Gateway coastal rental markets are attracting renewed investor interest, supported by strong fundamentals and slowing Sun Belt migration. Tight supply, robust absorption, and consistent rent growth have created favorable conditions for multi-family investment in cities, including New York, Boston, and Los Angeles. Recent investor surveys, including AFIRE’s latest foreign investor survey, highlighted these markets as top targets for expanded investment, as they exhibit strong fundamentals, the result of housing unaffordability, high barriers to entry and strong renter demographics.1 However, not all coastal markets are exhibiting the same resilience; Greater Washington DC, despite recent rent growth, is projected to experience a deceleration due to widespread layoffs associated with the new Trump administration.
Key Multi-Family Coastal Market Insights
- New York is leading the coastal rebound, with strong year-over-year rent growth, the second-highest absorption rate nationally, and persistent demand despite the addition of 34,800 new units forecasted for 2025—all while vacancy rates continue to decline.
- Boston remains supply-constrained, with construction levels still 20% below the 2018 peak, driving upward rent pressure and a projected 2.9% rent increase in 2025.
- Southern California markets like Los Angeles and San Diego are experiencing steady rent growth fueled by limited new development and persistent demand across the region.
- Washington DC Metro’s rent growth could slow materially due to widespread layoffs created by DOGE
New York reported the second-highest absorption rate (Chart 2) alongside strong YoY rent growth (Chart 1), signaling that demand continues to outpace supply, boosting the competitiveness of new developments. Looking ahead, RealPage projects a substantial increase in residential construction, with new supply expected to surge 85% year over year in 2025.2
Although this uptick may seem significant, housing starts in 2024 were roughly 70% below their peak levels.3 Therefore, even with this projected growth in 2025, new supply will fall short of historical highs. Demand is anticipated to remain strong as a result, further supported by declining vacancy rates and three-year high lease signings reported during the summer of 2024.2 As such, rental prices are likely to continue climbing throughout the year, positioning New York as a leading performer among coastal rental markets.
YoY Effective Rent Change (Mar’25) vs. Change in Momentum (since Dec’24)
Source: JPI research, RealPage Market Analytics
Boston experienced YoY rent growth because of limited supply, which hindered affordability and put upward pressure on rents. While the city is projected to see steady supply growth in 2025, the number of units currently under construction remains approximately 20% below the peak levels seen in late 2018. These controlled supply additions are expected to support long-term market stability without oversaturating the multi-family sector, supporting rental appreciation with rent growth forecasted to rise to 2.9% in 2025, according to MMG Real Estate.4
Southern California remains a highly competitive rental market, with Los Angeles reporting rent growth alongside strong net absorption (Charts 1 and 2). With year-over-year lease renewals on the rise, the ongoing shortage of rental housing is expected to widen, placing upward pressure on rental prices.5 Recent reports suggest that wildfires impact up to 17,000 structures across Los Angeles, putting further pressure on supply.6 Similarly, in San Diego, rents are rising due to persistent supply constraints, mirroring trends seen across the broader region, the Orange County Coast reported.7
Apartment Demand Leaders Based on T-12 Net Absorption (Units)
Source: JPI research, RealPage Market Analytics, Peakhill Capital
Despite strong net absorption (Chart 2) and rent growth (Chart 1) indicating steady demand, Greater Washington DC’s rental market will likely face headwinds from the new political environment and widespread layoffs. These factors could slow rent growth because of reduced employment in the area.
Coastal multi-family markets are regaining investor confidence, driven by strong demand, limited supply, and rent growth, particularly in New York, Boston, and Southern California. While Washington has posted solid fundamentals, its outlook may be challenged by political shifts and widespread layoffs, which could weigh on future rent growth. Overall, the outlook remains positive, with select coastal markets offering compelling opportunities for new single and multi-family developments.
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Footnotes
- AFIRE. (2025). International Investor Survey: Pulse Report, Spring 2025. AFIRE ↩︎
- Colman, A. (2025, January 16). NYC rental market 2025: A surge in supply amid soaring demand. CityRealty. https://www.cityrealty.com/nyc/market-insight/features/future-nyc/nyc-rental-market-2025-a-surge-supply-amid-soaring-demand/65707 ↩︎
- CBRE. (2024). U.S. Real Estate Market Outlook 2024: Multifamily. CBRE ↩︎
- MMG Real Estate Advisors. (2025, April 21). 2025 Boston forecast. https://mmgrea.com/2025-boston-forecast/ ↩︎
- Kiszla, C. (2025, January 10). Southern California wildfires could drive your rent up. KTLA. https://ktla.com/news/local-news/southern-california-wildfires-could-drive-your-rent-up-los-angeles-times/KTLA+1KTLA+1 ↩︎
- Coleman, H. (2025, February 3). Examining the environmental impacts of the LA fires. EHS Daily Advisor. https://ehsdailyadvisor.blr.com/2025/02/examining-the-environmental-impacts-of-the-la-fires/ ↩︎
- Orange County Coast. (2023, December 4). Southern California rents to rise 2–4% a year through 2025, USC forecast says. https://www.orangecountycoast.com/southern-california-rents-to-rise-2-4-a-year-through-2025-usc-forecast-says/ ↩︎
