San Francisco multifamily, Q3 2026

Rents and vacancy

Rents in San Francisco kept climbing through the third quarter, and vacancy stayed near its lowest level in a decade. The rent figures in the table differ because each one measures something slightly different (asking rents, effective rents, or averages across all units), but every one of them points the same way: double-digit annual growth.

Most of the rent growth is concentrated Downtown (up 25.3% year-over-year) and in SoMa (up 20.1%). By building quality, luxury product (4 and 5 star) is up 17.9%, mid-tier (3 star) is up 11.7%, and older, lower-tier buildings (1 and 2 star) are up 4.5%.

Net absorption turned negative in the third quarter and vacancy rose 59 basis points. Vacancy is still very low by historical standards. New supply remains thin, with fewer than 1,000 market-rate units breaking ground over the past 12 months.

2 to 4 unit buildings

Over the past 12 months, the most active areas for 2-4 unit buildings were the Richmond District and Lake Street, Noe, Eureka and Cole Valleys, and Russian Hill, Nob Hill, and Telegraph Hill.

For context, in the first edition of this report (spring 2026) I showed year-to-date median prices of $1.95 million for 2-unit buildings ($784 per square foot) and $2.18 million for 3-4 unit buildings ($604 per square foot). Buildings with 2 to 4 units continue to price at a higher per-square-foot rate than buildings with 5 or more units, which I read as a sign of steady owner-user and individual-investor demand.

5 or more unit buildings

In many price ranges, 5-9 unit buildings account for most of the transactions, while buildings with more units take a bigger share at the higher price points. Over the past 12 months, the most buildings sold in Noe, Eureka and Cole Valleys, followed by the Inner Mission, Bernal and SoMa, and the Richmond District and Lake Street.

Cap rates in San Francisco averaged about 4.8% in Q3 2026 and have compressed for two quarters running. The latest figures I have by building size are from Q1 2026: a 5.9% average cap rate for 5+ unit buildings, a gross rent multiplier of 11.7x, and roughly $366,000 per unit for 5-9 unit buildings. Days on market ranged from 40 to 147 depending on neighborhood.

Investment sales

Dollar volume and building counts are telling two different stories, which happens when you measure different slices of the market. Multifamily investment sales in San Francisco totaled $1.28 billion in the first half of 2026, down about 18% from $1.56 billion in the first half of 2025, though still historically elevated. A separate Q3 figure of $1.46 billion across 123 deals does not specify the period it covers, so I would not compare it directly to the first-half number. Meanwhile, the number of buildings sold in Q2 2026 is up 49% for 2-4 unit buildings and 70% for 5+ unit buildings year-over-year.

What is driving demand

Tech and AI hiring, which is bringing high-paying jobs back into the city, is the most commonly cited driver of the current run of rent growth, and it shows up in where rents are rising fastest: Downtown and SoMa, and the luxury end of the market. On the supply side, very little new housing is being built, with fewer than 1,000 market-rate units breaking ground over the past 12 months. That leaves existing buildings to absorb most of the demand.

What this means for owners and buyers

Owners. Rents are rising at double-digit rates, vacancy is low, and buyer demand is visible in the count of sales. Pricing is not rising as fast as rents, which means buildings with rents well below market, or with vacant units, deserve a careful look at what the income is worth under different assumptions before you decide when to sell. A unit-by-unit valuation is more useful than a citywide average.

Buyers. Competition is real in both segments. In Q2, the average 2-4 unit building sold for 109% of list price, and 58% of active 2-4 unit listings went into contract. Days on market in the most recent published data ranged from 40 to 147 depending on neighborhood, so local knowledge matters more than citywide averages. Underwriting should be based on in-place income, with rent growth treated as upside, not as the base case.

Both sides. Citywide medians blend very different buildings. Two buildings on the same block can price differently based on unit mix, in-place rents, condition, and potential to add units. A valuation built from comparable San Francisco sales will be more reliable than a regional figure.

If you are thinking about buying or selling and would like these numbers applied to a specific building, request a free valuation or email me.

Sources

• CBRE, Bay Area Multifamily Figures Q3 2026, published October 23, 2026.
• NAI NorCal, San Francisco October 2026 Report, using CoStar Group data.
• San Francisco apartment building market reports for the 5+ unit and 2-4 unit segments (MLS-reported sales), published October 1, 2026 (Q2 2026 data) and April 2026 (Q1 2026 data).
• Matthews, San Francisco, CA Multifamily Market Report Q3 2026.
• CoStar, San Francisco multifamily investment sales stay elevated in the first half of 2026, August 7, 2026.

All data is specific to the City and County of San Francisco. Figures reflect third-party market research current as of publication and are provided for general informational purposes only. They are not investment, legal, or tax advice. Consult the appropriate professional before making a real estate decision. Published as the second edition of a report Matt Campana updates roughly every four months. The next edition is expected in early 2027.