San Francisco’s multifamily sector roared back to life in 2025, delivering the highest transaction volume in years and signaling renewed investor confidence. In the 5-plus-unit segment, sales jumped 28.7 percent to 202 buildings — the most trades since 2005 — while contracts climbed 28.1 percent, reflecting aggressive demand amid tightening supply. Two-to-four-unit buildings also rebounded meaningfully, with contracts up 17.4 percent and closed sales up 18.0 percent, as investors capitalized on stabilizing values and improving cash flow.
Pricing remained disciplined as activity accelerated. In the 2–4 unit segment, the median sales price dipped slightly, but underlying value metrics strengthened, with median price per unit rising 6.3 percent and price per square foot increasing 1.5 percent. Sellers continued to perform well, receiving 102.5 percent of list price on average, with nearly 45 percent of buildings selling over asking. In the 5-plus-unit segment, median price per unit increased 4.9 percent, and faster absorption reflected growing competition despite modest adjustments in price per square foot.
Rising rents were a major catalyst throughout the year, materially improving income projections and underwriting assumptions. Strong demand driven by the city’s AI-led tech resurgence and increased office attendance pushed rents higher, reinforcing investor confidence and supporting higher valuations across both small and large multifamily assets.
Lower mortgage rates and improving capital markets sentiment helped bring sidelined capital back into the market in the second half of the year. Combined with limited supply and strengthening rental fundamentals, these conditions marked 2025 as a clear turning point for San Francisco’s multifamily sector. Heading into 2026, the market appears well-positioned for continued momentum, particularly for well-located, income-producing properties.
