Multifamily Transaction Activity Gains Momentum in Central Valley

The Central Valley’s multifamily market showed signs of modest strengthening during third quarter. Vacancies inched lower for the first time in more than a year, and rents posted a minimal quarterly gain. This improvement occurred during a period where competition from new supply has been elevated. Deliveries to this point in 2025 have totaled nearly 2,200 units, the region’s highest annual total in at least the past 25 years. While developers have been gradually adding units to local inventories for the past several years, the period of heightened deliveries is coming to a close. Fewer than 1,000 units are currently under construction—representing about 1% of total existing inventory—and multifamily permitting is particularly light. While operational performance has been healthy across the region in 2025, Madera County has led the way, posting the tightest vacancy and highest rent gains.

Sales activity in the Central Valley has accelerated in recent months, although total dollar volume remains below the region’s short- and long-term averages. This reflects a clear shift in deal composition, with the average transaction size falling approximately 35% from 2024 to just 91 units. In addition to being concentrated in smaller properties, investment activity has also been occurring among older assets. Nearly all of the deals that have closed to this point in the year have been concentrated in pre-1990s vintages, after newer properties accounted for about one-third of the transaction counts in 2024. Geographically, Fresno County captured nearly half of all transactions, while Kern County saw increased trading of stabilized, low-vacancy assets. Despite this concentration on smaller, older properties, per-unit pricing has pushed higher. The median price to this point in 2025 is up to $147,800 per unit.

Looking ahead

Despite facing the highest volume of new deliveries in over a decade, operational conditions in the Central Valley multifamily market are expected to remain broadly stable. With more than 2,000 units anticipated to deliver by the end of 2025, this new supply may push the regional vacancy rate slightly higher. However, much of this inventory is expected to be absorbed by renter demand, anchored by the region’s critical logistics sectors and supported by economic diversity. Local momentum is highlighted by Gimme Health Foods Inc.’s plan to establish a manufacturing facility in Madera as part of a $20 million investment. This is reinforced by broader statewide support, including an initiative of nearly $100 million dedicated to accelerating California’s manufacturing industry and driving job creation.

Multifamily investment activity in the Central Valley should continue to strengthen in the fourth quarter. Anticipated declines in interest rates and a narrowing expectations gap between buyers and sellers should support the investment market. The current elevated supply of new units, while increasing competition among operators, also creates prime stabilization opportunities for investors to acquire new assets at competitive prices. Structurally low vacancies will continue to attract investment capital, particularly as buyers avoid markets where supply-side pressures have resulted in softer operating conditions. Counties along key trade corridors, especially San Joaquin, are likely to remain focal points for investment through year-end, with conditions projected to strengthen further as the construction pipeline normalizes heading into 2026.

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