February 4, 2026

Ongoing demand in the Orange County multifamily market keeps vacancy in check

Q4 2025

Orange County multifamily market overview

Operating conditions in the Orange County multifamily market fluctuated modestly throughout the year, though the vacancy rate held within a tight range, ending the year at the same level as it was a year ago. These generally stable vacancy conditions coincided with relatively modest deliveries for the full year. Fourth quarter deliveries were elevated compared to earlier quarters, though there were significantly fewer units completed than originally forecast. This was due to the delayed delivery of projects totaling over 1,000 units during the closing three months of the year, with these units now scheduled to come to market in 2026. While Irvine contained the greatest number of completed units in 2025, Anaheim also had elevated deliveries while vacancy remained relatively stable and rent growth in South Anaheim was some of the strongest in Orange County.

The Orange County multifamily investment market cooled during the second half of the year, with fourth quarter activity slowing considerably. Roughly half of all properties that sold this year were in Santa Ana. In 2024, activity was more widespread with Anaheim and Huntington Beach recording a few sales in addition to Santa Ana. Class C properties, most of which were located in Santa Ana, made up the largest share of sales in 2025, though pricing on these properties has been down considerably from last year. In 2025 the median sale price of multifamily properties was $307,000 per unit, down 15% from 2024. Pricing varied over the past year, with a few properties selling for below $200,000 per unit, while one asset traded for nearly $700,000 per unit.

Looking ahead

Changes in multifamily operating conditions in 2026 will likely be similar to what was recorded in 2025 as many of the same factors will be at play. A spike in deliveries is expected to come in the earlier months of the year as the projects that were delayed at the end of 2025 are completed alongside an already inflated construction pipeline. This should push annual deliveries in 2026 to a cyclical high. Orange County has historically been resilient to large vacancy changes, so only a small increase in vacancy is predicted to come as a result of this influx of new supply. Rent growth should continue to be positive yet moderate, as operators prioritize occupancy over rent growth in the near future.

Multifamily transaction activity is expected to remain subdued through 2026, with total sales likely to align with levels recorded during the previous year. The increase in new deliveries may lessen some investor demand in the near term, impacting deal flow. As the development pipeline begins to taper in 2027, the number of sales that take place may begin to rise closer to historical averages. A total return to pre-2020 transaction counts is not anticipated until at least 2028. Cap rates are expected to hold stable, consistent with long-standing regional trends. Forecasted reductions in interest rates could further support the investment landscape as lower borrowing costs would allow for more deals to pencil for investors.