Sacramento Housing Market Report
The Sacramento housing market report for September has been updated in this article. The Sacramento housing market is cooling, but it's far from the crash of 2007 to 2008. While Sacramento is at a larger risk of a downturn than other cities, it doesn't mean it will happen – or that the slowdown will be severe.
The market performed really well in the last year owing to a rush of buyers fleeing the ultra-expensive Bay Area in search of more reasonably priced homes. Sacramento home price has been forecasted to decline by 0.2% between October 2022 to October 2023 (ZHVF). Higher mortgage rates are putting a damper on the Sacramento housing market. Sales of existing homes are falling as compared to last year.
In October 2022, the median home price of existing single-family homes in Sacramento County increased by 0.5% to $512,500 while sales decreased by 43.9% on a year-over-year basis, according to the most recent report released by the California Association of Realtors. Sacramento median home price dropped by 1.4% and sales dropped by 19.2% from the previous month. According to C.A.R., the unsold inventory in the county is 2.9 months. It shows the amount of time (in months) it would take for the current rate of sales to deplete the total active listings.
Sacramento Average Home Price Trends [October]
The following Sacramento housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only. In October 2022, the median list price of homes in Sacramento County was $520K, trending up 4.2% year-over-year.
The median listing price per square foot was $325. The median sale price was $490K. Sacramento is a seller's real estate market which means that more people are looking to buy than there are homes available. A seller's market arises when demand exceeds supply. Sellers that are just getting into the market are seeing they can set their asking price a little higher than what they may have expected because inventory is so low and the buyer pool is still growing.
Ideally, a buyer would prefer a sale-to-list price ratio that’s closer to 90% and a seller would always prefer scenarios that can yield a ratio of 100% or higher. In Sacramento, the Sale-to-List Price Ratio of 99.46% shows that sellers have managed to hold good leverage in these negotiations in the past month.
Below is the latest monthly report of the Sacramento housing market released by the Sacramento Association of REALTORS®. The report shows key housing metrics of Sacramento County and the City of West Sacramento for October 2022.
Home Sales Decline Sharply in Sacramento
- October ended with 902 sales, down 20.8% from the 1,139 sales in September.
- In comparison to a year ago (1,608), the current figure represents a decrease of 43.4 percent.
- 116 (12.9% percent) of the 902 sales this month involved cash financing.
- 569 (63.1 percent) involved conventional financing.
- 141 (15.6 percent) involved FHA financing.
- 42 (4.7 percent) involved VA financing.
- 34 (3.8 percent) involved other types of financing.
Sacramento Home Prices & Demand Remain Moderate
- The median sales price decreased by 1.9% from $520,000 to $510,000.
- This figure is unchanged from October 2021.
- Compared to May 2022 ($575,000), the current median price is down 11.3%.
- This is a 7.7 percent increase over June 2021's median price of $520,000.
- The Average Price/SqFt of all homes sold increased from $334 to $336.
- The Median DOM (days on market) increased from 19 to 21.
- The average DOM increased from 30 to 32.
- 62.7% of homes were on the market for 30 days or less
- 84.7% of homes were on the market for 60 days or less.
Housing Supply in Sacramento Continues to Increase
- Between September and October 2022, the Active Listing Inventory decreased by 5.8 percent, from 2,334 to 2,199 units.
- Compared with October 2021 (1,344), inventory is up 63.6%.
- Months of Inventory increased from 2 Months to 2.4 Months.
- It is the amount of time (in months) it would take to deplete the total active listing inventory at the current rate of sales.
Real Estate Foreclosures in Sacramento County
Here are some foreclosure statistics for the Sacramento real estate market. The number of new foreclosure filings in the Sacramento real estate market has maintained a steady downward trend since the last recession. However, the pandemic has caused a reversal in foreclosure trends. Data by Sacrealtor.org shows that the number of REO sales (single-family homes) in October 2022 was 0 (0% of total sales). This is a drop of 100% from last year. The number of Short Sales was also 0.
Sacramento Housing Market Forecast 2022 & 2023
What are the Sacramento real estate market predictions for 2022 & 2023? Is the Sacramento housing market shaping up to continue the trend of the last few years as one of the hottest markets in California? At the beginning of this year, Sacramento was predicted to do reasonably well in 2022. The combined home price and sales growth were expected to be 11.0% in the houisng market of Sacramento–Roseville–Arden-Arcade, Calif (Realtor.com). But rising interest rates are causing changes in the housing markets across the country.
