Nestled in the Central Valley region of California, Sacramento County boasts a thriving and dynamic housing market. As one of the most populous counties in the state, it offers a diverse range of opportunities for homebuyers and investors alike. In this blog post, we will delve into the housing market report for Sacramento County, exploring the median sold prices and sales figures for existing single-family homes, shedding light on the current state of this significant housing market in the Central Valley.
Sacramento County is a vibrant and bustling area that serves as the heart of the Central Valley region. With its rich history, vibrant culture, and strong economy, it has attracted an influx of residents seeking a high quality of life and excellent opportunities. The county's strategic location, excellent transportation links, and numerous amenities have contributed to its popularity among both local and out-of-state homebuyers.
Sacramento Housing Market Report – October 2023
California home sales remain muted in October as elevated interest rates continue to impact the real estate landscape, causing both homebuyers and sellers to remain cautious. According to the latest report from the California Association of Realtors (C.A.R.), existing, single-family home sales totaled 241,770 in October on a seasonally adjusted annualized rate. This reflects a marginal increase of 0.3 percent from September but a significant decline of 11.9 percent from October 2022.
Sacramento County: A Closer Look
In particular, let's delve into the specific details of the Sacramento County housing market for October 2023. The median sold price of existing single-family homes in Sacramento stood at $550,000, showing a modest month-to-month increase from $545,000 in September. However, the year-over-year comparison reveals a more substantial rise, with a 7.8% increase from October 2022's median price of $510,000.
Examining the sales data, there was a -4.7% month-to-month change, indicating a slight decrease in sales from September. On a year-over-year basis, the sales picture is more pronounced, with a -10.4% decline from October 2022.
Regional Comparison: Central Valley
Expanding the scope to the broader Central Valley region, the median sold price of existing single-family homes was $473,000 in October, showing a -1.7% month-to-month change from September's $481,000. The year-over-year comparison demonstrates a 4.0% increase from October 2022's median price of $455,000.
Looking at sales data, the Central Valley experienced a -3.9% month-to-month change, indicating a dip in sales compared to September. On a year-over-year basis, the decline is more pronounced, with an -11.3% decrease from October 2022.
Impact of Interest Rates
The muted real estate activity in October can be attributed, in part, to elevated interest rates. As interest rates have risen, both buyers and sellers are adopting a more cautious approach, leading to a slowdown in the housing market. This cautious sentiment is reflected in the modest month-to-month and significant year-over-year declines in both median prices and sales across the Sacramento County and Central Valley real estate markets.
Thus, the October 2023 housing market in Sacramento County and the broader Central Valley region reflects the ongoing impact of elevated interest rates. While there has been a slight increase in median prices on a month-to-month basis, the year-over-year data indicates a more significant upward trend. However, the decline in sales, both in the short term and compared to the previous year, underscores the cautious sentiment prevailing in the real estate market. As we move forward, the interplay between interest rates and market dynamics will likely continue to shape the trajectory of the housing market in California.
Is Now a Good Time to Buy a House in Sacramento?
For potential homebuyers considering the Sacramento housing market, the decision to buy a house is influenced by various factors, including market conditions, interest rates, and personal financial considerations. Let's delve into the current scenario to assess whether now is a favorable time to make a home purchase in Sacramento.
Current Market Conditions
The Sacramento housing market, as of October 2023, presents a mixed picture. The median sold price of existing single-family homes in the region is $550,000, showing a modest month-to-month increase. However, the year-over-year comparison reveals a more significant 7.8% increase, indicating a positive trend in home values.
On the other hand, home sales in Sacramento experienced a -4.7% month-to-month decline and a more pronounced -10.4% decrease compared to October 2022. These figures suggest a slowdown in real estate transactions, potentially impacting the overall buying experience.
Interest Rates Consideration
One crucial factor influencing the decision to buy a house is the prevailing interest rates. As of the latest data, interest rates remain elevated, contributing to the cautious sentiment in the real estate market. Higher interest rates can impact affordability, potentially affecting the size of mortgages and monthly payments for homebuyers.
