In this YouTube video, Austin Klar—formerly a lawyer and now a San Francisco real‑estate agent—provides a detailed market analysis of the city’s multifamily sector. He begins by highlighting that San Francisco’s rents have surged past New York’s, with annual rent growth exceeding 15% in 2026, making the market extremely lucrative for owners and investors. Klar then recounts the pandemic‑driven collapse (2020‑2023), describing how remote work, rising crime, homelessness, and soaring interest rates caused vacancy to spike, rents to fall, and sales activity to plunge (22% fewer sales, 17% lower average sale price, 10% drop in price per square foot). He shifts to the turnaround, attributing it to several simultaneous factors: a sharp decline in crime and unsheltered homelessness, improving retail and tourism, a strong rebound in office visitation (the nation’s biggest YoY gain), and a massive AI‑industry boom centered in San Francisco that is driving high‑earning talent back to the city. These forces have pushed vacancy down to record lows, lifted average rents by over 9% year‑over‑year (one‑bedrooms now ~$4,000, two‑bedrooms ~$5,500), and revived buyer demand. Klar then presents current quantitative data, splitting it into two market segments. For 2‑4‑unit properties, Q1 2026 median sale price hit $2 million (+21% YoY), price per square foot $700 (+18%), 59% sold above list, and days on market fell to 17. For 5+‑unit assets, median price reached $2.6 million (+10.5%), price per square foot $432 (+10%), average cap rate slipped to 5.9% (down from 6.21%), and 36% sold above list. Both segments show faster sales and higher prices. Finally, Klar interprets these trends for owners and prospective investors: existing owners should reassess valuations as they have risen sharply; investors face a narrowing window of distressed‑price opportunities but still have upside as rents and demand are expected to keep climbing, driven by the structural forces of office return, city‑wide improvements, and the AI hiring surge. He concludes with a call to action, offering his services, newsletter, and related videos. Overall, the video argues that San Francisco’s multifamily market has undergone a dramatic 180‑degree reversal and is poised for continued strength.
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Surging rents have lifted San Francisco above New York as the most expensive city to rent in the entire country. At a time when rent growth rates are pretty much stagnant across the country, annual growth rates in San Francisco have surpassed 15% year over year. And that's before most liquidity boom we're about to experience in our market. If you're a renter, that's genuinely brutal news. But if you own a multifamily building in San Francisco, or you're looking to invest in San Francisco, the data that I'm going to go over in this video should make you very happy. This is Austin Klar, your lawyer turned real estate agent in San Francisco., and so far 2026 has produced some of the strongest numbers in the multifamily market that we've seen since before the pandemic. And in this video, I'm breaking down the collapse and comeback story of San Francisco's multifamily market over the past several years. I'm going to cover what happened to this market during and after the pandemic, the city conditions that have changed the investment calculus entirely, and how those changes are directly impacting our multifamily market. So whether you own income property here or you're thinking about selling it, you're thinking about investing in one, this video has the roadmap of where the market stands today. So let's get right to it and start with the factors that led to the multifamily collapse starting in 2020. To understand how good things are right now in the multifamily space, you have to go back and look at how bad things got. San Francisco entered 2020 as one of the tightest rental markets in the country. Vacancy rates were historically low, rents were at or near then all-time highs, and multifamily buildings were trading at premium prices because investors believed the fundamentals were near bulletproof. You had a constrained housing supply, a growing population, growing tech workforce, a burgeoning nightlife and restaurant and retail scene, and you just had a city that genuinely people wanted to be in. It was as close to a guarantee as income property can give you. That was until COVID hit, and the change in city dynamics was probably more stark here than any major metropolitan area in the country. The shift to remote work decimated the logic that made San Francisco real estate so valuable. When you can work from anywhere, why would you pay $3,500+ a month for a studio if you could get an entire house a bunch of land in like Austin or Denver for the same price, especially when you looked around you and you saw city conditions deteriorate with, you know, retail shops closing, restaurants closing, rising crime, rising homelessness, rising drug overdoses, all of that. And tens of thousands of people answered that question by leaving San Francisco. The city lost about 10% of its population within a year of the pandemic. What made the city such a great place to live? Its proximity to restaurants, shopping, bars and just an overall walkable, clean, safe area basically waned overnight with fewer people needing to move here or wanting to move here. Landlords who had never offered a concession in their lives were suddenly dangling months of free rent and any other concessions they could think of just to fill units. And to make matters worse, in 2022, interest rates skyrocketed at a very rapid pace and rents were still falling. Construction costs also surged at the same time. Rampant inflation. So these deals, multifamily deals became way harder to underwrite. Cap rates expanded. Ended, operating