What is the 2025 Multifamily Market Outlook?
Posted on May 1, 2025 by Blake Backer
What You Need to Know About Demand, Supply & Opportunity
As the real estate industry looks ahead to 2025, multifamily investing continues to dominate discussions—and with good reason. In our recent webinar featuring Payton Mayes, CEO of JPI, Jay Parsons, Economic Advisor of JPI and Jill Homan, Managing Director of Pinnacle Partners, Jay shared an insightful update on the state of multifamily housing, offering a fresh, data-backed perspective on where we’re heading and what that means for investors, developers, and market watchers alike.
You can watch the video below or read on for key highlights from our discussion
Let’s get right into it: the multifamily sector is not suffering from a demand problem.
Yes, rent growth has slowed and supply pressures are real—but the core story is resilience.
“Demand is back—and bigger than expected,” says Jay.
Despite a rollercoaster few years post-COVID, 2024 saw demand roaring back, with net absorption levels surprising even the most bullish analysts. This resurgence points to a strong appetite for apartments, driven by demographic shifts, lifestyle choices, and macroeconomic factors.
Why the Demand Surge Isn’t Just About Homebuyers Delaying
Many assume that the cooling single-family home market is the primary reason for this apartment surge. But Jay cautions against that simplification.
“Most homebuyers are already renters. Apartment demand is about net new renters—people entering this stage of life.”
In other words, we’re seeing genuine growth in the renter base, not just a temporary detour for would-be buyers.
Supply is High… But That’s About to Change
Here’s where it gets even more interesting: multifamily supply is peaking now—but starts are plummeting.
Jay shared one of his most requested charts—showing a 262,000 unit gap between completions and new starts, the largest since 1975.
“You don’t need an advanced math degree to figure out where this is going,” he quips. “We’re going to see a dramatic slowdown in new supply over the next 12–24 months.”
Why it matters:
- 2024/2025 = heavy lease-up challenges due to high completions
- 2026 onward = tightening supply pipeline, setting the stage for rent growth recovery
What This Means for Investors
Right now, the market is working through lease-up pressures—especially in high-delivery metros. But looking ahead:
- Expect less competition from new builds
- Strong demand fundamentals remain intact
- Long-term rent growth is poised to return as supply drops
For savvy investors, this could signal a prime window to:
- Acquire value-add or lease-up assets at discounts
- Lock in favorable financing terms
- Prepare portfolios for the next upswing
The Bigger Picture
Despite noise in the headlines, the 2025 outlook for multifamily remains positively strong—not because of artificial factors, but due to organic, demographically-driven demand and a tightening future pipeline.
“While the headlines may scream about rent stagnation, the real story is in the fundamentals—and they’re looking solid,” Jay reminds us.
Whether you’re a developer, investor, or industry observer, the key takeaway is clear: multifamily is not in crisis—it’s in transition. And in transition lies opportunity. If you’d like to request a full deck or to learn more about our Workforce Housing Fund, visit us here.
Past performance of Pinnacle Partners OZ Funds is not indicative of future results. There can be no assurance that the fund’s objectives will be achieved or that cash distributions will, in fact, be made or, if made, whether those distributions will be made when or in the amount anticipated or that certain tax benefits will be available to investors. An investment in the fund is illiquid, speculative, and will involve significant risks. It is only offered to suitable and qualified investors. Full details about the fund and its associated risks can be found in the fund offering documents.
Nothing in this blog post should be construed as tax advice. Please confer with your tax adviser to determine if an investment in an OZ fund is right for you.