Prospective Buyers' Considerations
Prospective homebuyers should carefully consider their own financial situation and goals. If you have the financial stability to weather the impact of elevated interest rates and are looking for a long-term investment, the current market conditions might still present opportunities. Additionally, the year-over-year increase in median prices suggests potential appreciation in home values over time.
However, if short-term affordability is a primary concern or if you are sensitive to market fluctuations, it might be prudent to assess whether waiting for a more favorable market environment is a viable option. Monitoring interest rate trends and market dynamics can provide valuable insights for making an informed decision.
Sacramento Single-Family Housing Market Data
Let's take a closer look at the key statistics provided by the Sacramento Association of REALTORS®. Sales experienced a 5% month-to-month drop, closing the month with 837 transactions. This represents a 4.9% decrease from September's 880 sales. Moreover, there is a more significant 7.8% decline compared to October 2022, which saw 908 sales.
Diving into the financing aspect, conventional financing accounts for the majority, constituting 60% of sales in October. Cash transactions and FHA loans represent 19.1% and 13.5%, respectively, showcasing the varied financing landscape in the market.
Sales Price Dynamics
The median sales price for single-family homes in Sacramento increased by .6%, reaching $548,000. This reflects a 7.5% increase from October 2022, where the median price was $510,000. The median sales price serves as a crucial indicator, signifying that half of the monthly sales are above this figure, and half are below.
Listing Inventory Overview
Listing inventory experienced a 5% increase from September to October, rising from 1,368 units to 1,437 units. However, when compared with October 2022's inventory of 2,199, there is a notable 34.7% decrease. The months of inventory, a key metric representing the time it would take to deplete the total active listing inventory at the current sales rate, increased from 1.6 months to 1.7 months.
Days on Market and Market Dynamics
The median days on market (DOM) increased from 10 to 12, down from 21 in October 2022. Notably, 77.9% (652) of the 837 sales this month were on the market for 30 days or less, and 91.3% (764) were on the market for 60 days or less.
In summary, the Sacramento single-family housing market in October 2023 experienced a seasonal decline in sales volume, marked by a 5% month-to-month decrease. However, the median sales price held steady, showcasing a 7.5% year-over-year increase. The increase in listing inventory, while a shift in demand, is tempered by a significant decrease compared to the previous year. The market's resilience is reflected in the days on market statistics, with the majority of sales occurring within a relatively short timeframe.
As the Average Price/SqFt sits at $347, prospective buyers and sellers should carefully analyze these comprehensive market insights to make informed decisions in the dynamic Sacramento single-family housing market.
Sacramento Housing Market Forecast 2023-2024
The Sacramento housing market has experienced fluctuations over the past year, with changes in home values, market forecasts, and key market indicators. Let's explore the current state of the market and the forecast for the near future.
The Sacramento-Roseville-Arden-Arcade area encompasses multiple cities in Sacramento County, known for its diverse communities, cultural richness, and a blend of urban and suburban living. The region boasts a strong economy, educational institutions, and ample recreational opportunities.
According to Zillow data, the average home value in the Sacramento–Roseville–Arden-Arcade housing market is $563,056, reflecting a 3.2% decrease over the past year. Homes in this region go to pending status in approximately 12 days, indicating a brisk pace of market activity.
Zillow's 1-year market forecast for Sacramento–Roseville–Arden-Arcade, as of October 31, 2023, anticipates a -2.5% change in home values. This forecast suggests a potential further decrease in the average home value over the coming year, highlighting the importance of careful consideration for both buyers and sellers in the current market conditions.
Inventory and Listings
- For sale inventory: As of October 31, 2023, there are 4,738 homes available for sale in the market.
- New listings: In October 2023, 1,921 new listings entered the market, contributing to the overall inventory.
Sale Price Dynamics
- Median sale to list ratio (September 30, 2023): The median sale price in September 2023 was $554,000, with a median list price of $618,000. The median sale to list ratio is 1.000, indicating a strong alignment between the listed and sold prices.
