Market Market Update &
Rental Survey



Michael Burke has specialized in selling Marin’s residential income property for 50 years. He is one of the few agents to limit his practice to this market segment. Michael’s wife Pamela, who has been assisting for years in the background, has joined Michael as an active licensed agent.

Income property sales require an expertise that not all agents have. Many sales involve tax-deferring techniques requiring more than a casual knowledge of tax laws and practice. Income and expense statements must be analyzed, leases must be reviewed, and tenant estoppels drawn. Showing an income property takes understanding and tact. One cannot tour agents and buyers through a rental property without risking a tenant uprising.

Whether you are selling a duplex or a large apartment complex, you deserve to have a specialist in Marin’s income properties representing you. Michael and Pam have been representing sellers for 50 years and are the top-producing agents in this field.

Disclaimer: The opinions expressed in this newsletter are those only of Michael and Pamela Burke, not necessarily those expressed by Golden Gate Sotheby’s International Realty.

Marin Rental Update

The latest CoStar Group rental survey shows that, in the first quarter of 2023, Marin’s average apartment rents are at $2,741 per month. This is down slightly from the previous first quarter 2021 rent of $2,810 by a modest 2.0%. After seeing rapidly rising prices between 2011 and 2019, rents settled into a moderate pattern of increase and flattening. The long-range forecast by CoStar predicted that rents would be flat this year and begin rising again in 2024 (more than 9% over the next four years or about 2.3% per year).

The vacancy rate remained relatively steady over most of the previous year or two and now has risen to the current level of 5.1%- up from 3.3% of a year ago. This level of vacancy rate supports the idea that rental rates will remain relatively steady this year before rising at a more moderate rate in the foreseeable future.

Marin Apartment Values

Marin duplexes are selling between 16-20 times their reasonable annual market income (GRM), 4-plexes at 14-18 GRM, small apartment buildings at 13-16 GRM, and mid-sized complexes at about 12-15 GRM. Premium locations will be at or above the upper end of this range, and inferior locations (or “problem properties”) will be at or below the lower end of the range. Cap rates are running between 4%-5%, depending upon the size and location of the property. Smaller premium properties will sell at, or for less than, a 4.0% rate.

Apartment Sales

2021 saw a 40.8% increase in the number of Duplex and Triplex sales, jumping from 98 sales in 2020 to 138 sales in 2021. 4+ unit sales also increased dramatically by about 81% from 21 sales in 2020 to 38 sales in 2021.

2022 sales have held at the same high level of 2021. There were a number of notable sales that year: The 455 unit Skylark Apartments in Larkspur sold early in the year for $300,000,000, the 40 unit Portofino Apartments in Sausalito for $20,750,000, and the 126 unit Lofts at Albert Park in San Rafael for $59,600,000. Two buildings in Terra Linda (93 units and 32 units) sold to a non-profit group. The 98 units at 400 Canal Street in San Rafael closed at $32,250,000. One 19-unit building at 10 Park St in Mill Valley sold in August for $400,000 over the asking price with six competing offers. (And yes, we represented the winning buyer.) There was also a year-end sale of two affordable housing apartment buildings in Novato, totaling 297 units for $131,500,000.

2023 so far has only one notable sale: The Sherwood Oaks complex of 80 units in Fairfax sold to an affordable housing group for $22,875,000. The level of sales activity is being only restrained by the lack of properties on the market.

Interest Rates

The current market is all about interest rates. We started 2022 with residential rates hovering around 3%. By mid-March, rates were up to 4% and broke through 5% in mid-April. We hit 6% on September 15 and 7% on October 20. Since then, rates have settled into a range of 5.50% - 6.50%. The effect of this on the marketplace has been somewhat dramatic, affecting mostly first-time entry-level buyers of single-family homes. At the beginning of the year, you might have qualified for an $800,000 house with a loan at 3%. Now you are struggling to qualify for a $700,000 house at 6%.

Interest rate hikes have not affected those buying residential income properties as much. For the most part, our loans are not 30-year fixed interest rate loans. They are more of a hybrid of 3-7 years fixed and then adjustable for the balance of 30 years. Yes, these rates are up as well, just not as dramatically as in the residential home world. Current rates are in the range of 5.5% - 6%

Rising interest rates affect income property pricing in a somewhat different way. The anticipated return one expects on a property increases as interest rates increase. If one can get a high rate of return on a safe 10-year Treasuring Bill, then the rate of return on one’s real estate investment must be equally higher. To achieve a higher return given the same income, the price must be reduced. So why are prices not falling? Offsetting these changes in expected rates of return are expected rising rents from an inflationary economy. To some extent, one off-sets the other.

