Multifamily Rent Concessions Move Higher With Seasonal Weakness

The use of concessions tend to be greatest during November and December as operators seek to capture renters from the reduced prospect pool. Those seasonal trends persisted throughout 2025. Nationwide, 16% of stabilized apartments offered concessions in November.

The average discount in November was 10.2%, the highest level since September 2024. By product class, concessions were greatest in Class A (10.8%) and Class C (10.3%) units, while Class B product posted a slightly smaller discount of 9.8%.

Meanwhile concession prevalence was overwhelmingly greatest in Class C units in November, with 20.7% of units offering discounts. Use of concessions in Class A and Class B was comparatively milder, hovering around 14%.

Source: RealPage

Multifamily Transaction Volume Remains Muted

Trailing 4-quarter multifamily transaction volumes are 24% lower than 2018/2019 on a dollar basis and 42% lower on a unit basis.

With stabilized cap rates sitting at 5.3 percent, well below the long-term average of 6.2 percent, owners are generally holding their properties rather than accepting reduced values in a murky pricing environment.

Cap rates are lower than interest rates for the eighth consecutive quarter, meaning debt is dilutive to cash flow upon acquisition. Expense growth has outpaced revenue growth since 2023, negatively impacting NOI growth.

Source: John Burns

Rapidly Rising Expenses Are Devastating Affordable Multifamily Properties

The affordable (rent restricted) multifamily sector is facing unprecedented margin pressure as operators confront a structural mismatch between revenue and costs.

Expenses at affordable communities have risen 38% since 2019, while income has only increased 32% over that same period.The six-point spread is not just a financial statistic but a lived reality on the ground, visible in tightening margins, deferred maintenance, and growing vulnerability to even modest external shocks.

Actual transaction data confirms NOI growth has been under acute pressure over the last several years, a phenomenon not seen with the same intensity on the market-rate side. While property-level revenues have trended upward in step with increases in area median income, expense growth has been less forgiving, driven primarily by surging payroll, maintenance, and utility costs. In many jurisdictions, these line items are up four to five percent year over year—a rate much higher on the affordable [side]…than on the market rate world.

The gravity of this trend becomes starker at the market and even sub-market level. In cities like Charlotte, operators have reported particularly acute challenges, where the expense load has been extremely difficult.

Some limited relief has come from a recent slowdown in insurance cost spikes, but this is far from enough to offset broad-based expense inflation.

The squeeze challenges the notion that affordable housing provides stability for both residents and owners. Turnover, typically much lower in affordable communities than in market-rate ones, has in some cases reached parity—a worrisome trend that may signal growing instability. Operators are forced to operate leaner, often delaying both routine and capital-intensive work.

Regulatory complexity itself is both a symptom and driver of higher operating costs, as subsidy layering and compliance requirements add about $20,000 per unit in development cost and significantly extend timelines, further stressing the operational side.

Source: Globe Street