Currently, the typical value of homes in Sacramento County is $537,465 (ZHVI) and Sacramento home values have gone up by 5.5% over the last twelve months.
- Sacramento–Roseville–Arden-Arcade Metro home values have gone up 5.4% to $590,318 over the past year.
- According to Zillow's forecast, Sacramento MSA home prices may decline by 0.2% by October 2023.
SACRAMENTO REAL ESTATE APPRECIATION RATES
In the last 10 years, Sacramento has experienced some of the highest home appreciation rates of any community in the nation. NeighborhoodScout's data shows that Sacramento real estate appreciated 210.37% over the last ten years, which is an average annual home appreciation rate of 11.99%. This puts Sacramento in the top 10% nationally for real estate appreciation.
NeighborhoodScout's data show that during the twelve months (2021 Q2 – 2022 Q2), Sacramento's appreciation rate, at 15.33%, has been at or slightly above the national average. In the quarter (2022 Q1 – 2022 Q2), Sacramento's appreciation rate has been 2.72%, which annualizes to a rate of 11.35%.
In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, the Sacramento housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen in Sacramento.
This region is very much skewed to sellers due to a persistent imbalance in supply and demand. Due to pent-up demand and diminishing housing inventory home prices in the area will likely continue rising over the coming months. Sacramento’s population has grown steadily over the past few years.
A lot of Bay Area residents are now eyeing markets like Sacramento and Fresno. The main reason is that it's more affordable than expensive coastal markets in California. According to the U.S. Census Bureau, Sacramento’s population grew by around 10% from 2010 to 2019. This trend of migration will continue to fuel housing demand within the region.
For buyers in Sacramento County, mortgage rates are rising. Therefore, it is better for them to enter the market now and scoop up their favorite deals. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.
Is Buying a House in Sacramento a Good Investment?
Should you consider Sacramento real estate investment? Now that you know where Sacramento is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a property in Sacramento is a good investment. You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
Let’s talk a bit about Sacramento. Sacramento is the capital of California, though many mistakenly think it is L.A. or another larger city. Sacramento is a minimally walkable city in Sacramento County with a population of approximately just over half a million people. It is overshadowed by bigger, glitzier cities like San Francisco or Los Angeles. When you take suburbs like Yuba City, Truckee, Roseville, and South Lake Tahoe into account, the Sacramento real estate market contains around two million people. However, size isn’t reason enough to invest in any real estate market.
The rise and fall of Detroit and the current decline of other rust belt cities are testaments to this. The city of Sacramento has a mixture of owners and renters, with 47.12% owning and 52.88% renting. According to Neigborhoodscout.com, a real estate data provider, three and four-bedroom single-family detached homes are the most common housing units in Sacramento. Other types of housing that are prevalent in Sacramento include duplexes, rowhouses, and homes converted to apartments. Sacramento has more renter-occupied housing accounts as compared to owner-occupied.
Single-family detached homes account for roughly 60% of Sacramento's housing units. Looking back in 2018 about 2,400 new dwelling units were built in Sacramento, most of them being single-family detached homes. That’s even more than San Francisco, a city of nearly 900,000 people where new towers have altered the skyline. Overall, neither Sacramento nor California produced nearly the same amount of new housing that occurred during the state’s big building boom more than a decade ago, when home construction in Sacramento peaked at 4,000 new units, city officials said.
Although this article alone is not a comprehensive source to make a final investment decision for Sacramento, we have collected evidence-based positive things for those who are keen to invest in the Sacramento real estate market. Let’s take a look at the number of positive things going on in the Sacramento real estate market which can help investors who are keen to buy an investment property in this city.
Annual Data for Sacramento County and the City of West Sacramento (2021)
Here’s a rundown of where the Sacramento real estate market was before the pandemic and how COVID upended things. The Sacramento housing market has outpaced itself every year. December 2021 Statistics released by Sacrealtor.org show the following Year-to-Date Statistics.
- Number of Closed Escrows 17,389, +5.9% from last year
- Dollar Value of Closed Escrows = $9,560,435,368, +26.0%
- Median price = $500,000, +19.0%
- Mean price = $549,798, +19.0%
Sacramento is a Healthy Housing Market
Sacramento had several thousand people move in there in 2017. Between people relocating here from overheated housing markets and demographic momentum, it saw 1.4 percent growth in 2017 and 2018. This gives the Sacramento housing market a source of slowly increasing demand and rising property values. Yet the area isn’t experiencing a bubble that will burst down the line.
