Dive Brief:
- Apartment sales volume rose 7% year over year to $30 billion in the first quarter of 2025, according to a report that data firm MSCI Real Assets shared with Multifamily Dive. Multifamily investment activity has now increased each of the last four quarters.
- Apartment prices fell 0.9% YOY in Q1, according to MSCI. Over the previous two quarters, multifamily values have increased at an average annualized growth rate of 2.0%.
- Cap rates have stayed flat at 5.7% across the last five quarters, according to MSCI. Mid- and high-rise cap rates stood at 5.6% in Q1, compared to 5.8% for garden properties.
Dive Insight:
Single-property sales drove the market in Q1, approaching the pre-COVID-19 average of $26.7 billion from 2015 to 2019. Individual asset sales grew 39% YOY to $25.7 billion in the first quarter of 2025.
MSCI has traditionally pointed to individual asset sales as the best gauge of buyer interest in apartments. Investors buying one property at a time will underwrite each apartment community individually, while portfolio and entity-level sales are sometimes driven by broader portfolio and relative financing changes.
Although single-asset deals have returned to pre-pandemic averages, portfolio and entity-level sales still lag behind those levels.
Between 2015 and 2019, megadeals accounted for 25% of the total volume. In Q1, those trades accounted for only 15% of the market, with no entity-level deals occurring during the quarter. Portfolio sales rose 18% YOY to $4.4 billion.
Mid- and high-rise properties saw volume increase 45% YOY to $12.3 billion in Q1. Trades for garden properties increased 29% to $17.7 billion in Q1. Interestingly, portfolio sales for mid- and high-rise properties increased by 141% due to a slow Q1 2024, while portfolio sales of garden properties rose by 22%.
Although the apartment sales market appears to be in full recovery with four quarters of growth in a row, MSCI notes that “minute-to-minute changes in the news cycle that started in February had a dizzying effect on the public equity and bond markets” and performance in multifamily “never responds to shocks in a single quarter.”
However, Scott Lebenhart, chief investment officer at New York City-based apartment owner Ashcroft Capital, says the market has almost come to expect volatility in bonds.
“We have seen some major swings in rates recently, yet this is not dissimilar from previous fluctuations in rates,” Lebenhart told Multifamily Dive. “For new acquisitions, it’s important to layer in some cushion in rates when underwriting deals.”
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