Q1 2025 Los Angeles Multifamily Market Report
Key Findings
- Demand for Los Angeles Multifamily is recovering, with vacancy dropping to 4.8% and absorption outpacing deliveries, but gains are concentrated in Class A units as lower-income demand remains weak.
- Rent growth remains sluggish at 0.9%, though forecasts suggest improvement to over 2% by 2026 as vacancy continues to decline.
- Construction is slowing, with only 1.9% of inventory underway—well below the national average—positioning the market for improved occupancy and rent performance in the near term.
Los Angeles Demographics
- Unemployment Rate: 6.0%
- Current Population: 9,770,345
- Households: 3,497,280
- Median Household Income: $91,603
Los Angeles has a diverse economy anchored by entertainment, trade, tourism, and aerospace, supported by a creative, entrepreneurial workforce and top universities like USC and UCLA. However, outmigration—over 300,000 people in five years—has slowed growth, as residents across income levels seek more affordable Sun Belt metros.
Los Angeles Multifamily Performance
Los Angeles’ multifamily market showed signs of improvement in early 2025 following a relatively stable 2024. Renter demand picked up compared to the previous year, though it remains relatively subdued for a metro of its size. Still, this demand has generally matched the pace of new deliveries, contributing to a decline in the vacancy rate—from 5.0% at the end of 2024 to 4.8% in Q1 2025. Occupancy gains were seen across all property classes, with the strongest activity in upscale Class A communities.
Rent growth has consistently trailed behind national trends. Over the past five years, average asking rents in the city rose by 11.1%, compared to a 19.3% increase across the U.S. This weaker performance is largely attributed to a sharp spike in vacancy during 2020. At the time, many renters left the area for more affordable markets in response to the early impacts of the COVID-19 pandemic. While overall growth remains minimal, the market outlook is cautiously optimistic. With construction activity slowing and demand expected to stay steady, rent growth is projected to gradually accelerate—potentially surpassing 2% in 2026.
The current construction pipeline includes approximately 20,000 units, accounting for 1.9% of the existing housing stock—below the national average of 3.0%. Downtown Los Angeles and Koreatown remain the most active submarkets, contributing around 1,500 units (roughly 4% of their current inventory) and 2,000 units (approximately 3%), respectively. Additionally, twelve other submarkets report construction activity that exceeds the overall Los Angeles market average in proportion to their existing inventory.
Multifamily capital market conditions have shown signs of recovery in recent quarters. Following a nearly 15-year low in activity during 2023, transaction volume gained momentum throughout 2024, culminating in $1.3 billion in sales during Q1 2025. Average market pricing has declined more than 15% from its 2022 peak—driven largely by the spike in debt costs that year—to approximately $360,000 per unit. Nonetheless, pricing has remained relatively stable since late 2023, suggesting the market has found a pricing floor. Private buyers continue to lead transaction activity accounting for roughly 75% of acquisitions over the past year—an increase from their historical average of around two-thirds. While their investment strategies vary, they are particularly drawn to high-quality assets in prime locations offered at compelling prices.
