Real estate can be a worthy investment opportunity. With research, a plan and the right price, just about anyone can be a real estate investor. If you are looking at investing in the Sacramento housing market as a potential investment opportunity, you must read till the end. Sacramento is the capital of California, though many mistakenly think it is L.A. or another larger city.
It is home to just over half a million people. Sacramento 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 current decline of other rust belt cities are testament to this. There are a number of reasons to consider investing in the Sacramento real estate in 2020. In the latest quarter, real estate appreciation rate in Sacramento has been around 1%. If it remains steady, the annualized appreciation rate would be around 4%, which could trigger good amount of interest in the Sacramento real estate investment opportunities.
In this article, we shall discuss some more important reasons why you may want to consider buying Sacramento investment properties in 2020. Please note that there are many variables that can potentially impact the value of a home in Sacramento (or any other market) and some of these variables are impossible to predict in advance.
Sacramento Real Estate Market Forecast 2020
What are the Sacramento real estate market predictions for 2020? Is Sacramento housing market 2020 shaping up to continue the trend of the last few years as one of the hottest markets in California. Well, the latest real estate data from Zillow shows that the current median home value in Sacramento is $346,970. Sacramento is currently a seller’s market – which means there are a lot of qualified buyers in the market place and not enough homes for sale in the market.
The home prices have risen by 5.2% over the last year. Looking forward in this year, the Sacramento real estate market forecast is that home prices will continue to increase by 5.4%. Since 2015, the median home price in Sacramento has increased from $235,000 to $365,000.
Here is the Sacramento, CA real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 5.4% till Dec 2020.
The median list price per square foot in Sacramento is $233, which is lower than the Sacramento–Roseville–Arden-Arcade Metro average of $247. Zillow reports that 8.1% of the listings in Sacramento had a price cut in Dec 2019, which is a good thing for buyers. The median price of current listings in Sacramento is $335,500.
Homes are selling below their asking prices as the median price of homes that have been sold out is $322,000. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices. The median rent price in Sacramento is $1,795, which is lower than the Sacramento–Roseville–Arden-Arcade Metro median of $1,950.
Sacramento home prices are among the most expensive in the state of California. Here is a snapshot that shows the median home values in the some of the neighborhoods of Sacramento.
Sacramento Housing Market Forecast 2019 – 2021
Here is a short and crisp Sacramento housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Sacramento is 74% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Sacramento is 74% during this period. If this price forecast is correct, the Sacramento home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Sacramento, California Real Estate Forecast.
Sacramento Housing Market Trends
We shall now discuss some of the most recent housing trends in the Sacramento area and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. The Sacramento housing market is healthy and that the city remains a choice landing spot for coastal emigres tired of skyrocketing housing costs and long commutes.
Trulia has currently 1,166 homes for sale in Sacramento, CA including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median price of sold homes in Sacramento is $339,000 and home are selling for about $245/sqft.
The median sales price for homes in Sacramento for Mar 27 to Jun 26 was $325,000 based on 2,348 home sales. Average price per square foot for Sacramento was $241, an increase of 6% compared to the same period last year. The median rent per month for apartments in Sacramento for Jun 1 to Jul 1 was $1,850.
As per the real estate company called Neigborhoodscout.com, the median house price in Sacramento is $352,102, which indicates that home prices in Sacramento are well above the national average for all cities and towns in the United States. 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, row houses and homes converted to apartments. Sacramento has more renter-occupied housing accounts as compared to owner-occupied.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental 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.
Currently, there are 618 single family homes for sale in Sacramento, CA on Zillow. Additionally, there are 295 single family homes for rent in Sacramento, CA. Under potential listings, there are about 11 Foreclosed and 387 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
In the past month, 753 homes have been sold in Sacramento, CA on Redfin.com. In addition to houses in Sacramento, there were also 109 condos, 13 townhouses, and 100 multi-family units for sale in Sacramento last month. The median listing price is around $366,000. According their statistics, the Sacramento housing market is most competitive.
Homes in Sacramento receive 2 offers on average and sell in around 19 days. The average sale price of a home in Sacramento was $340K last month, up 6.3% since last year. The average sale price per square foot in Sacramento is $231, up 4.5% since last year. A hot listing in Sacramento can sell for about 2% above list price and go pending in around 7 days.
Here is the latest Sacramento housing market data for the month of Jan 2020 from Redfin.com. The sale to list price ratio shows us that it was a trending more like a seller’s market in the past month.
Sacramento Real Estate Market Trends
|Median List Price||$365,000|
|Avg. Sale / List||99.2%|
|Median List $/Sq Ft||$238|
|Median Sale Price||$340,000|
|Median Sale $/Sq Ft||$231|
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. There are currently 1,906 homes for sale in Sacramento on Realtor.com. The asking price of single family homes can start from $135,000 and can go up to $5.2M for a luxury property located in Arden – Arcade neighborhood in the city of Sacramento, CA. The median home price in Arden – Arcade neighborhood is $396,000.
Sacramento is also a big rental property market. There are currently 621 rental properties in Sacramento and their rent prices range from $100 to $4,300 per month. There are only 28 new construction homes for sale in Sacramento within a price range of $310,000 to $1.3M. The most affordable new construction homes can found in Del Paso Nuevo neighborhood in the city of Sacramento, CA. The home prices in Del Paso Nuevo neighborhood range from $310K to $380K.
According to Realtor.com, in December 2019, Sacramento housing market was is a seller’s market, which means there were roughly more buyers than there were active homes for sale. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. In Sacramento, the sellers have held good leverage in these negotiations in the past month. On an average, they could sell homes for 100% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
In December 2019, the median list price of homes in Sacramento, CA was $355K, trending up 6.8% year-over-year. The median listing price per square foot was $236. The median sale price was $340K.
