In Q3 2025, Los Angeles’ multifamily market experienced further softening as vacancy rose to 5.3%, up from the prior quarter’s 5.1% and the highest level since early 2021. Elevated new deliveries, 4,300 units this quarter and up 20% year-over-year, outpaced demand, with 1,800 units absorbed, keeping rent growth subdued. Asking rents averaged $2.3K per unit, essentially flat quarter-over-quarter and up only 0.5% year-over-year, reflecting limited pricing power amid supply pressures.

 

Despite these challenges, Los Angeles continues to outperform nationally, where vacancy stands at 8.2%, though it trails other major California markets. The imbalance between new supply and moderating demand is expected to persist through year-end before easing in 2026.

 

Key Findings

• The market saw vacancy rise to 5.3%,  the highest this decade outside 2025, as 1.8K units were absorbed against 4.3K units delivered. Despite this, performance remains resilient compared to the national average vacancy of 8.2%.
• With asking rents flat at $2.3K per unit and annual rent growth at just 0.5%, landlords increasingly offered concessions to attract tenants, particularly in Downtown LA, where vacancy reached 10.9%.
• The city’s 18.2K units under construction reflect a historically strong pipeline, though new starts have declined about 20% annually since 2021. As supply pressures ease and population trends improve, vacancy compression and gradual rent recovery are expected.

 

Los Angeles Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Los Angeles Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.7%
• Current Population: 9,775,675
• Households: 3,500,605
• Median Household Income: $93,064

 

Los Angeles, the nation’s second-largest metro, has a diverse economy driven by entertainment, trade, tourism, fashion, and aerospace, supported by top universities like USC, UCLA, and Caltech. The entertainment sector, contributing about 20% of regional output, is recovering from the 2023 strikes, aided by a $750M state tax credit expected to generate over $1.1B in activity. The ports of LA and Long Beach, handling a quarter of U.S. trade, and the tourism industry, which brings 50M visitors and $35B annually, remain key anchors. However, the January 2025 wildfires, causing up to $54B in losses, pose lasting economic headwinds even as rebuilding efforts begin.

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

 Major Upcoming Events Hosted in LA

Source: Discover Los Angeles

• 2026: FIFA World Cup, NBA All-Star Weekend
• 2027: Super Bowl LXI
• 2028: Olympics & Paralympic Games

 

Los Angeles Multifamily Construction

Construction activity in Los Angeles’ multifamily market continued to moderate amid tighter f inancing conditions and softer fundamentals. The metro had 18,200 units under construction, or roughly 1.7% of total inventory, below the 2.6% national average, highlighting slower expansion relative to peers. Over the past 12 months, 11,000 units were delivered, including 4,300 in Q3, while 1,800 units were absorbed, pushing vacancy up to 5.3%. Development remains concentrated in Downtown Los Angeles, Koreatown, and Hollywood, areas more receptive to higher density. Nearly 90% of new projects target 4- and 5-Star properties, reflecting high construction costs and regulatory hurdles that limit mid-tier projects. Looking ahead, declining starts signal a gradual easing of supply pressures into 2026.

 

Units Construction Starts

Source: CoStar Group, Inc.

 

Units Under Construction

Source: CoStar Group, Inc.

 

 Los Angeles Multifamily Sales

Investment activity showed signs of stabilization but remained subdued relative to pre-pandemic norms. Sales volume totaled $2.3 billion, in line with the quarterly average of the past year of $1.7 billion, yet well below 2021–2022 highs of $3.0 billion per quarter. The average price per unit was $368,000, with cap rates holding at 5.0%, suggesting that pricing may have reached its cyclical floor following two years of expansion. Investor sentiment is improving as fundamentals begin to steady, though vacancy at 5.3% and rent growth of just 0.5% continue to weigh on valuations. Institutional investors have increased their market share to nearly 40% of transactions, signaling renewed confidence and a longer-term view of recovery as supply pressures ease heading into 2026.

 

Los Angeles Multifamily Sales Volume

Source: CoStar Group, Inc.

 

 By the Numbers

Source: CoStar Group, Inc.

• Sales Volume: $2.3B
• Price Per Unit: $368K
• Cap Rate: 5.0%
• Vacancy Rate: 5.3%
• Rent Growth: 0.5%
• Asking Rent Per Unit: $2.3K
• Under Construction: 18.2K units
• Delivered: 4.3K units
• Absorbed: 1.8K units