Q2 2025 Los Angeles Multifamily Market Report
Highlights
- Vacancy increased to 5.2% in Q2 2025 as renter demand weakened, especially among lower- and middle-income households.
- Rent growth was just 0.6%, reflecting sluggish momentum across all property classes.
- 2,600 units were delivered, but only 533 units were absorbed, creating a supply-demand imbalance. This led to rising vacancy, though L.A.’s slower pace of development kept the market tighter than most U.S. metros.
Los Angeles Demographics
- Unemployment Rate: 5.7%
- Households: 3,499,365
- Current Population: 9,774,379
- Median Household Income: $92,424
Market Performance
The Los Angeles multifamily market experienced a noticeable cooling in performance. The vacancy rate increased from 5.0% in Q1 to 5.2% in Q2, driven by weakening renter demand—particularly among lower- and middle-income households impacted by economic challenges and ongoing outmigration. In contrast, demand among higher-income renters remained more stable, especially in Class A properties. Rent growth was subdued, registering at just 0.7% year-over-year, which lagged behind the national average of 1.0% and marked a continuation of the market’s muted rental momentum.
On the supply side, deliveries outpaced absorption, with approximately 9,100 new units added to the market compared to 6,700 units absorbed over the last 12 months. This imbalance contributed to the uptick in vacancy. However, L.A.’s overall development pace remained modest by national standards, helping to prevent more significant oversupply concerns.
By the Numbers
- Sales Volume: $515M
- Cap Rate: 5.0%
- Market Sale Price Per Unit: $357K
- Vacancy Rate: 5.2%
- Rent Growth: 0.6%
- Market Asking Rent Per Unit: $2,334
- Units Under Construction: 19,790
- Units Delivered: 2.6K
- Units Absorbed: 533 | Q2 2025 | Source: CoStar Group
Supply & Demand Dynamics
Source: RealPage
Under Construction
Source: CoStar Group, Inc.
Construction activity continued at a restrained but steady pace, with approximately 9,100 net new market-rate units delivered over the past 12 months, marking a 0.9% increase in inventory. This reflects a tapering trend as higher interest rates and softer market conditions make financing new developments more difficult. Current development remains below national levels, largely due to the city’s high costs, complex permitting, and anti-density sentiment. Notably, Downtown Los Angeles added 1,800 units, including the delivery of Olympic + Hill, a 685-unit luxury tower. The total pipeline stands at 19,000 units (1.8% of inventory)—well below the 2.8% national average. Projections suggest fewer than 6,000 new units will be added in 2026, better aligning future supply with expected demand.
Sales
Los Angeles’ multifamily capital markets showed continued signs of recovery following a prolonged slump. Sales volume over the past 12 months reached $6.9 billion, a notable increase from $4.6 billion the year prior, as deal flow accelerated after hitting a 15-year low in 2023. While average pricing remains over 15% below 2022’s peak, holding at around $350,000 per unit, values have stabilized since late 2023, suggesting the market has found a pricing floor. Private buyers have driven this resurgence, accounting for approximately 75% of recent acquisitions, up from their historical two-thirds share. These buyers have primarily targeted well-located, attractively priced assets, such as Candlewood North, acquired by Post Investment Group for $51.1 million ($270,400/unit). In contrast, institutional buyers, private equity firms, and REITs have scaled back participation due to concerns over transfer taxes, regulatory constraints, and eviction restrictions. Notably, Grubb Properties and PCCP acquired The Fifty Five Fifty in Hollywood for $98.4 million, reflecting a 34% decline from its 2018 sale price. Despite recent gains, the broader outlook suggests a slow recovery, with full pricing rebound not expected until 2029 or beyond, even as fundamentals begin to modestly improve.
Sales Volume & Market Sale Price Per Unit
Source: CoStar Group, Inc.
Buyer Composition
Source: Real Capital Analytics