The area also has a steady enough job market that it isn’t experiencing population loss like the San Joaquin Valley due to environmental crackdowns on agriculture or the risk of a collapse like San Francisco’s tech bubble may see. This is why SmartAsset ranked the city as the third healthiest housing market in the state.
For those considering Sacramento real estate investment, median rents of around 1700 dollars a month in Sacramento don’t sound as appealing as the 4000 dollars a month in San Francisco and 3400 dollars a month in San Jose. However, Sacramento is more landlord-friendly than some of the alternatives. For example, the Sacramento housing market isn’t burdened by local rent control laws, though the state government is considering imposing it on the whole state.
A side benefit of the relatively affordable Sacramento real estate market and increasing demand is that any Sacramento real estate investment will see significant appreciation. For example, the average rental rates in the Sacramento housing market went up nearly 9 percent year over year in 2018. That was the greatest increase for any American metro area.
Among all the nation's largest metros, the Sacramento metro area is predicted to have the highest sales and price growth in 2021. Therefore, with the affordable entry price of homes, high appreciation, and growing rent prices, real estate investors in Sacramento can enjoy positive cash flow and nice profits in the long term.
Sacramento's Cost of Living & Quality of Life
Sacramento may not offer the $200,000 salaries of tech startups, but it doesn’t cost you more than a million dollars to buy a modest bungalow, either. Sacramento’s cost of living is much cheaper than the California coast just 75 miles away. That’s why the Sacramento real estate market being 50 percent higher than that national average is irrelevant – it is the sizzling home prices in the Bay Area that make people move here for the relative bargains. The 20 percent higher cost of living is a bargain, too, compared to the California coast.
Sacramento offers a better quality of life than the larger cities it is becoming a suburb of. We’ll ignore the fact you’re far closer to Lake Tahoe because any home in the Sacramento housing market puts you in easy reach of the outdoors. The area offers white water rafting, hot air balloons, mountain biking, fishing, and nature walks. You don’t have to buy a luxury property in the Sacramento real estate market to enjoy beautiful views or live near open spaces.
The area had its great cuisine and entertainment options before the influx of Silicon Valley types, but a livelier night scene is forming, too. A side benefit of the more affordable Sacramento housing market is that homelessness is almost nonexistent in Sacramento. You certainly don’t need a poop-reporting app to avoid the attendant health hazards while you go on your morning run.
One of the reasons to snap up a Sacramento real estate investment over one in the hotter real estate markets is that the area is safer overall. Sacramento has a slightly higher property crime rate than other big cities in cities, but Sacramento has a much lower violent crime rate. People are more concerned about being mugged, raped, or murdered than having their car broken into.
The nonviolent crime stats are also skewed due to the more lenient authorities in San Francisco and Los Angeles. When you ignore people shooting up in public and won’t punish violent panhandlers, your official crime rate is lower but that doesn’t make it better. Sacramento seeks to maintain order, public health, and safety to make it a safer place to live.
Sacramento is Bucking the Bad Trends Plaguing California
California is seeing overall population growth, but it isn’t healthy. Native-born Americans are fleeing the state for Oregon, Nevada, Arizona, and Idaho. They’re replaced by lower-skilled, lower-paid legal and illegal immigrants. This hollows out the middle class of the state while contributing to sky-high poverty rates. Sacramento is a stark contrast to these unhealthy trends. It is receiving an influx of middle-class and working-class people from around the state who don’t want to leave California.
This is why Sacramento ranked number one in the state for one-way U-Haul trips in 2018. This makes the Sacramento real estate market much healthier since it contains a true income mix. It also allows Sacramento real estate investment investors more options than luxury homes and densely packed affordable units, the only types of housing you see built in San Francisco.
People are willing to commute 90 minutes to San Francisco each way to get those Silicon Valley paychecks, though they don’t want to pay SF prices for a property. This is increasing the value of homes on the western side of the Sacramento real estate market since they’ve become a de facto suburb of the Bay Area.
While Yolo County is a rapidly developing suburb of San Francisco, the eastern side of the Sacramento metro area contains large tracts of agricultural land. The Central Valley is one of the most productive agricultural areas in the United States. This means that Sacramento's real estate investment opportunities include agricultural land and former farmland that is open to new development.
