The multi-family investment market in the Central Valley has slowed significantly from its peak just a few years ago. This year has seen only 47 transactions, 56% fewer than the 107 transactions recorded during the same period in 2018.
Despite the sharp decline in deal velocity, average CAP rates today are very similar to those in 2018: 6.00% in the first three quarters of this year compared to 6.26% in 2018.
A significant rise in the 10-year Treasury yield has reshaped the investment landscape. The median yield increased from 2.78% in 2018 to 4.03% in 2024—a 125 basis point jump. This has compressed the spread between CAP rates and Treasury yields, reducing transaction activity.
The spread between CAP rates and Treasury yields shrank from 348 basis points in 2018 to 197 basis points in 2024, a 151-basis point reduction. This has two key impacts:
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