Intelligent Investment
Core Multifamily Buyer Sentiment Improves in Q4 2025
March 2, 2026 3 Minute Read
Buyer sentiment for core multifamily assets improved in Q4 2025, while underwriting assumptions mostly held steady for the second consecutive quarter, according to CBRE’s Q4 Multifamily Underwriting Survey. Seventy-six percent of survey respondents indicated positive sentiment for core acquisitions, up from 64% in Q3 and 44% a year ago. This increased positivity contributed to a 9% year-over-year rise in multifamily investment volume last year, with a similar gain expected in 2026.
Figure 1: Quarterly Changes in IRR Target & Cap Rates for Core Multifamily Assets
The average core multifamily going-in cap rate increased by 2 basis points (bps) to 4.75% in Q4, while the average exit cap rate held steady at 4.95%. Core unlevered internal rate of return (IRR) targets remained at 7.70% for the third consecutive quarter.
The spread between going-in and exit cap rates for core assets decreased to 20 bps in Q4. The spread is expected to increase over the next two years, with going-in cap rates compressing more than exit cap rates. However, it may be some time before the spread increases to a more typical level of between 50 and 60 bps.
Sixteen of the 19 markets tracked by CBRE had stable IRR targets for core assets in Q4. Two markets (Denver and Philadelphia) saw an increase in their core-asset IRR targets, while Los Angeles saw a decrease.
Figure 2: Buyer & Seller Sentiment for Core & Value-Add Multifamily Assets
Source: CBRE Research, Q4 2025.
While positive sentiment among core-asset buyers increased dramatically, negative sentiment was unchanged from Q3 at 5%. Positive sentiment among value-add buyers fell to 63% of survey respondents from 70% in Q3. Sellers of both core and value-add assets remained largely neutral, with minimal positive and negative sentiment. Overall buyer and seller sentiment improved most in Sun Belt markets such as Atlanta and Charlotte.
Figure 3: Buyer Valuation Underwriting Assumptions for Core & Value-Add Multifamily Assets
Underwriting assumptions of annual rent growth for core and value-add assets over the next three years fell to 2.7% and 3.1%, respectively, in Q4 from 2.8% and 3.2% in Q3. This aligns with the deceleration in rent growth in many markets in the second half of 2025.
Going-in cap rates for value-add assets increased by 3 bps quarter-over-quarter to 5.26% and exit cap rates remained at 5.38%. The spread between going-in and exit cap rates for value-add assets tightened to 12 bps from 15 bps. Unlevered IRR targets for value-add assets compressed for the eighth consecutive quarter to 9.36%.
Figure 4: Underwriting Assumptions for Core & Value-Add Multifamily Assets by Market, Q4 2025
Note: Estimates are based on the expert opinion of local CBRE investment professionals.
Source: CBRE Research, Q4 2025.
Three markets (Charlotte, Miami and Philadelphia) saw slight going-in cap rate compression for core assets, while Denver, Indianapolis and Los Angeles saw increases. No markets saw more than a 25-bp movement either way. For value-add assets, only Charlotte had a lower going-in cap rate in Q4 than in Q3, while Dallas, Indianapolis and Los Angeles had increases.
Although core buyer sentiment improved in Q4, there was little change in overall underwriting metrics. While bid/ask spreads are narrowing, some investors remain reluctant to sell. However, as in Q4, we expect more selling activity this year as buyers take advantage of a more liquid debt market with attractive financing options.
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