In Q4 2025, Los Angeles’ multifamily market continued to face pressure from weak demand and elevated supply, pushing vacancy to 5.7%, the highest level since 1Q21, as negative absorption coincided with increased deliveries and 17.6K units under construction. Despite this rise, vacancy remains well below the national average of 8.2%, though Los Angeles trails other major California metros. Rent performance remains muted, with average asking rents of $2.3K per unit and rent growth slightly negative at -0.1%, reflecting constrained pricing power and ongoing concessions.

 

Performance varies by quality and location, with higher-end properties absorbing demand but posting elevated vacancy, while more affordable submarkets maintain tighter conditions and modest rent growth, underscoring a bifurcated market as supply-side pressures persist.

 

Key Findings

• Vacancy elevated on weak demand and supply pressure. Vacancy reached 5.7%, the highest this decade excluding 2020, driven by negative absorption, sharply lower demand, and heavy deliveries, particularly in 4 & 5 Star assets and Downtown LA.
• New deliveries continue to weigh on performance. Oversupply has limited lease-up, pushed high-end vacancy to 9.9%, and constrained rent growth.
• Sales totaled $2.0B at $355K/unit and a 5.0% cap rate, while rents averaged $2.3K/unit with -0.1% growth, reflecting flat pricing and increased concessions despite expectations for improved fundamentals as the pipeline tapers.

 

Los Angeles Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

 Los Angeles Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.8%
• Current Population: 9,760,728
• Households: 3,479,379
• Median Household Income: $95,149

 

Los Angeles is the nation’s second-largest metropolitan economy, anchored by a diverse mix of industries including entertainment, tourism, international trade, aerospace, and fashion, and supported by a deep pool of creative and entrepreneurial talent. The region benefits from major universities such as USC, UCLA, and Caltech, which help sustain workforce depth, though high living costs and labor disputes continue to pressure economic stability and contribute to outmigration. Tourism remains a major economic driver, generating nearly $35 billion annually and supporting over 500,000 jobs, with long-term growth supported by major infrastructure investments ahead of the 2028 Olympics.

 

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

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Los Angeles Multifamily Construction

While construction activity remains elevated, there are clear signs of deceleration, following several years of steady development. Despite 17.6K units under construction, both construction starts and the pipeline have trended downward as higher interest rates, rising development costs, anti-density policies, and lengthy permitting timelines constrain new projects. New supply remains heavily concentrated in Class A assets, particularly in Koreatown, Downtown Los Angeles, and Greater Inglewood, which together account for roughly 30% of units under construction. Looking ahead, slowing starts and a forecast decline in deliveries, less than 5,200 units expected in 2026, should ease supply-side pressure and support improving occupancy beginning in mid-2026.

 

Units Construction Starts

Source: CoStar Group, Inc.

 

Units Under Construction

Source: CoStar Group, Inc.

 

Los Angeles Multifamily Sales

Investment activity remained subdued yet stable, with $2.0B in quarterly sales volume, pricing at $355K per unit, and cap rates holding at 5.0%. Transaction volume over the past 12 months totaled $7.9B, reflecting a modest year-over-year decline as soft fundamentals, elevated vacancy, flat rent growth, and the ongoing impact of Measure ULA continue to restrain deal flow. While overall activity remains well below pre-pandemic and 2021–2022 peaks, institutional investors have become more active, accounting for a growing share of transactions and signaling increased interest in repriced assets. Market sentiment suggests pricing has bottomed, with cap rate expansion largely complete; however, a meaningful recovery in values is expected to be gradual, with prior peak pricing levels unlikely to return until 2029 or later.

 

Los Angeles Multifamily Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

• Sales Volume: $2B
• Price Per Unit: $355K
• Cap Rate: 5.0%
• Vacancy Rate: 5.7%
• Rent Growth: (0.1%)
• Asking Rent Per Unit: $2.3K
• Units Under Construction: 17.6K
• Units Delivered: 1.7K
• Units Absorbed: (304)