- Percent of sales over list price (September 30, 2023): 48.1% of sales were conducted over the list price, demonstrating a competitive market where buyers are willing to pay premium prices.
- Percent of sales under list price (September 30, 2023): 37.4% of sales occurred under the list price, showcasing the diversity of pricing strategies in the market.
Is Buying a House in Sacramento a Good Investment?
When considering whether buying a house in Sacramento is a good investment, it's crucial to examine various factors that contribute to the real estate market's attractiveness. Let's delve into the key aspects to help you make an informed decision.
Sacramento Rental Property Market
One of the key indicators of a strong real estate market is the demand for rental properties. In Sacramento, the rental property market has been robust, with a growing number of individuals and families looking for quality housing. This demand is driven by various factors, including the city's growing job market and its appeal as a place to live.
Investing in a rental property in Sacramento can provide a steady income stream, especially if you choose the right location and property type. It's essential to research neighborhoods and assess rental rates to ensure your investment is profitable.
Sacramento's Cost of Living & Quality of Life
Sacramento boasts a relatively lower cost of living compared to many other major California cities. This makes it an attractive destination for individuals and families looking for affordable housing options and a good quality of life.
The city offers a diverse range of amenities, including parks, cultural attractions, and a vibrant culinary scene. Sacramento's pleasant climate and proximity to outdoor recreational activities also contribute to its high quality of life.
These factors not only make it an attractive place to live but can also drive property value appreciation over time, enhancing the potential for a return on your investment.
Sacramento's Diverse Job Market & Economic Growth
Sacramento's job market has shown considerable growth in recent years. The city is home to a diverse range of industries, including healthcare, government, technology, and education. The presence of government agencies, such as the California State Government, further stabilizes the job market.
A strong and diverse job market can positively impact the demand for housing. Job opportunities attract professionals and families to the area, driving both rental and home purchase markets.
Population Growth of the Sacramento Metro Area
Population growth is a significant factor in the real estate market's health. The Sacramento metropolitan area has been experiencing steady population growth, driven by its economic opportunities and quality of life. An increasing population can lead to higher demand for housing, potentially driving property values upward.
Real Estate Appreciation Trends
One of the primary reasons why buying a house in Sacramento may be a good investment is the city's history of real estate appreciation. Over the past decade, Sacramento has experienced consistent and significant property value appreciation. This trend can be attributed to several factors, including an increase in demand for housing, a limited housing supply, and Sacramento's growing appeal as a desirable place to live.
Investors and homeowners who purchased properties in Sacramento a few years ago have witnessed substantial gains in their property values. While past performance does not guarantee future results, this trend is a positive indicator for potential real estate investors.
Investment Property Tax Benefits
Investing in real estate in Sacramento can offer tax benefits that make it an even more attractive investment. These benefits can include deductions for mortgage interest, property taxes, and depreciation. Be sure to consult with a tax advisor to understand how these deductions can positively impact your overall financial picture.
Resilience in Economic Downturns
During economic downturns, real estate in Sacramento has demonstrated resilience. While property values may experience fluctuations, the city's diversified economy and government stability have often shielded it from severe declines seen in other areas. This stability can provide a sense of security for investors concerned about economic uncertainties.
Other factors that contribute to the attractiveness of Sacramento's real estate market include:
- Transportation Infrastructure: Sacramento benefits from a well-developed transportation infrastructure, including highways and an international airport, making it accessible to residents and businesses.
- Education: The city is home to reputable educational institutions, including universities and colleges, making it an appealing location for students and academics.
- Cultural and Recreational Opportunities: Sacramento offers a rich cultural scene, with museums, theaters, and historic landmarks, providing diverse recreational opportunities for residents.
Consulting Real Estate Professionals
To make a well-informed decision, it's highly recommended to consult with real estate professionals who are knowledgeable about the Sacramento market. Real estate agents, appraisers, and property managers can provide insights into current market conditions, trends, and specific investment opportunities.