Multifamily Investing: Going Beyond the Headlines for Smarter Wealth

It’s easy to be swayed by “top performer” or “troubled market” lists, but experienced multifamily investors know the real story is more complex. The rent-growth data across the U.S. isn’t just about numbers; it’s about understanding what drives cashflow, durability, and smart risk-taking in today’s changing environment.

Deep Dive: Market-by-Market Rent Trends & Demand Signals

Let’s look at recent data from key metros, both the “highest demand” and “lowest demand” markets in Q2 2025:

Highest-Demand Markets

Northern New Jersey (Greater Tri-State)

• YoY rent growth: +6.5%; average rent: $2,715/unit; urban absorption remains strong, vacancy below 8% in Class A; richly diversified economy (financial services, logistics, life sciences); resilient renter demand in transit-rich areas; supply stream mostly balanced.
• Strong fundamentals attract affluent tenants and passive investors. Stability and high baseline rents support reliable long-term income even amid elevated new deliveries.

San Jose, CA

• YoY rent growth: +4.6% (up to +3.7% in September); average advertised rent: $3,068–$3,259/unit; occupancy in stabilized assets: 96.3%; robust absorption keeps vacancy below 5%.
• Driven by tech, innovation economy and high household income, this gateway market delivers strong rent resilience with ongoing new supply and low vacancy.

Chicago, IL (Metro)

• YoY rent growth: +4.4%; average rent: $1,922/unit (Downtown: $3,029/unit); occupancy: 95.8% overall, 4.7% average vacancy; absorption: 9,742 units vs. 5,341 delivered (supply/demand imbalance).
• The Midwest’s largest market has consistent tenant demand, healthy rent growth, and slow new construction keeping fundamentals tight for core-plus strategies.

Minneapolis–St. Paul, MN

• YoY rent growth: +3.9%; average rent: ~$1,500–$1,650/unit; occupancy: ~95%; absorption exceeds new supply in core urban sectors.
• Stable, secondary gateway with minimal speculative development and economic diversity. Favored for its risk-mitigation and portfolio diversification.

Detroit, MI

• YoY rent growth: +3.4%; average rent: ~$1,200–$1,350/unit; occupancy: ~94%; new supply limited, absorption steady, with upside from job growth.
• Emerging star among Midwest metros; slow, positive momentum appeals to patient investors seeking yield and diversification.

Long Island (NY) / Metro NYC-adjacent

• YoY rent growth: +3.9%; average rent: ~$2,500–$2,700/unit; vacancy low across stabilized assets; premium entry cost offset by proximity to major employment centers.
• Supported by consistent migration, tight rental housing, and NYC spillover demand. Income potential remains robust due to the high base rent.

Miami, FL (Metro)

• YoY rent growth: +3.5%; average rent: ~$2,600/unit; occupancy: ~94%; record migration, lifestyle appeal, supply-side risk materializing (new deliveries, higher concessions).
• Attractive for growth-oriented portfolios, with strong demographic tailwinds. Investors advised to balance upside against local supply risk.

Lowest-Demand Markets

Austin, TX (Metro)

• YoY rent growth: ~–4.0%; average asking rent: ~$1,750–$1,800; occupancy: ~92% (down YoY); high new deliveries and elevated concessions in luxury segment.
• Rents declined as the market corrects from prior highs; historically elevated rent levels still generate solid income if acquired before the recent oversupply. Excess pipeline means investors must underwrite carefully, especially for shorter hold periods.

Denver, CO (Metro)

• YoY rent growth: ~–4.3%; average rent: ~$1,950; occupancy rate: ~93%; supply spike in core and suburban areas; increased concessions noted.
• After years as a top performer, Denver now faces headwinds from supply surges and normalizing demand. Investors advised to target resilient submarkets and value-add opportunities.

Phoenix, AZ (Metro)

• YoY rent growth: ~–3.3%; average rent: ~$1,600; occupancy: ~92%; oversupply and high concessions reported throughout metro.
• Rapid Sun Belt growth led to a boom-and-correction cycle; rents are down but remain high compared to many growth markets, making cashflow possible if basis is favorable.

Atlanta, GA (Metro)

• Projected rent growth by year-end: <2%; current avg. rent: ~$1,650; supply pipeline remains heavy; absorption slowing; occupancy: ~93%.
• Rent trend is positive but muted; new deliveries outpace demand growth. Market may recover, but investor caution warranted in the short term.

Orlando, FL (Tourism-dependent)

• YoY rent growth Q2 2025: –0.8%; average effective rent: $1,801; stabilized occupancy: 92.7% (lowest since Q4 2020); H1 2025 absorption down 23% YoY.
• Underperformed vs. peer growth metros; demand more vulnerable to macro shocks. While rent declines are mild, occupancy slippage and lower absorption require careful underwriting.

San Antonio, TX (Metro)

• YoY rent growth Q4 2024: –2.3%; Q2 2025 rents flat; avg. rent: ~$1,350; high concessions (especially in luxury sector); occupancy: ~92%.
• Flagged for deepest rent cuts nationally, especially in newest deliveries and luxury segment. Rapid new supply drives volatility; sponsor experience and submarket targeting are critical for returns.

Riverside/Inland Empire, CA

• YoY rent growth Q2 2025: +0.9%; avg. rent: $2,124–$2,334; vacancy: 5.9% (up 60 bps YoY); quarterly growth just +0.1%.
• Demand softened against strong supply pipeline; absolute rents remain well above national median. Region’s appeal persists for migrants, but affordability and new deliveries are pressuring rent growth.

Making Sense of the Data — Rent Growth vs. Actual Rent Levels

It’s natural to see markets with strong rent growth and assume they’re where the highest rents (and income potential) are found. But sophisticated investors know that rent growth percentage and absolute rent level are not the same thing.

Here’s what that distinction means in practice, using your market data:

• A high rent-growth percentage indicates momentum, not price. For example, Detroit’s asking rents grew by +3.4% in Q2 2025. But the average rent there, around $1,200, is still far lower than Miami, Austin, or San Jose, where rents might be $1,750–$2,600 even after a slower growth or a slight decline.
• A negative or flat rent-growth rate doesn’t mean income has disappeared. Austin’s rents are down about –4% year-over-year, but the average rent is still high, meaning investors are likely still collecting solid income, especially if their basis is below today’s averages.
• Past spikes matter. Markets like Phoenix, Austin, and Denver posted explosive rent gains in recent years. The current softening is partly a market correction, but rents remain elevated compared to earlier years.
  
  

It’s important for investors to not conflate rent growth with income opportunity. A “high-growth” market may simply be rebounding from a low base, while a “softening” market may still offer top rents and stable cashflow. Use both rent-growth rates and actual rent levels to judge the true earning power and risk profile of an investment. 

Investor Checklist: How to Use This Data

• Is the recent rent change a result of market normalization?
• Are rents today still strong compared to historic averages?
• Is occupancy high despite softening rents?
• What’s driving local trends?
• How does your sponsor underwrite for rental volatility and new supply?

Where to Find Credible Data

• Moody’s Analytics CRE
• Yardi Matrix 
• RealPage 

Key Takeaway: Go Deeper Than Growth

Don’t be misled by surface growth rates alone. Top markets for rent growth may not have the highest rents, and softening markets may still deliver substantial income. For passive investors, the best returns come from understanding both rent trends and levels, and matching market fundamentals to your risk profile and strategy.

Smart investing is about clarity, not headlines. Compare the numbers, ask the tough questions, and rely on solid data. That’s how you build wealth in all cycles.

---

About Ellie Perlman