38 California cities ranked by estimated cap rate. The average cap rate across California markets is 3.0%, with median home prices averaging $624K and rents averaging $2,266/mo. Susanville leads with a 5.1% cap rate at a $225K median price. California's low average property tax rate of 0.75% gives investors a significant cash flow advantage.
California offers 38 investable rental markets tracked by CapRateCity. The state average cap rate of 3.0% is near the 3.81% national average. No cities pass the 1% rule at median prices, so value-add strategies are essential.
Prices and rents: California home prices average $624K, which is 87% above the national average of $333K. Rents average $2,266/mo.
Taxes and costs: Property taxes average 0.75% across California, below the 1.08% national average — a meaningful cash flow advantage that adds roughly $2,065 per year to NOI on an average-priced property. Bakersfield has the lowest rate at 0.72%.Vacancy averages 5.2%, tighter than the national average — favorable for landlords.
Growth outlook: Population growth across California averages 0.80% per year, led by Riverside at 1.2%. Home values are appreciating at 2.8% annually on average. Moderate growth provides a stable demand foundation.
Bottom line: California is primarily an appreciation market. Cash flow investing requires below-median purchases or value-add strategies. Consider whether the growth and appreciation potential justifies tighter margins.