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The Sacramento multifamily market is experiencing strong demand, even on the heels of robust construction activity, said David Diggs, Senior Regional Sales Manager at Chase.
“Sacramento is still attractive from a price standpoint versus many Bay Area markets. There are good job opportunities, the economy is strong and people like living there,” Diggs said. “The key is watching the uptick in vacancy tied to recent construction.”
Supply growth expected to ease
The Sacramento multifamily market saw a significant increase in construction coming out of the pandemic. The vacancy rate rose to 3.9% in the first quarter of 2026, according to Moody’s data.
Sacramento vacancy rates | All | Class A | Class B and C |
|---|---|---|---|
2025 Q1 | 3.9% | 4.0% | 3.7% |
2025 Q2 | 3.8% | 4.0% | 3.6% |
2025 Q3 | 3.8% | 4.0% | 3.6% |
2025 Q4 | 3.7% | 4.0% | 3.4% |
2026 Q1 | 3.8% | 4.1% | 3.5% |
New construction has decreased dramatically. The number of completed newly constructed apartments was down roughly 20% year over year from March 2025, according to Moody’s.
“We’re watching the uptick in vacancies—especially downtown where most new construction is—but we’re not too concerned given rental demand,” Diggs said. “Over the next 12 months, we expect absorption and some moderation in vacancy.”
Rising property management expenses
Property management expenses are rising, with insurance costs seeing particularly large jumps.
Some cost increases are unavoidable. But closely monitoring expenses can help investors identify opportunities to lower those costs within their control.
Strategically managing payments, meanwhile, can help investors make the most of their liquidity. For instance, accelerating receivables and extending payables lengthens access to operating funds, giving investors flexibility to use or invest them.
“Having great solutions for payments and liquidity can help investors effectively manage their capital in an inflationary environment,” Diggs said.
“Sacramento is still attractive from a price standpoint versus many Bay Area markets. The key is watching the uptick in vacancy tied to recent construction.”
David Diggs
Senior Regional Sales Manager, Chase
Higher-for-longer interest rates
Interest rates remain elevated as the Federal Reserve waits to see more signs of inflation cooling toward its 2% target. As of May, the market doesn’t anticipate any rate cuts in 2026.
Elevated rates are one factor behind the year-over-year increase in Sacramento’s cap rates, which were in the mid-5% range in the first quarter of 2026, according to Moody’s data.
The timeline for additional Fed easing is uncertain. Multifamily investors seeking or refinancing apartment loans may also want to explore financing that offers options if the rate environment changes, such as shorter terms or flexible prepayment premiums.
Whether you’re ready for financing or looking to streamline your operations, connect with our Sacramento lending, payments and liquidity team.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.
