Q1 2026 San Francisco Multifamily Report
The San Francisco multifamily market moderated in transaction activity during the first quarter of 2026 following robust performance in Q4 2025.
Key market indicators reflect:
• Absorption moderated in Q1 2026 versus Q4 last-three-month sales absorbed 42% of current 10+ unit inventory (13 of 31 active listings), down from 87% in Q4 (26 of 30 active); for 5-9 unit properties, absorption decreased to 48% (29 of 60 active) from 75% in Q4 (42 of 56 active).
• Sales velocity decreased with 13 properties of 10+ units sold in the last three months (down from 26 in Q4 2025) and 29 properties of 5-9 units sold (down from 42).
• Effective rents continued their quarter-over-quarter growth amid persistently low vacancy levels.
• Cap rates remained competitive with several districts averaging in the low- to mid-5% range and $/SF values stable in high-demand areas.
On the ground, LL CRE observed an overall decrease in sales due to the lack of quality listings and motivated Sellers. Sellers continue to try to test pricing as rents and vacancy have firmed over the preceding quarters.
Looking ahead, LL CRE maintains a positive outlook for the San Francisco multifamily sector and anticipates healthy transaction velocity and incremental cap rate compression. Quality and well priced assets will continue to be absorbed quickly.
District-by-District Analysis | Q1 2026 Average/Total
Cap Rate | $/SF | Total Transactions - 5+Unit Multifamily Properties - Source: SFAR MLS
District-by-District Analysis | Trailing Twelve Month Average/Total
Cap Rate | $/SF | Total Transactions - 5+Unit Multifamily Properties - Source: SFAR MLS
Transaction Volume and Active Listings
5+ Unit Properties - Sales Volume
5+ Unit Properties - Average $/SF | Cap Rate | GRM
Multifamily Vacancy Rate & Average Asking Rents
Federal Funds Rate, 30-Year Mortgage Rate,
5-Year Treasury, and 25-Year SBA504 Loan Rate
This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass and LL CRE Group disclaim any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass/ LL CRE Group does not provide such advice. All opinions are subject to change without notice. Compass and LL CRE Group makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.