After another year of strong demand, multifamily investment in 2025 revealed a subtle but telling shift. While gateway markets continued to attract capital, more investors began chasing higher yields in lower-cost Sun Belt and secondary metros, according to Yardi Matrix.
Total multifamily sales reached $83.2 billion for the year—just under a 1% increase from 2024—a figure that Yardi Matrix noted could edge higher as additional transactions are reported. The modest growth masked deeper movement beneath the surface, as investors followed profitability toward markets offering better pricing and income potential.
Dallas and Seattle led secondary and Sun Belt markets with $3.9 billion each in transaction volume, followed closely by Phoenix and Miami at $3.5 billion and Atlanta at $3.4 billion. Traditional gateways still recorded some of the strongest totals, including Chicago ($3.6 billion), Boston ($2.8 billion), Los Angeles ($2.8 billion), New York ($2.4 billion), San Francisco ($2.4 billion) and Washington, D.C. ($2.4 billion). According to Yardi Matrix, these six gateway metros all ranked among the top 14 by dollar volume, with Chicago the only one competing in the overall top five.
Still, gateway properties came at a premium. Yardi Matrix’s analysis, assisted by an AI service reviewing 1,000 multifamily transactions across 85 markets, found that investors consistently paid lower capitalization rates in primary markets than elsewhere. Some of 2025’s lowest acquisition cap rates were 3.8% in San Francisco’s South Bay, 4.1% on the San Francisco Peninsula and in Manhattan, 4.3% in Los Angeles, 4.5% in suburban Washington, D.C. and 4.6% in Boston.
Across gateway markets overall, average cap rates ranged from 4.2% for upper mid-range properties to 5.6% for fully affordable communities.
Secondary high-volume metros showed slightly higher yields—5.4% in Phoenix, 5.2% in North Dallas, 5.6% in Miami, 5.5% in Atlanta and 4.7% in Seattle, just above Boston’s average. In these markets, cap rates averaged 5.2% to 6.6%, depending on property class. Tertiary areas saw even wider spreads, from 5.6% for upper mid-range to 7% for fully affordable properties.
“Pricing is tight almost everywhere relative to mortgage rates,” Yardi Matrix reported, noting that acquisition yields are often equal to or below financing costs, which typically ranged between 5% and 6% in 2025.
That compression, the firm explained, reflects how much capital continues to chase multifamily deals, even in a higher-rate environment. Competition remains “fierce,” as investors bet on rent growth and rising net income to justify their purchases.
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