The median list price in Sacramento, CA is $370,000 on Movoto.com. The median list price in Sacramento went down 1% from January to February. Sacramento’s home resale inventories is 700, which increased 1 percent since January 2020. The median list price per square foot in Sacramento is $245.
As you can see in the graph, the median price per sq ft in Sacramento rose to its peak value in Dec 2019, when it was $240. In January 2020 it was $246. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.
Sacramento is a minimally walkable city in Sacramento County with a population of approximately 466,259 people and 304,773 jobs. If you are looking to invest in the Sacramento real estate, you should that three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Sacramento investment real estate and you should be able flip it for a lump sum profit.
The neighborhoods in Sacramento must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls. Land Park has a median listing price of $665K, making it the most expensive neighborhood in Sacramento. Haggin Park is the most affordable neighborhood, with a median listing price of $239K.
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.
Sacramento, CA Foreclosures And Bank Owned Homes Statistics
As per the Sacramento foreclosure data by Zillow, in Sacramento 0.8 homes are foreclosed (per 10,000). This is greater than the Sacramento–Roseville–Arden-Arcade Metro value of 0.4 and also lower than the national value of 1.2. The percent of delinquent mortgages in Sacramento is 0.7%, which is lower than the national value of 1.1%.
With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Sacramento homeowners underwater on their mortgage is 5.6%, which is higher than Sacramento–Roseville–Arden-Arcade Metro at 4.7%.
|Total No. of Foreclosures in Sacramento||613 (RealtyTrac)|
|Homes for Sale in Sacramento||267|
|Median List Price||$359,450 (0% rise vs Nov 2018)|
There are currently 613 properties in Sacramento, CA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 267. In December 2019, the number of properties that received a foreclosure filing in Sacramento, CA was 12% higher than the previous month and 33% higher than the same time last year.
In Sacramento, the zip code with the highest foreclosure rate is 95837, where 1 in every 109 housing units is foreclosed. 95838 zip code has the lowest foreclosure rate, where 1 in every 1083 housing units becomes delinquent.
Is Sacramento a Good Place For Real Estate Investment?
Is Sacramento a Good Place to Invest In Real Estate? 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 good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Sacramento housing market 2020 forecast for answers on why to put resources into this market.
Although, this article alone is not a comprehensive source to make a final investment decision for Sacramento but we have collected ten evidence based positive things for those who are keen to invest in the Sacramento real estate in 2020. Investing in Sacramento real estate will fetch you good returns in the long term as the home prices in Sacramento have been trending up year-over-year. 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.
1. Sacramento – 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 the third healthiest housing market in the state.
2. Cost of Living is a Selling Point
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.
3. The Return on the Investment Remains Strong
For those considering Sacramento real estate investment, median rents of around 1700 a month in Sacramento doesn’t sound as appealing as the 4000 a month in San Francisco and 3400 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 rental rates in the Sacramento housing market went up nearly 9 percent year over hear. That was the greatest increase for any American metro area.
4. It 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.
5. San Francisco’s Insanity Adds to Sacramento’s Stability
There are people 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.
6. Sacramento Has a Better Quality of Life
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 living near open spaces.
The area had its own 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.
7. Sacramento is Safer
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 the 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 seeking to maintain order, public health and safety makes it a safer place to live.
8. There Are Investment Opportunities in Sacramento
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. In fact, the Central Valley is one of the most productive agricultural areas in the United States. This means that Sacramento real estate investment opportunities include agricultural land and former farmland that is open to new development.
9. The 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 a number of high tech jobs, many of them small firms that relocated to the area for its lower cost of living and doing business.
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.
10. 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.
Investing in Sacramento Real Estate or Not: The Conclusion
Maybe, you have done a bit of real estate investing in Sacramento, CA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Sacramento real estate investment?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. A good cash flow from Sacramento investment properties 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 a good Sacramento real estate investment opportunity would be a key to your success. If you invest wisely in the Sacramento real estate, you could secure your future.
If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. You must also collaborate and learn from savvy investors who have retired early on in their lives by investing locally in the Sacramento real estate market. As with any real estate purchase, act wisely. Evaluate the specifics of the Sacramento housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Sacramento.
If it is your first time to invest in Sacramento real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. 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 area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Sacramento real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Good Markets To Invest in Real Estate in 2020
Another sizzling market to invest in real estate is Fort Collins, CO. The Fort Collins area is growing both as an outer suburb of Denver and for its own reasons, making it the fourth largest city in the state. The city offers an ideal mix of jobs, affordable living, and decent quality of life that will keep it strong for years to come. The Fort Collins housing market has seen steady appreciation because the population itself is growing slowly but steadily. The population has been growing at roughly two percent a year.
This causes the Fort Collins real estate market to appreciate at a slightly faster rate, but the Fort Collins housing market isn’t so hot that locals are priced out. However, the relatively young population creates an opportunity for those who own Fort Collins real estate investment properties. You can rent the property to the steady stream of students, or you can rent it or sell it to the young adults who choose to stay in the area and work for one of the major employers.
The other best place to invest in real estate is Albuquerque, NM. Albuquerque is an often overlooked real estate market in the West because it doesn’t make headlines. However, the strong fundamentals and positive long-term outlook make it a great place to consider investing. The Albuquerque real estate market is considered balanced. The number of buyers and sellers is roughly even. It isn’t so hot that property values are skyrocketing. Demand isn’t so soft that property values are declining. Homes take 60 to 80 days to sell. This is the sign of a healthy real estate market that will remain stable unless the job market collapses.
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Slow and steady
Cost of living
Bucking bad trends
SF insanity / SF suburb
Quality of life
Housing Market Data, Trends & Statistics