Sacramento's Diverse Job Market Is a Plus for Residents
San Francisco suffered a decline in the early 2000s when the first internet bubble burst. Fears of regulation and anti-trust action against Big Tech firms could cause the San Francisco area to suffer a second major decline because they’re so dependent on high tech to bolster the real estate market. Sacramento does have several high-tech jobs, many of them small firms that relocated to the area for its lower cost of living and doing business.
The government is the largest employer, and it is a stable one at that. Healthcare and construction are major employers, as well. This gives Sacramento a more stable job market in addition to low unemployment rates. Tourism and the service sector is a growing contributor, too, as people move here for the lower cost of living and have more money to spend on luxuries like going out. This contributes to the improving quality of life that will keep the Sacramento real estate market going strong.
Sacramento Rent Prices
Sacramento was on the nation’s top 10 list of rent increases in 2020. More people are moving out of big cities and heading toward surrounding areas, like Sacramento. The transition is driving rental prices up in counties like Sacramento, while rent in areas like San Francisco is going down. There is not a whole bunch of rental property inventory out there, which is driving the prices up.
As of December 04, 2022, the average rent for a 1-bedroom apartment in Sacramento, CA is currently $1,595. This is a 3% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Sacramento remained flat. The average rent for a 1-bedroom apartment increased by 3% to $1,595, and the average rent for a 2-bedroom apartment remained flat.
- The average rent for a 2-bedroom apartment in Sacramento, CA is currently $1,900, up 3% compared to the previous year.
- The average rent for a 3-bedroom apartment in Sacramento, CA is currently $2,350, up 1% compared to the previous year.
- The average rent for a 4-bedroom apartment in Sacramento, CA is currently $2,670, up 5% compared to the previous year.
The Diverse Sacramento Rental Market Is a Plus for Investors
If you’re considering Sacramento real estate investment, the diverse rental market is a definite plus. Being a state capital, it is home to several universities. This allows you to rent to the relatively large student market in addition to the local population. There is, of course, the University of California campus in Sacramento, but you could own investment properties by American River College and other, smaller schools in the area, too. Around 50% of households are renter-occupied.
Best Neighborhoods in Sacramento to Buy a House
In any property investment, cash flow is gold. California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. Sacramento is an island of sanity in an overpriced, over-regulated, and overheated West Coast housing market.
It reflects the California ideal that most of the state has lost, and that’s we recommend it to investors over the “hotter” California metro areas. These are the same factors causing many Californians themselves to vote with their feet and move here instead of moving out of the state altogether.
The city remains a choice landing spot for coastal emigres tired of skyrocketing housing costs and long commutes. Sacramento is also a fast-growing city with a flourishing real estate market. Continuously developing economy, employment, and a better quality of life offer a lot of opportunities for real estate investors in Sacramento to purchase single-family homes as investment properties.
Good cash flow from Sacramento investment property means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Sacramento in a growing neighborhood would be key to your success. If you invest wisely in Sacramento real estate, you could secure your future.
The less expensive the Sacramento investment property is, the lower your ongoing expenses will be. When looking for the best real estate investments in Sacramento, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Sacramento might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods.
Sacramento home prices are some of the most expensive in all of the United States. There are 89 neighborhoods in Sacramento. Midtown has a median listing price of $838.9K, making it the most expensive neighborhood. Hagginwood is the most affordable neighborhood, with a median listing price of $278K (Realtor.com).
Some of the most popular neighborhoods in Sacramento, California are Florin, East Sacramento, Midtown, Meadowview, Natomas Crossing, Arden-Arcade, North Sacramento, Elmhurst, East Sacramento, Tahoe Park, North Highlands, Natomas Park, Hollywood Park, Rancho Cordova, and South Land Park.
Elmhurst, Land Park, and Upper Land Park are some of the top neighborhoods in Sacramento to buy investment properties. These are quite affordable neighborhoods with a low entry price of homes, high cash-on-cash returns, and a positive appreciation forecast for the coming years. According to Zillow, Elmhurst home values have gone down 0.2% over the past year. Typical Home Value is $616,096 (Data through September 30, 2022).
According to Realtor.com Market Hotness Index, Elmhurst, Sacramento, CA is VERY HOT at the moment. It ranks in the top 11% of neighborhoods in the area and the top 28% in the U.S. Homes sell 5 days slower and are 23% less popular than homes in the surrounding area. In October 2022, the median list price of homes in Elmhurst was $580K, trending down 13.4% year-over-year. The median sale price was $580K. It is a seller's market.
