In Q3 2024, sales of 5+ unit multi-family buildings in San Francisco saw a notable increase from the previous year, bolstered by a recent cut in the Federal Reserve Bank's benchmark rate—the first since 2020.
Despite the uptick in sales, property values continue to decline from previous years and remain significantly lower than pre-pandemic levels. Rental rates for apartments are slowly increasing but have not changed much year-over-year, still trailing behind pre-pandemic figures. The office-building sector is struggling, with vacancy rates climbing and office attendance staying near historic lows, significantly impacting apartment demand and rent rates. As of early October, the market had 77 such buildings listed without offers, reflecting continued challenges in the real estate sector.
San Francisco 5+ Unit Multi-Family Building Market Dynamics for Q3 2024
The absorption rate, a key indicator of market demand relative to available property supply, decreased in Q3 2024 from the previous quarter, aligning with typical seasonal patterns. However, it remained considerably higher than the rates observed in Q3 of 2023 and 2022, indicating more robust market activity this year.
This analysis is based on sales data provided by SFARMLS and is intended to offer insights into the current state of the market. Please note that while the data is deemed reliable, it may include inaccuracies and is subject to change upon reporting new information. Additionally, not all properties are listed or sold through MLS, which could affect the comprehensiveness of these findings. All provided figures should be regarded as approximations.
San Francisco 5+ Unit Apartment Building Cap Rates (2010-2024)
The capitalization rates, which reflect the return on investment for properties purchased in cash, have rapidly increased since mid-2022. The data for 2024, calculated from sales within the first three quarters, is preliminary and should be considered an approximation until the entire year's data is finalized.
Cap rate calculations are dependent on the accuracy of the income and expense information provided by listing agents and can vary significantly. The data is considered reliable but may include errors and is open to revision. Sales that could skew the average have been selectively removed from the analysis to provide a clearer picture of the market trends.
San Francisco 5+ Unit Apartment Sales: Average Price per Unit in 2024
The average price per unit for apartment buildings with five or more units in San Francisco has been preliminarily calculated based on sales data from the first three quarters of 2024. While this metric provides a general view of market trends, it should be treated as provisional until the data for the entire year is available.
It's important to note that this average price per unit may only accurately reflect the specifics of any individual property with a detailed comparative market analysis due to the diverse characteristics and locations of the buildings sold. The data, sourced from reliable but not infallible systems, may include occasional errors and is often adjusted to exclude sales considered outliers. Thus, while applicable for broad market assessments, the figures should be interpreted as general estimates that provide a baseline understanding of the market dynamics rather than precise investment guidance.
San Francisco Multi-Family Building Market Analysis: 12-Month Overview by Realtor District
This analysis provides an overview of the multi-family property market across various San Francisco districts over the last 12 months, as the NorCal MLS Alliance reported by late September 2024. Each district showcases metrics such as median sales price, price per square foot, number of units, building size, gross rent multiple (GRM), capitalization rate (Cap Rate), and median days on the market. The data emphasizes the variability in real estate values across the city and underlines the necessity of a specific comparative market analysis to fully understand any property's value.
For example, properties in Pacific & Presidio Heights, Cow Hollow & Marina (District 7) recorded a median sales price of $4,036,500, with a price per square foot of $495, and typically featured 6 units averaging 7517 square feet. These buildings had a median GRM of 11.6 and a Cap Rate of 5.7, staying on the market for an average of 40 days.
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