Multifamily properties attract record institutional investment in 2025. Understanding supply-demand dynamics helps investors identify markets with strongest return potential.
Supply Pipeline Concerns
350,000 new multifamily units deliver in 2025, highest level since 1970s. Concentrated in Sun Belt markets may create temporary oversupply. Secondary markets with limited new construction offer better near-term opportunities.
Rent Growth Moderating
National rent growth slowed to 3-4% after 15-20% gains in 2021-2022. Class A properties facing most pressure from new supply. Class B/C properties in supply-constrained markets maintain stronger growth.
Investment Strategy
Focus on markets with job growth exceeding housing supply. Value-add opportunities in older properties upgrading amenities. Affordable housing sector remains underserved with strong fundamentals.