Current vacancy of just 1.4% confirms that demand for housing in San Diego County still outpaces theavailable supply--a scenario that is compounded by an increasing number of residents who cannot afford tobuy a home.

"The shortage of affordable and available housing in San Diego will continue to be an issue for years tocome," says George Carlson, vice president and apartment specialist with Burnham Real Estate Services. "As a result, apartments are well-positioned for a strong future investment-wise."San Diego County apartment rental rates are at theirhighest level ever, up 53% since the beginning of 1996, the Burnham report shows.

"Renters of newly built units today can expect to pay, on average, over $1,700 per month and average rentsoverall stand at just over $1,000 per month," Carlson said. "While this is clearly a good thing for owners,it is certainly prohibitive for a large percentage of our rental population. Unfortunately, high land costs and government regulatory fees leave developers little choice but to build higher end product to offset these costs. Certainly expect affordable housing to be a leading agenda item for city leaders and planners in the years ahead."