Multifamily investment surges 33% YOY

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Multifamily vacancy rate reaches lowest point in two years link

• National multifamily vacancy dropped to 5%, the lowest in two years, despite high construction activity. Nearly 147,000 net units were absorbed in Q1 alone, showing strong leasing momentum.

• Apartment retention hit 55.3% in Q1, up 160 basis points from last year. Class C properties saw the highest retention at 58.7%, signaling that affordability is keeping renters in place.

• Permitting dropped to 54,000 units, the lowest since 2015, and insurance costs per unit rose 75% over four years. These pressures are likely to reduce new supply, which could tighten vacancy even more in cities across the board.

The U.S. is expected to lose $12.5 billion in international visitor spending link

• The U.S. is expected to lose $12.5 billion in international visitor spending in 2025, a 7% drop from last year and over 22% below 2019 levels. This decline threatens major revenue streams for both retail and hospitality sectors across the country.

• New York City is especially vulnerable, with just 20% of its visitors being international in 2024, yet they accounted for half of the city's $51 billion tourism revenue. The city alone may lose $4 billion in spending due to a forecasted drop of 800,000 visitors.

• Hotels are facing a projected 9% fall in international arrivals, translating to millions fewer room nights. The strongest declines are from Canada, Mexico, the UK, Germany, and South Korea, with border regions like upstate New York already cutting staff due to falling Canadian bookings.

Demand for vacation homes drops to lowest level since at least 2018 link

• Vacation-home mortgage originations fell to 86,604 in 2024, the lowest since 2018 and down 5% from 2023. Second homes made up just 2.6% of all mortgages, a sharp drop from the 2020 peak of 5%.

• Florida metros saw the steepest declines, with Miami down 32.2%, followed by Orlando (-28.4%), Fort Lauderdale (-28%), West Palm Beach (-23.7%) and Tampa (-20.9%). High insurance, property taxes, and climate risks are driving buyers away.

• Nearly 90% of vacation-home mortgages went to high-income buyers, mostly white Gen Xers. Baby boomers were the only group to increase purchases, with a jump of 4.5% among 65–74-year-olds and 8.6% for those 74 and older.

Property managers prioritize occupancy over rent to start 2nd quarter link

• National apartment occupancy rose 0.4% in April to 95.7%, marking a stronger start to Q2 compared to last year’s 0.1% gain. Cities like Charlotte, Denver, Raleigh, and Austin led with 0.5%+ increases, showing strong leasing even in high-supply metros.

• Rent growth was modest at 0.2% nationally, with the Midwest and Northeast seeing the strongest gains at 0.6% and 0.5% respectively. The South saw no change, reflecting pressure from oversupply in many areas.

• Florida’s major markets underperformed on occupancy gains, with Miami and West Palm Beach posting just 0.1% increases. This points to ongoing demand adjustments as new inventory continues to weigh on the state.

Multifamily investment surges 33% as vacancy rates drop nationwide link

• Multifamily investment jumped 33% year-over-year in Q1 2025 to $28.8 billion, marking the highest first-quarter total since 2022. Net absorption soared 77% to 100,600 units, the strongest since 2000, while the national vacancy rate fell to 4.8%.

• Supply dropped sharply, with only 71,000 units completed in Q1 compared to 120,000 in Q4 2024, and new construction fell to 602,500 units. Cities like Chicago, Atlanta, and Tampa absorbed more units than were delivered.

• Rent growth returned in most markets, with average monthly rent up 0.9% year-over-year to $2,184. Gains were strongest in the Midwest and Northeast, while Austin, Phoenix, and Denver still faced negative rent growth.

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