York metropolitan area at $3,405.

The Changing Landscape of Rental Markets

Zillow's data comes from its Observed Rent Index (ZORI), which tracks rental price changes. While different real estate platforms may use varying methodologies to calculate rent prices, the broader trends remain clear. According to Zumper data, Jersey City recently surpassed San Francisco to become the second most expensive rental market in the nation. This follows San Francisco's previous drop to third place in October 2022 when Boston's rental prices surged ahead.

The fluctuations in rental prices reflect more than just economic factors—they reveal evolving societal preferences and continuous exploration of living environments. As San Francisco's rental market faces new challenges, San Diego's emergence may significantly reshape California's—and potentially the nation's—rental landscape in the coming years.