income fell. The multifamily market in San Francisco basically went from frenzy to freeze for a few years across all different real estate sectors. The city was in a genuine crisis of confidence, and it extended into the multifamily market. Between 2019 and 2023, the number of multifamily sales in the city dropped by over 22%. The average sale price dropped by over 17%. Price per foot dropped over 10%, and the typical multifamily property was taking over 2 months to sell. Everybody wrote San Francisco off as dead and never coming back. But if you look at what's happening today. Not only is there a comeback, it's a complete 180, and it's getting stronger. Before I get into what's changed and the actual numbers, if you do me a huge favor, if you like videos about San Francisco real estate, lifestyle, current events, new developments, or its incredible history, subscribe to my channel because I make videos about that stuff every single week. And if you're thinking about buying or selling multifamily property or any other property type in San Francisco and you have questions about how all the changes that we're seeing are impacting our local market, reach out to me. I was a lawyer at one of the biggest law firms in the world before getting into real estate, and I've helped numerous people relocate here from all over the country. Happy to be a resource for you. My contact info is in the description below. Reach out anytime. Now back to how San Francisco did a complete 180 and the impact it had on the multifamily space. So what turned things around? Well, there are a few things that happened simultaneously that completely changed the script. First, the city itself stabilized and started genuinely improving. Crime, which had been a major headline issue, is now at multi-decade lows, both violent and nonviolent crime. You can go to the San Francisco Crime Dashboard at the SFPD's website, look at the data for yourself. It is staggering how much it's dropped. Unsheltered homelessness Homelessness numbers have been declining. The mayor's office just released the most recent encampment count, and it was at the lowest level on record. Retail, while it's still recovering, has been improving. According to Cushman Wakefield, the overall vacancy rate declined to 6.3%, down 20 basis points from 6.5% last quarter and down 70 basis points from 7% a year ago. Convention traffic is back, and both recreational and business tourism are expected to be so strong this year that visitorship and spending are expected to be at record highs after years of declines between 2020 and 2023. Specifically, San Francisco Travel projects 24.2 million visitors in San Francisco this year, and they're expected to spend about $9.9 billion, up from the 2019 record of $9.6 billion. So the city overall is becoming a much more desirable, much cleaner, much safer place to live. More restaurants, more shopping, more nightlife, more things to do. Return to office is the second big driver. The era of fully remote work is largely over for industries that drive San Francisco. Companies are bringing workers back, some hybrid, some full time, but the direction generally is clear— less remote work. In fact, San Francisco had the nation's strongest year-over-year gain in office visitorship, according to analytics company PlasserAI, up 8.2% year over year. That means people who left San Francisco but kept their jobs during the pandemic are now starting to come back because they have to or because they want to. And people taking new jobs at companies are being forced to be here because they have to be in the office at least part-time. And those people are showing up looking for housing. So not only is the city a better place to live, people genuinely want to spend more time here, but in many cases they have to spend more time here. And when that happens, obviously more people look for places to live. And then there's AI, and that's driving everything right now. Unlike the last major tech cycle, which was centered in Silicon Valley, the AI industry has planted its flag firmly in San Francisco. OpenAI, Anthropic, and many other AI startups have made San Francisco their flagship, and they are signing massive office leases left and right. The financial District and Mission Bay have seen the largest expansion from an office standpoint, capturing 71% of growth in Q1 of 2026. And office demand right now is above pre-pandemic levels. And there's also a massive amount of venture capital funding and incoming funds from forthcoming IPOs that are infusing these employees with a ton of cash. What does that mean for housing? It means a wave of high-earning workers flooding into a city that has not built enough housing to accommodate them. Nowhere close. These are people with income to pay whatever it takes to live they want to live close to work, and these companies are actively encouraging that proximity with their policies. Some AI startups are leasing entire floors of apartment buildings for their employees, others offering rent stipends of thousands of dollars or more if workers live within walking distance of the office. The result of all of this is a complete reversal in the rental market from several years ago. Vacancy, which peaked at the depth of the pandemic, has now fallen to record lows. The average apartment in San Francisco, according to CoStar, is renting for 9+% more than it was just a year ago. One-bedroom apartments are now running from $4,000 a month, median 2-bedroom, $5,500 a month, surpassing New York, making San Francisco the most expensive places to rent in the entire country. That is a wild turn of events for a city that just a few years ago people were writing off entirely. And for multifamily investors, the implications are massive. Higher rents means higher NOI. Higher NOI means higher building