San Francisco’s 5+ Unit Market is Heating Up – Buyers and Sellers Are Making Moves!
The last quarter of 2024 was the most active period for San Francisco's 5+ unit apartment building market in over eight years, marking a significant rebound. With closed sales reaching their highest levels since at least 2016, Q4 2024 capped off a year that saw overall sales increase by approximately 35% compared to 2023. This surge suggests a strong recovery in investor confidence and heightened transaction activity, positioning the market for a potentially dynamic 2025.
San Francisco's 5+ unit apartment building market saw a surge in activity in late 2024, largely driven by the strongest financials for buyers since 2011. The average gross rent multiple (GRM) fell to its lowest level in over 16 years, making properties more attractive from a pricing standpoint. Simultaneously, cap rates reached their highest annual reading in over 16 years, offering significantly improved returns on investment. These factors combined to create an environment where buyers were more incentivized to act, fueling the strongest sales volume in years.
Despite a significant decline from the market peak, the price per square foot for San Francisco 5+ unit apartment buildings remains notably higher than in 2011. However, the shift in valuation dynamics is evident—today, income is the most appreciated and valued factor in property pricing. This is reflected in the declining gross rent multiple (GRM) and rising cap rates, reinforcing that investors are prioritizing cash flow and returns over speculative appreciation. The focus has moved away from price per square foot as a leading metric, making financial performance the primary driver of property valuations in the current market.
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