San Francisco, CA Multifamily Market Report Q2 2026
San Francisco’s AI Boom Fuels the Nation’s Fastest Rent Growth
Demand
No market is running hotter than San Francisco. Rent surged to $3,562 in Q2, up 11.76% YoY. This is nearly double the pace of San Jose, the next-fastest major market nationally as AI-sector hiring pulls highincome renters back into the city faster than landlords can raise rates. Vacancy fell to 3.78%, down 97bps YoY and the tightest reading in a quarter-century, even though net absorption of just 197 units was modest by any normal standard. When a market has almost no new supply to lease up, it doesn’t take much absorption to move vacancy this much. San Francisco’s tightness right now is a supply story as much as a demand one.
Supply
Completions have been zero in back-to-back quarters, and trailing-twelve-month deliveries have collapsed 57.4% to just 676 units. Roughly 20,000 entitled units reportedly sit stalled because the financing math doesn’t pencil at today’s construction costs and interest rates, even with rents this strong. There are small signs of life, with units under construction climbing for five straight quarters to 3,777 (1.97% of inventory) but at this pace, new supply isn’t likely to meaningfully compete with existing inventory for years.
Investment Market
Capital is taking notice of San Francisco’s growth. The TTM volume climbed 8.0% to $3.6B, and Q2’s $1.5B was up 74.7% YoY, the strongest single quarter in this stretch of data.
Cap rates have inched up to 4.82%, reportedly the highest level for San Francisco since 2011, a real shift after years of compression.
Volume
- $3.6B TTM volume (+8% YoY)
- Q2 2026: $1.5B (+75% YoY)
- Capital calling SF the topconviction U.S. market
Pricing
- Cap rate 4.82%
- Price per unit $444k
- Rent growth the fastest of any market (+11.8% YoY)
