Los Angeles’ multifamily performance in Q1 2026 reflects continued softness, with vacancy reaching 5.6% as new supply outpaced demand. Approximately 1,100 units were absorbed during the quarter, trailing the roughly 2,300 units delivered, which contributed to a net increase in available inventory. Asking rents averaged about $2,300 per unit, but rent growth remained flat at 0%, highlighting limited pricing power and the need for concessions to maintain occupancy. Market conditions remain bifurcated, with higher-end properties experiencing the greatest pressure due to elevated supply levels, while mid-tier assets demonstrate relatively more stability. Affordability challenges and shifting renter preferences continue to dampen demand, resulting in a market that is stabilizing but still operating below peak performance levels.

 

Key Findings

• New deliveries have outpaced demand, resulting in modest absorption and continued leasing pressure, particularly among Class A product.
• Multifamily fundamentals in Los Angeles remained soft in Q1 2026, with flat rent growth and elevated vacancy reflecting ongoing supply-demand imbalance.
• Investment activity has stabilized at lower pricing levels, with cap rates holding steady as investors adjust to a higher interest rate environment.

 

Los Angeles Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Los Angeles Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.8%
• Households: 3,475,543
• Current Population: 9,677,403
• Median Household Income: $94,934

 

The Los Angeles economy entered 2026 with mixed momentum, as modest job growth and structural challenges continued to weigh on housing demand. Employment trends have been relatively flat overall, with gains in sectors such as education, healthcare, and hospitality offset by softness in professional services, trade, and other cyclical industries. Despite these pressures, the region benefits from a diverse economic base anchored by entertainment, trade, tourism, and higher education, though some of these sectors are experiencing volatility due to labor disputes, global competition, and trade fluctuations. While upcoming global events and tourism activity may provide incremental support, overall economic conditions remain subdued, contributing to cautious renter behavior and slower multifamily demand growth.

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Major Upcoming Events Hosted in LA

Source: CoStar Group, Inc.

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

 

Los Angeles Multifamily Construction

Construction activity remains elevated yet gradually moderating as development conditions become more restrictive. Approximately 19,400 units are currently under construction, representing a sizable pipeline that will continue to impact market balance in the near term. Deliveries totaled about 2,300 units in Q1 2026, adding to existing supply pressures, particularly in the luxury segment where most new development is concentrated. However, construction starts have slowed in response to higher financing costs and tighter capital availability, which should reduce future supply volumes over time. Regulatory changes aimed at easing development constraints may support longer-term activity, but near-term impacts are limited.

 

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.

 

Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q1 2026 | Source: CoStar Group, Inc.

• Sales Volume: $1.4B
• Price Per Unit: $350K
• Cap Rate: 5.1%
• Vacancy Rate: 5.6%
• Rent Growth: 0%
• Asking Rent Per Unit: $2.3K
• Units Under Construction: 19.4K
• Units Delivered: 2.3K
• Units Absorbed: 1.1K