Second Quarter 2025 Trends

LA County Multifamily Market Holds Strong in Q2 2025

Vacancy flat, rent hits record high, and sales volume climbs despite ongoing investment challenges.

Rents reach a record high while unit deliveries slow and cap rates rise—multifamily activity shows resilience in a shifting economic landscape.

The Eden Apartments, 235 units built in 2025 in Downtown LA, with residences, penthouses, and 10,000 SF of retail: currently 51.1% vacant.
 
Managing Director of Research and Public Relations at NAI Capital Commercial
 
In Q2 2025, the multifamily housing market reported a flat vacancy rate quarter-over-quarter and a modest year-over-year decrease of 20 basis points, bringing the rate to 4.6%. Rental demand and newly completed construction contributed to the rise, with added units pushing average asking rents higher. Following an uptick in Q1, the average rent rose again, up 0.1% quarter-over-quarter and 0.5% year-over-year, reaching a record high of $2,265 per unit per month. A total of 3,245 new units were delivered in Q2, down 22.6% from Q2 2024, signaling a slowdown in development. Units under construction declined to 27,888, down 14.6% year-over-year.
 

Multifamily investment continues to face significant headwinds. High interest rates, rising construction costs, a cooling economy, and slower rent growth have all weighed heavily on the sector. In addition, the City of Los Angeles’s “ULA tax” remains a key factor in the investment market. Still, record-high rents are helping to offset some investor concerns.

In the City of Los Angeles, the median sale price per unit for properties subject to the ULA tax—those sold above $5.15 million—fell to $218,421, down 36.0% quarter-over-quarter and 32.9% year-over-year. Year-to-date, transaction volume for properties subject to the ULA tax totaled approximately $704 million, a 28.0% decline compared to the first half of 2024.

Sales activity in the first half of 2025 in Los Angeles County reflects the multifamily market’s mixed environment. The number of units sold rose 39.0% quarter-over-quarter, signaling renewed momentum. However, year-to-date unit sales declined 5.5% from the prior year to 11,699 units, while the number of transactions jumped 35.8% compared to the first half of 2024, indicating a surge in deal flow. Total dollar volume climbed 20.5% year-over-year and rose 12.4% from the previous quarter. The median sale price per unit fell 6.4% quarter-over-quarter and 4.4% year-over-year to $266,667. Meanwhile, the median capitalization rate increased by 10 basis points from the prior quarter and 60 basis points year-over-year, reaching 5.5%. As the market continues to adjust, investors are still navigating price discovery.