All You Need To Know About Sacramento's Housing Market

As the Golden State's capital and an important statewide market, Sacramento is a bit of a real estate superstar. Even in times of the pandemic, the housing market seemed to be unshaken and continued to thrive like it usually does. This is probably due in part to Sacramento’s proximity to several other cities, but the key is that it remains the cheaper alternative. Pricier southward neighbors like San Francisco and San Jose actually add more attention to the capital, making more and more people want to move, rent, and even potentially invest there.

There’s an added attention to Sacramento's housing market at a time when a lot of us are working from home too. At the very least, fewer people nowadays need to live close to an actual office, and this gives them the freedom to look at places like Sacramento—even if they work in Silicon Valley, for instance. Learn more about the ins and outs of Sacramento’s real estate market to see whether or not it’s worth investing.

Sacramento Real Estate Trends to Keep Up With

According to top-of-their-game real estate agents, the median list price of Sacramento homes values at $430,000, building up 19.5 percent year over year. The city is very much a seller's world, which means that more people are looking to buy than there are houses available. With such a growing buyer's pool, sellers newly entering the market discover that they can set their asking price a little higher than what they may have expected initially. 

If we listen to the sale-to-list ratio—the final sum of what the buyer pays for a home divided by the last list price—Sacramento shows that sellers have managed to hold good leverage in negotiations. If the percentage comes above 100 percent, this means that the house was sold for more than the listing price thanks to a seller’s expertise. And indeed, Sacramento sellers really know what they’re doing because the ratio comes at about 104.62 percent.

Another component instrumental to Sacramento's real estate market is the influx of people coming from all over the state and choosing the capital city as their home sweet home. There are a few reasons for this. First, the market in Sacramento is in its healthiest form yet—it was ranked number one in California for one-way U-Haul trips in 2018. 

Second, due to the income mix, diversity of jobs, and people living in the area, real estate investors have a larger pool to choose from. It's not as black and white as choosing between a luxury residence and a densely packed unit. This is definitely a good thing, as more and more people begin to see Sacramento as a better alternative to the Bay Area.

Average House Price in Sacramento

With a median home value of $399,683, the average Sacramento house prices are roughly $130,644 more than the national average. However, if you have your mind set on that part of the West Coast, it’s worth noting that Sacramento is considerably cheaper than most of its neighbors—San Francisco and San Jose to be more exact. 

Now, you might be wondering if house prices are likely going down soon in the capital city. And as much as we wish we had the answers for you, the pandemic made it quite hard to make those sorts of predictions. On one hand, house price increases halted temporarily in response to COVID, but the historically low-interest rates and inventory saw demand go through the roof.

Sacramento Rental Market 

Sacramento's rental market has long been deemed California's overlooked middle child. But, in recent quarters, the city has been enjoying a growing amount of attention. As mentioned above, more and more people are looking to move to this beautiful city, but not all are ready to become homeowners yet. And when it comes to renting a house, it’s pretty much a different ballgame. Here are a few questions we suspect you need answered.

What are the largest recent rent increases?

According to recent reports, rent in Sacramento is at an all-time high—it has gone up by 10 percent compared to the national index, which only shows a five percent year-over-year spike. Residents who moved to Sacramento years ago see their rent doubled and even tripled, and a lot of it has to do with the massive influx of people and the jobs they bring with them.

The latest stats show that the largest spikes in Sacramento's rental world were found in the areas of South Land Park's Greenhaven, Arden's Sierra Oaks Vista, and Northeast Carmichael's Fair Oaks. However, despite this increase, these areas are still more affordable—in fact, they’re $800 cheaper than midtown Sacramento's average. The latter is $2,280, and central Davis’ average is $2,208.

What's the main reason rent prices are going up?

Jobs. It all comes back to jobs. Sacramento's job force is growing rapidly, with education, health services, and construction-related professions making up the biggest bulk. And as this sector grows, house prices follow—the goal is to raise people up, not to try and slow the market down. If no increase was to be made with the same influx of jobs, the latter is sure to happen.

The Greater Sacramento Economic Council aims to attract new industries—particularly the STEM fields—with higher-paying jobs that help promote higher education. With personal income raises and favorable economic opportunities (which Sacramento aims to provide), the ever-so-changing real estate market becomes much easier to navigate on both a personal and community level.

What about Affordable Housing?

Sacramento is said to be growing steadily—albeit a bit slowly—in this department. But, changes are on the horizon. For instance, come the year 2022, and a pile of rubble near the corner of 14th and O Streets will become a five-story, apartment called Sonrisa; meaning "happy" in Spanish. And while its 267 square feet sound like a bit of a tight squeeze, these units are said to be equipped with elevated ceilings and floor-to-ceiling windows; among other amenities. Sonrisa is among the many projects being implemented all over the city.