We’re at an interesting intersection in the SF multi-family market. Similarly to the residential market, it’s red-hot due to lack of inventory, high demand, and strong appreciation.
Right now, the average for multi-family property is just above ~$529,000 per unit. Favorable interest rates for buyers and strong market rents continue to drive the apartment market appreciation. For sellers, this is one of the best possible times to sell in the history of San Francisco.
As we all know, the tenants in any given building drive the property’s market value. Although there’s been a slight dip in average rents per unit for Q3, occupancy rates have risen since Q1. It’s definitely a softer rental market compared with 2015, but this data tells us that we’re recovering from 2016. It will be interesting to see where occupancy rates land at the end of the year.
With high prices per unit, average cap rates for multi-family buildings remain low at 3.9%. Rates have been fluctuating since the end of 2015, so it’s too early to say if there are any meaningful tends at the moment.