July 8, 2025

Multifamily Transactions in Boston Hit Three-Year High

Q1 2025

Balanced growth continues to underpin Boston’s multifamily market, though structural shifts may reshape fundamentals ahead. Apartment deliveries have averaged nearly double the pace seen from 2005 to 2014, a trend set to persist through 2025. Thus far, steady job gains in government, healthcare, and education have supported rent growth and kept vacancy stable. Still, recent federal policy changes and budgetary constraints pose risks to these key sectors, potentially tempering future demand. At the same time, development is shifting outward. Core areas like Cambridge-Somerville and Intown Boston are seeing sharp declines in new supply, with similar slowdowns projected for Fenway-Brookline-Brighton and Chelsea-Revere-Charlestown by 2026. Meanwhile, construction is accelerating in outer-ring submarkets such as East Middlesex, South Essex, Lowell, and Marlborough-Framingham. Despite rising supply, vacancy in these areas has held firm, signaling strong demand supported by lower rents and proximity to suburban job hubs. If economic conditions soften, these more affordable submarkets may offer steadier performance and present lower-risk opportunities for investors focused on long-term regional growth.

Conditions in the Boston multifamily investment market continued to strengthen in early 2025, as stable operations attracted more active investors. Following a surge in transactions during the second half of 2024, momentum carried into this year, with first-quarter deal volume up 15 % from the same period in 2024. Class C properties accounted for nearly half of all transactions over the past 12 months, with deal volume in this segment nearly doubling. Median pricing for Class C assets rose 4.3 % year over year, the strongest gain among all asset types. This wave of lower-tier sales pulled the overall market median down more than 10 % from last year, to $259,300 per unit. Meanwhile, Class A pricing moved higher, with the median reaching $612,000 per unit to start 2025, up from $590,000 between 2022 and 2024. Submarket activity was concentrated in East Boston/Chelsea and JP/Roslindale/West Roxbury, which together accounted for 33 % of sales. The latter area captured 15 % of Class C deals alone, likely due to a tight 2.3 % vacancy rate and no active construction, making it an attractive target for value-focused investors.

Looking ahead

Trends observed in Boston’s multifamily market in 2024 are expected to continue through 2025, with vacancy gradually inching higher and rent growth holding steady. Deliveries are on pace to reach 11,100 units this year, the highest total since 2020, reflecting ongoing inventory growth. While net absorption totaled approximately 5,800 units in 2024, it may come in slightly lower this year due to elevated levels of construction, which could temporarily outpace demand. Nearly 40 % of all units underway are concentrated in four submarkets, including three contiguous areas in the inner northern suburbs: Everett/Malden/Medford/Melrose, Route 1 North, and 93 North. Somerville/Charlestown also holds a significant share. Alston/Brighton is another key submarket to watch, with nearly 1,000 units under construction, amounting to about 9.2 % of existing inventory.

Transaction activity in Boston’s multifamily market is expected to remain elevated in the coming quarters. Cap rates have settled into the mid-4 % range after trending higher for much of last year, a level that may be sufficient to bring more buyers off the sidelines. With local investors cautious about the outlook for office and life sciences, multifamily continues to draw interest as a relatively stable investment vehicle. Preliminary figures show a strong start to the second quarter; first-quarter sales volume doubled from the same period in 2024, contributing to $3.5 billion in transactions during the 12 months ending in March. Momentum is expected to build as more properties are listed, particularly on the lower end of the price spectrum. Most deals to start the year involved Class C properties priced under $20 million, a segment likely to remain active as buyers search for yield in a competitive environment.