Market Market Update &
Rental Survey

Q3 FALL 2026

MARIN MARKET UPDATE AND RENTAL SURVEY

Celebrating decades in Marin’s Apartment Market
For more than four decades, Michael Burke has specialized in selling residential income properties in Marin County—one of the few agents to focus exclusively on this unique market. In 2021, he was officially joined by his wife, Pamela Burke, a long-time behind-the-scenes collaborator and now a licensed agent. Together, they lead the field in representing duplexes, fourplexes, and apartment complexes across Marin.

Selling income property isn’t the same as selling a single-family home. It demands expertise in tax-deferred strategies, income analysis, lease review, tenant relations, and tactful showings. Whether it’s a two-unit duplex or a 30-unit apartment building, you need a specialist with decades of proven results.

Rental Market Overview
According to the Summer 2026 CoStar Survey, Marin County’s average apartment rent stands at $3,042 per month, reflecting a 4.1% year-over-year increase and a 5.4% increase over the past two years. After largely plateauing in 2024, rents increased modestly in 2025, generally in line with inflation, and then jumped in 2026. Vacancy trends indicate the potential for continued, though measured, rent growth.

A balanced rental market typically reflects a 5.0% vacancy rate. Marin’s vacancy rate has declined to 4.3%, down from 5.0% in mid-2023. This tightening of available units places upward pressure on rents. CoStar projects average rents will reach $3,339 by 2030, representing an 14% increase, or approximately 2.9% annually.

Interest Rates and Property Values
Interest rates have experienced significant cycles over the past two decades. After peaking near 8% in 2007 and contributing to the 2008 recession, the Prime Rate declined sharply to 3.25% in 2009. It remained near that level through 2016, briefly rose, and then returned to 3.25% by 2021. Beginning in late 2022, rates increased rapidly, reaching a high of 8.50% in 2023. The current Prime Rate is 6.75%.

Apartment valuations are closely tied to interest rates. When rates are low, returns on alternative investments such as Treasury Bills are also lower, which reduces required returns on real estate. This results in lower capitalization (CAP) rates and higher property values. Conversely, higher interest rates lead investors to seek higher returns, increasing CAP rates and lowering valuations.

For example, a building generating $100,000 in net operating income would be valued at $2,500,000 with a 4% CAP rate, but only $2,000,000 at a 5% CAP rate.

Prior to 2007, the market operated in a higher interest rate environment with correspondingly higher CAP rates and lower gross rent multipliers. As rates declined over the following years, valuations rose and peaked around 2021. Today’s market more closely resembles the pre-2007 environment. While valuations have declined, rising rents have helped offset some of that impact through increased net operating income. At the same time, operating expenses—particularly insurance—have increased.

Owners who purchased properties between 2020 and 2022 may find that their buildings have not appreciated and, in some cases, may have declined in value.
As these market conditions have become better understood, sales activity has increased, though at prices below prior peaks. We are seeing renewed momentum as buyers and sellers adjust expectations. Please feel free to call for a complimentary evaluation of your building in today’s market.

Market Activity and Valuations
In 2025, there were 36 sales of apartment buildings with four or more units, consistent with historical averages and similar to last year’s activity. This represents a significant increase from 2023. Sales of two- and three-unit properties were also strong, ahead of last year’s levels and well ahead of 2023. 2026 is on track to equal or exceed 2025 sales.

Valuation changes have not occurred abruptly but have evolved over several years. Declining interest rates and rapidly rising rents drove values upward, peaking around 2021. Today, with higher interest rates and more moderate rent growth, valuations have returned to pre-COVID levels, representing a more balanced and sustainable market. Prices remain higher than earlier periods due to overall rent growth, but valuation metrics such as CAP rates and Gross Rent Multipliers (GRMs) have normalized.

Many properties currently sitting unsold are priced based on outdated 2021 expectations rather than today’s market realities.

Notable Sales
A unique series of transactions has disrupted Marin's mid-size apartment market.
In the years leading up to 2020, Professional Financial Investors (PFI) acquired approximately 40 Marin apartment properties, often paying prices that many in the industry considered above market. Following the death of the company's principal, PFI collapsed amid the discovery of a Ponzi scheme, and the properties ultimately entered bankruptcy.

The portfolio was subsequently sold in bulk to Hamilton Zanze (HZ). HZ initially sold some of the smaller properties while retaining the larger buildings. Over the past two years, however, HZ decided to sell most, if not all, of its remaining Marin holdings.
Rather than marketing the properties individually, HZ generally offered them in groups of three to six buildings. Several of these portfolio sales closed in 2026 at prices well below what we would normally expect for comparable properties sold individually. In fact, some of those same buildings are already back on the market at substantially higher asking prices.

These bulk transactions have temporarily distorted Marin's apartment sales data and should be viewed carefully when evaluating comparable sales or property values.
With most of the HZ portfolio sales now behind us, we expect the market to provide a clearer picture of true individual property values moving forward.

CAP Rates and Valuation Metrics
We are currently operating in a 5% CAP rate environment, compared to the approximately 4% environment leading into 2021. Smaller properties and those in premium locations may trade at lower CAP rates, while larger buildings typically command higher rates.

CAP rates are calculated by determining net income after deducting expenses a new buyer would incur, including updated taxes, insurance, repair allowances, a vacancy factor of 3–5%, and a management allowance of approximately 5%. Dividing this net income by the purchase price yields the CAP rate. Alternatively, dividing net income by 0.05 provides an estimate of value at a 5% CAP rate.

A simpler valuation method is the Gross Rent Multiplier (GRM), where a GRM of approximately 12.5 generally corresponds to a 5% CAP rate.

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Property Management
Several sales this year have highlighted an issue that can become costly for apartment owners: property problems that go unnoticed until it is time to sell.

Most properties are thoroughly inspected when they are purchased. However, buildings change over time. Regular property inspections by management can identify deferred maintenance, water intrusion, non-functioning appliances, tenant-related issues, and other concerns before they become larger—and potentially more expensive—problems.

Unfortunately, we frequently find that these inspections have not been carried out. When the property is eventually placed on the market, the buyer's inspection may uncover issues the owner didn't know existed. Discovering them during a sale can affect negotiations, create unexpected repair requests, and, in some cases, affect the price a buyer is willing to pay.

We recommend asking your property manager what inspections are performed and how often.

It is also worth reviewing your management agreement before selling. Some companies charge additional fees for inspections, supervising repairs, coordinating access or assisting with showings.

When we list an occupied apartment property, our team handles tenant coordination, showings and sale-related inspections directly. This minimizes disruption to tenants, avoids unnecessary delays, and helps prevent owners from incurring management fees for services already included in our sales process.

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Preparing Your Building for Sale
In most cases, we do not recommend extensive repairs or renovations prior to selling, as many improvements are better left to the new owner. Basic landscaping and minor enhancements that improve curb appeal are worthwhile exceptions.

In today’s market, however, two items should be addressed before listing. First is the required deck inspection (SB-721), which was due by January 1, 2026. Lenders are now requesting inspection reports and clearance documentation. Second, electrical panels located inside apartments should be reviewed. Panels manufactured by Zinsco, Sylvania, Challenger, or Federal Pacific may be uninsurable, which can delay or prevent a sale. Replacing these panels prior to marketing is strongly advised, with typical costs ranging from $1,500 to $2,500 per panel.

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Final Thought
Marin’s income property market continues to show strength and resilience—even amid rising regulations and elevated interest rates. Whether you’re evaluating, selling, or just staying informed, we’re here to help.
Michael & Pamela Burke
Top Producing Agents – Marin Apartment Market
[email protected] | MarinApartments.com