Q4 2023 San Francisco Multifamily Report
The 2024 outlook for San Francisco Multifamily is filled with promising signs.
San Francisco Multifamily Ends the Year on a High Note Despite Obstacles
2023 marks a year where San Francisco’s multifamily market has been challenged by tightening lending conditions, low office attendance, and unrest over homelessness and crime. Yet, there are many promising signs of growth and recovery. Federal Reserve interest rates have plateaued with consensus of rates lowering in 2024, retail employment in the city is up year-over-year, and neighborhood commercial corridor vacancy has decreased. APEC conference showed the world that a clean and safe San Francisco was possible and the multifamily market has reflected this optimism. Sales velocity has seen steady growth in Q2-Q4 and rents have recovered to pre-pandemic levels.
District-by-District Analysis - Trailing Twelve Month Average/Total as of 12/31/2023
Cap Rate | $/SF | Total Transactions - 5+Unit Multifamily Properties - Source: SFAR MLS
At the end of 2023, we saw cap rates decompress to 5.9% in correlation to the Federal Fund Rate of 5.3%. Transaction velocity decreased with the defaulting of several regional banks, which tightened lending for several months. However, rents have remained strong as home-buyers have been priced out and are forced to rent. Strong rents in combination with falling interest rates increased sales volume in Q3 and Q4. Market sentiment is positive and well-priced real estate continues to sell. LL CRE is optimistic for 2024 and we expect sales volume to return to pre-pandemic levels.
Cap Rates, $/SF, and GRM, 5+ Unit Properties
Multifamily Vacancy Rate & Asking Rents
Transaction Volume and Active Listings
Federal Funds Rate, 30-Year Mortgage Rate, 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.
Contact us for more market information or multifamily investment portfolio consultation
Brian Leung
Senior Vice President
Lic. 01203473
415 278 7838
Brian@LL-CRE.com
Jeremy Lee
Senior Vice President
Lic. 01951309
415 988 9719
Jeremy@LL-CRE.com
Carla Pecoraro
Associate
Lic. 02019669
415 312 8901
Carla@LL-CRE.com
Chris Leung
Associate
Lic. 02194279
415 828 9108
Chris@LL-CRE.com