values. And that becomes especially more attractive if interest rates start to fall even further. They're down slightly from where they were just a year ago. Now let's get into the actual data of what it means for multifamily buildings.. And I'm going to split this into two categories, the 2 to 4 unit market and then the 5+ unit sector, because they are a little different in terms of the buyer pool, the investor pool, and they behave somewhat differently as a result. Let's start with the smaller buildings, the 2 to 4 unit buildings, which just posted their strongest quarter since spring of 2022, right before interest rates started rising. The median sale price for 2 to 4 unit buildings in Q1 2026 came in at just over $2 million, and that's up over 21% compared to Q1 of 2025. That's a huge move.. We haven't seen appreciation like that in this segment since before the pandemic. Price per square foot jumped as well, over $700 a foot, up 18% year over year. These buildings are selling on average for about 20% more than what they're listed at. 59% are trading above list price compared to 45% a year ago. Days on market dropped from 22 days in Q1 of 2025 to just 17 days in Q1 of 2026. So not only are these buildings selling for a lot more money, they're moving faster. And the percentage of listings accepting offers, around 32%, was the highest Q1 absorption rate we've seen again since early 2022, right before interest rates started rising. Sales volumes have also steadily risen each of the past 3 years. It's directly correlated with overall improvements in city conditions, with rising rents, with falling office vacancies, falling crime, falling homelessness, all of that. As more investment opportunities start to pencil,, you'll start to see pricing move, demand move. It's just simple math when it comes to these types of properties. And you're starting to see similar trends in the 5+ unit market, which is where the heavy hitters and institutional investors play. The 5+ unit segment just recorded its highest first quarter sales total since 2018, and 2025 saw the highest annual sales volume in the past 15 years. Median sale price for these buildings was over $2.6 million, up 10.5% year over year. Price per square foot was around $432, up 10% as well. The average cap rate came in at 5.9% in Q1 of 2026, down from 6.21% in Q1 of 2025. And nearly 36% of these buildings sold over list in Q1 of 2026 compared to just 12% a year ago. So there's a real shift in the demand dynamics in this segment of the market. So let me bring it all together and tell you what this means if you're a current owner or you're looking to invest in buildings like this. If you own a multifamily building in San Francisco, particularly if you bought it years ago and have watched the market stagnate during the pandemic years, you need to be paying attention to what's happening right now. Values are up meaningfully, and the dynamics that are happening in the city right now suggest that values are going to keep climbing. Competition among buyers is going to intensify and grow. The bid over ask dynamic that used to be reserved for single-family homes and premium condos is now becoming more prominent in the multifamily space. Valuations that you received even just a year ago are outdated and need to be updated. If you're an investor looking to buy, the window of opportunity that existed a year or two ago when buildings were trading at distressed or near-distressed prices and higher cap rates, that window is narrowing, but it hasn't closed if you believe in the future trajectory of the city. Pricing has moved a lot, but there's more room to move as rents can continue rising. The structural drivers of demand like return to office, improving city conditions, and all that's going on, AI, are going to keep keep price movement up. They're going to keep demand up. They're going to keep pressure up. As more people come to the city where we don't have enough housing to meet demand, it's going to put upward pressure on pricing and building values. So there's still room to grow even though things have moved meaningfully in the past year. It's definitely a tough market to buy in, don't get me wrong, but it could get tougher. It really is a remarkable reversal in the market over such a short time period. The pandemic almost broke it, but the AI boom and all the great things our mayor is doing and all the great things happening in our city have turned the course. Q1 2026 is about as strong as a quarter of we've seen in this sector of the market in many years, but the dynamics in the city right now suggest it could get even stronger. If you own a building and want to know what it's worth in today's market, or if you're an investor wanting to know where opportunities exist and how to navigate tenant issues and the regulations in San Francisco that apply to some of these buildings, reach out to me. I've lived in San Francisco for almost 14 years, and I've helped people on both sides of these transactions, buy side and sell side, all over the city. Happy to be a resource for you. I'll put my contact info in the description below. Reach out anytime. And if you like videos about San Francisco real estate, lifestyle, current events, new developments, or its incredible history, subscribe to my channel because I make videos about that stuff every single week. And if you want some of the best headlines delivered directly to your inbox about San Francisco, I've got a newsletter that accomplishes just that. The link to subscribe is also in the description below. And if you want a breakdown of what's going on in the luxury condo market or our single-family market, I've got a separate video on that that I'll link in the description below as well. Go check it out. I hope you enjoyed the video, and I'll see you in the next one.
