Central Valley Multifamily Market Overview
Regional operating fundamentals appeared stable during the second quarter, although pending additions to existing supply could result in a wider range of property performance in future periods. Kern and Stanislaus counties face construction pipelines totaling more than 5% of their existing inventories, while Fresno, which accounts for roughly 40% of the regional apartment stock, has almost no new development underway. Some of the construction trends can be explained by growth trajectories in recent years. The projects currently under construction in Kern and Stanislaus counties broke ground in 2025, when area employment growth was stronger. Those units will likely deliver into counties where payroll growth has stalled in the near term, while the region’s largest rental market faces almost no competition from new supply. County-level performance should diverge further from the regional average as those projects come online.
The composition of Central Valley sales has changed more than the transaction count suggests. Only one first-half sale exceeded 100 units, and none involved properties built after 1984. The trend became more pronounced during the second quarter, when four of the five transactions contained fewer than 40 units. By comparison, the fourth quarter of 2025 included five properties of at least 140 units across Fresno, San Joaquin and Kern counties, and the median transaction size was roughly twice as large as the 2026 level. That shift in deal composition explains why transaction activity has remained relatively stable while dollar volume has fallen sharply. Properties are still trading, but the larger transactions that boosted late-2025 volume have not occurred in 2026, leaving liquidity concentrated in smaller, older Class B and Class C assets.
Looking ahead for Central Valley
Most of the year’s new supply is scheduled to deliver in the second half, concentrating lease-up pressure into a relatively short period. Projects currently scheduled for delivery in the second half of 2026 represent a total close to the region’s average absorption for a full year, and some lease-up will likely linger into 2027. The market enters that period from a favorable position. Demand has outpaced deliveries over the past year, and much of the product completed in 2025 has already been absorbed. The next few quarters may produce a widening performance gap between stabilized properties and new communities. Existing properties with established occupancy should face less direct pressure, while newly delivered projects will compete more aggressively for renters.
Transaction activity should remain near current levels through the rest of 2026, although dollar volume will likely remain below 2025 levels unless larger deals return to the market. Fresno is expected to remain the region’s most active investment market, supported by its deeper transaction history and limited near-term supply. San Joaquin County continues to achieve some of the highest per-unit pricing in the region, but recent deliveries create a more competitive operating environment for the near term. Until that new supply is absorbed, newer and larger properties are likely to account for a smaller share of transaction activity.
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