These interest rate changes are a result of the actions of the Federal Reserve and its attempts to curb the worst inflation in decades. Higher interest rates are central banks’ primary tool for combating inflation.  Inflation, while starting to cool, is still far too high, and interest rates are predicted to rise further through the Federal Reserve. The yield on 10-year U.S. government bonds, which underpins borrowing costs across the globe, has risen about .75 percentage points this last year from around 2.75% a year ago to around 3.5% this year.

These changing rates have slowed the marketplace. Many investors are in a “wait and see” attitude. Others are jumping in to pick up on a slowing marketplace.

Apartment building loans are divided into two types: 2-4 units and 5+ units. 2-4 unit loans still enjoy a possible 30-year fixed rate term. 5+ unit loans have interest fixed for 3 -7 years then rates adjusting for the balance of the 30-year term. The 2-4 unit loans mirror the residential market. The 5+ unit loans are available on a 3-7 year fixed rate of around 5.5% – 6.0%. Call for a current quote as these are changing daily.

Statewide Rent Control

The Tenant Protection Act of 2019 (AB-1482) went into effect January 1, 2020. AB 1482 limits the amount that you can raise rents on existing tenants during any 12-month period. While you may raise rents up to two times a year, your total increase in any 12-month period cannot be more than 5% plus the April cost-of-living index. For the Bay Area, this cost-of-living index was 3.8% in 2021/22, allowing for a maximum annual rent increase of 8.8%. The index was updated last May for April 2022/23 at 5.0%, allowing 10% increases and the current cost-of-living index (April 2023) is 4.2% for 2023/24. The maximum allowable annual rent increase will be capped at 9.2% until the next index is published this month for April 2024.

Also included in this law are Just Cause Eviction protections for tenants. Tenants can only be evicted for a “Just Cause,” like non-payment of rent. An owner wanting to move into their unit is considered Just Cause. No longer can you vacate your duplex before putting it on the market for sale. This applies only to tenants in place for more than 12 months– a nice safety net.

Fairfax Rent Control and Just Cause Eviction

On November 2, 2022, the Fairfax Town Council enacted two ordinances effecting all Fairfax properties being rented. Fairfax is the only town in Marin to adopt such ordinances and is the smallest community in the State to do so. Their ordinances are also the most restrictive of any other California community.

Single family homes and apartment units built after 1995 are exempt from the rent control portion. For all others, rents are to be rolled back to February 2, 2022 and may not be increased until September, 2023. Annual increases in rent are limited to 60% of the cost-of-living index. This index is currently at 5%, allowing for increases of 3%. Two years ago, the index was 1.1% which would have allowed for almost no increase in rents at all.

All rental properties including single family homes and ADUs (Accessory Dwelling Units) are restricted by the Just Cause Eviction Ordinance. This ordinance is far reaching and complex. It goes beyond what is already in place at a Statewide level. Even Just Cause evictions may be limited based on the age of your tenant and if they are employed in the school system. There are no safety clauses as in the State ordinance.

These two ordinances will seriously effect property values in Fairfax. Few will want to invest here and put up with this. They will place their money elsewhere. It will also significantly slow any new development or the addition of ADUs to single family homes.

We are fighting this. A small group of property owners and myself have formed an entity, hired an attorney, and are in the earliest stages of fighting City Hall. So far, these efforts are being funded by the larger Fairfax apartment owners. If you would like to help, please email me at

Our concern is this: If Fairfax is successful in keeping these ordinances in place, other Marin cities may follow. These issues are being discussed in San Anselmo and Larkspur as well. Those cities are waiting first to see what happens in Fairfax. The Larkspur City Council is split on where to go. In their May 8, 2023 meeting they indicated they might want to take it to the vote of the City.

These local rent control ordinances are being pushed through by a group called DSA (Democratic Socialists of America), who are attempting to get rent control approved throughout Marin County. This is a scary situation that must be stopped. Your voices need to be heard. Please write to your city or town’s Town Council or show up to speak at their meetings. If you want to see something scary, look up the DSA website.

If you have not done so recently, check out our website, Aside from highlighting all our current listings, the site offers information on all of Marin’s income properties for sale, up to date recent and historical apartment sales, rent surveys, and a wealth of information for those thinking of buying or selling soon. The website also features a link to sign up for weekly email updates of all Marin apartment buildings that are currently for sale, that have sales pending, and those recently sold.

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Golden Gate Sotheby's International Realty
500 Drakes Landing Rd.
Greenbrae, CA 94904
o: 415.877.1077
Michael J Burke
m: 415.518.7200
Lic #00454938
Pamela Burke
m: 415.424-9835
Lic #02156257

Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each office is independently owned and operated.

© 2023  : Marin Apartments Michael J Burke