Land Park, Sacramento, CA is also VERY HOT. It ranks in the top 3% of neighborhoods in the area and the top 13% in the U.S. Homes sell 4 days faster and are 116% more popular than homes in the surrounding area. In October 2022, the median list price of homes in Land Park was $749.9K on Realtor.com, trending up 7.3% year-over-year. The median sale price was $750K. It is a seller's market.
Upper Land Park is a neighborhood in the more general Land Park area of Sacramento, California. The real estate is primarily made up of small (studio to two bedrooms) to medium-sized (three or four bedrooms) single-family homes and apartment complexes/high-rise apartments. Most of the residential real estate is occupied by a mixture of owners and renters.
Upper Land Park, Sacramento, CA is also VERY HOT at the moment. It ranks in the top 3% of neighborhoods in the area and the top 13% in the U.S. It is a seller's market. The housing supply is very tight compared to the demand for property here. In October 2022, the median listing home price in Upper Land Park was $529K, trending up 2.7% year-over-year. The median home sold price was $493.7K.
Top 10 Sacramento Neighborhoods Where Real Estate Is Going Up
Here are the ten neighborhoods in Sacramento having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
- Central Oak Park
- Woodlake
- South Hagginwood
- Norwood I-80
- Youngs Heights
- Central Oak Park East
- Midtown Winn Park Capital Avenue North
- Boulevard Park
- Old Sacramento
- Glen Elder North
We recommend taking the help of the local real estate agents to find neighborhoods with an affordable entry prices of homes, high appreciation forecasts, and growing rent prices so that as an investor you can enjoy positive cash flow and nice profits. Apart from Sacramento, you can also invest in many other real estate markets in California. California's real estate market is the focus of many U.S. and foreign real estate investors.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your turnkey investment properties.
Not just limited to Sacramento or California but you can also invest in some of the hottest real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience with our team to see if Sacramento makes sense as a place to invest today.
We can help build you a custom portfolio of turnkey properties located in some of the best markets in the United States. By researching and structuring complete turnkey real estate investments, we can help you succeed by minimizing risk and maximizing profitability.
This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments makes no express or implied representations, warranties, or guarantees that the information is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. Buying a rental property requires research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.
References
Market Data, Reports & Forecasts
https://www.sacrealtor.org/
https://www.sacrealtor.org/consumers/housing-statistics
https://www.zillow.com/sacramento-ca/home-values
https://www.littlebighomes.com/real-estate-sacramento.html
https://www.neighborhoodscout.com/ca/sacramento/real-estate
https://www.sacbee.com/news/coronavirus/article243805667.html
https://www.realtor.com/realestateandhomes-search/Sacramento_CA/overview
Foreclosures
https://www.realtytrac.com/statsandtrends/ca/sacramento-county/sacramento
Best Neighborhoods
https://www.homeunion.com/sacramento-ca/
https://www.neighborhoodscout.com/ca/sacramento/real-estate
Top Reasons to Invest in Sacramento
https://en.wikipedia.org/wiki/California_locations_by_crime_rate
https://realestate.usnews.com/places/california/sacramento/jobs
https://www.gobankingrates.com/making-money/economy/sacramento-vs-bay-area
https://www.thesandiegocriminallawyer.com/california-cities-most-dangerous.html
https://www.theguardian.com/business/2019/apr/29/big-tech-regulation-facebook-google-amazon
https://www.abc10.com/article/news/local/5-rent-controlled-cities-in-california/103-591256565
https://www.thrillist.com/entertainment/san-francisco/why-sacramento-is-the-new-oakland-sf
https://www.sfgate.com/bayarea/article/SnapCrap-app-San-Francisco-poop-feces-dirty-street-13281837.php
https://www.sfgate.com/expensive-san-francisco/article/uhaul-sacramento-san-francisco-moving-exodus-13509219.php
https://www.sfgate.com/expensive-san-francisco/article/sacramento-move-grass-is-greener-tips-bay-area-13164238.php
https://www.technologyreview.com/s/613628/big-tech-breakup-regulation-antitrust-apple-amazon-google-facebook-doj-ftc-policy
Rental Market Trends
https://www.rentjungle.com/average-rent-in-sacramento-rent-trends/
https://www.rentcafe.com/average-rent-market-trends/us/ca/sacramento/
