Orange County’s multifamily market posted steady performance in Q4 2025, characterized by tight vacancy and modest rent growth. Market vacancy held at 4.1%, significantly below the national average of 8.5%, as quarterly absorption slightly outpaced deliveries, continuing a trend of supply and demand remaining largely in balance. Trailing-year absorption increased to 2,000 units, supported by a solid local economy, return-to-office momentum, and the market’s lifestyle appeal, even as overall absorption remains below long-term averages. Rent growth remained restrained at 1.5% year-over-year, with average asking rents near $2,700 per unit, as operators focused on preserving high occupancy amid expanding renter options and new deliveries offering concessions. Vacancy is especially tight among higher-quality properties, while softer performance at lower-priced assets reflects growing affordability pressures.

 

Overall, the combination of compressed vacancy, measured supply growth, and resilient demand underscores a stable market foundation, with rents expected to rise gradually as new supply is absorbed.

 

Key Findings

• Vacancy remains very low at 4.1% in Q4 2025 (about half the U.S. rate), supporting strong occupancy, but rent growth is limited to roughly 1.5% as operators report difficulty raising rents without losing tenants.
• 430 units delivered and 443 absorbed in Q4, with about 5,000 units under construction, mostly in Irvine. Absorption is steady but below historical norms, keeping vacancy stable around 4.0%–4.5%.
• $117M in sales, $457K per unit pricing, and 4.4% cap rates reflect continued investor confidence. Rent growth is expected to improve modestly in 2026 but remain below 3% due to slower job and population growth.

 

Orange County Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Orange County Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.2%
• Current Population: 3,174,229
• Households: 1,104,084
• Median Household Income: $119,849

 

Orange County’s economy continues to expand at a slow but positive pace, with employment growth lagging the national average since mid-2022 as the market works through post-pandemic labor constraints. Employment is less than 1% above pre-pandemic levels—well below national gains—reflecting resident outmigration to more affordable regions and a limited local labor pool, though unemployment remains relatively tight at around 5%, below the state average. The economy is broadly diversified, led by professional and business services and leisure and hospitality, and anchored by major employers such as The Walt Disney Company and UC Irvine, alongside a strong cluster of biotech and medical device firms in Irvine that support long-term stability and innovation-driven growth.

 

Top Orange County Employers

Source: OC Business Journal

• Walt Disney Co.
• University of California, Irvine
• Providence Southern California

 

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Orange County Multifamily Construction

Apartment construction in Orange County remained active but restrained in Q4 2025, with approximately 5,000 units under construction, representing just 1.9% of the county’s 260,000-unit inventory—well below the national average of 2.7% and far under the 6%–12% seen in the most active U.S. development markets. 430 units delivered during the quarter were fully absorbed (443 units), reinforcing that new supply is being met by demand amid a 4.1% vacancy rate. While construction starts slowed in 2025 compared with 2024, activity remains concentrated in Irvine, driven by The Irvine Company’s long-term land holdings and redevelopment projects. Land scarcity, entitlement hurdles, and community opposition continue to limit broader development across the county, keeping supply growth measured and supportive of long-term market balance.

 

Units Construction Starts

Source: CoStar Group, Inc.

 

Units Under Construction

Source: CoStar Group, Inc.

 

Orange County Multifamily Sales

Sales activity in Q4 2025 reflected continued investor confidence in Orange County’s apartment market despite elevated capital costs. Quarterly transaction volume totaled $117 million, with assets trading at an average of $457,000 per unit and cap rates around 4.4%, among the lowest in the nation. Activity remains below peak levels, but pricing has proven resilient as investors are attracted to the market’s 4.1% vacancy, limited supply risk, and durable demand fundamentals. Institutional buyers and well-capitalized private investors, particularly in coastal submarkets, continue to transact, often accepting lower initial yields in exchange for long-term growth prospects, signaling expectations that values and deal velocity will improve as capital markets normalize.

 

Orange County Multifamily Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

• Sales Volume: $117M
• Price Per Unit: $457K
• Cap Rate: 4.4%
• Vacancy Rate: 4.1%
• Rent Growth: 1.54%
• Asking Rent Per Unit: $2.7K
• Units Under Construction: 5.0K
• Units Delivered: 430
• Units Absorbed: 443