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. The Sacramento housing market currently leans slightly towards sellers, given the positive month-to-month and year-over-year changes in median sold prices.
However, the decrease in sales from the previous year suggests that buyers may have more negotiating power compared to the previous year. While the statewide median home price in California experienced a modest decline in December, Sacramento County bucks the trend with an upward trajectory. The month-to-month increase in median sold price indicates a local market that remains resilient to broader statewide trends.
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.
In December, the California housing market experienced a period of stagnation, as reported by the California Association of Realtors (C.A.R.). The existing, single-family home sales totaled 224,000, maintaining a flat trajectory from November but reflecting a 7.1 percent decline compared to December 2022.
The median home price in California for December 2023 stood at $819,740. This figure represents a marginal 0.3 percent decrease from November but demonstrates a robust 6.4 percent increase when compared to the same month in 2022.
Zooming into the Sacramento County housing market, let's delve into the specifics of December 2023:
For potential homebuyers in Sacramento, the current scenario presents a mixed picture. The increasing median sold prices suggest a competitive market, favoring sellers. However, the dip in year-over-year sales may provide buyers with opportunities for negotiation. As always, individual circumstances and long-term goals should guide the decision-making process.
December 2023 provided valuable insights into the real estate market in the Central Valley region. Let's break down the data:
The Central Valley real estate market appears to be navigating a nuanced landscape. The slight decrease in median sold price from November, combined with a positive year-over-year change, underscores the dynamic nature of the market. The month-to-month increase in sales further indicates a level of resilience, although the year-over-year decline warrants attention.
For buyers, the current scenario in the Central Valley may present opportunities for negotiation, particularly with the month-to-month increase in sales. Sellers, on the other hand, should consider the positive year-over-year change in median sold price as a sign of long-term market appreciation.
Let's take a closer look at the key statistics provided by the Sacramento Association of REALTORS®.
November witnessed a 16.7% decrease in sales volume compared to October, with 697 closed sales, reflecting a significant shift in market dynamics. In a year-over-year comparison, there was an 11.2% decline from November 2022, signaling a shift in buyer activity. Notably, conventional financing dominated the market, accounting for 59.3% of sales, while cash and FHA constituted 19.8% and 13.6%, respectively.
The median sales price experienced a 4.2% decrease from $548,000 to $525,000, indicating a shift in pricing trends. However, compared to November 2022, there was a 2.9% increase in the median sales price, reaching $510,000. This data emphasizes the importance of understanding the dynamic nature of the market, where prices can vary based on multiple factors.
The listing inventory declined by 9.8% from October to November, dropping from 1,437 units to 1,296. In a year-over-year perspective, the inventory showed a substantial 30.7% decrease from November 2022 (1,871). The Months of Inventory, a key metric indicating the time it would take to deplete the current listing inventory at the current sales rate, increased from 1.7 to 1.9 months. This rise suggests a potential shift in the balance between supply and demand in the market.
The median Days on Market (DOM) increased from 12 to 14, although it remained significantly lower than the 23 days recorded in November 2022. Of the 697 sales in November 2023, 74% were on the market for 30 days or less, while a substantial 91.1% spent 60 days or less on the market. These figures highlight the continued brisk pace of the Sacramento single-family housing market, with the majority of homes selling within a relatively short timeframe.
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.
According to Zillow, the average home value in the Sacramento–Roseville–Arden-Arcade area stands at $555,739, experiencing a marginal decrease of 0.6% over the past year. Homes in this region typically go pending in around 18 days – a crucial metric that reflects the market's pace and demand.
While the average home value has experienced a slight decrease of 0.6% over the past year, it does not necessarily indicate a widespread trend of dropping prices. The market remains dynamic, and fluctuations are common. It is advisable to monitor future trends for a more accurate assessment.
As of the current data and the 1.5% 1-year market forecast, there is no indication of an imminent housing market crash in Sacramento. However, real estate markets are influenced by various factors, and continuous monitoring is crucial for staying informed about any potential shifts.
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.
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 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 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 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.
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.
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.
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:
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.
The California Association of Realtors has forecast a significant increase in home sales next year of 22.9% to 327,100 units. And they predict a home price growth of 6.2% in 2024 to $860,300.
They believe the severity of the housing shortage will push prices up. However, mortgage rates might fall a little in 2024, it likely won’t be enough to encourage homeowners to sell.
Homeowners may have to wait until 2025, before rates fall significantly and when that occurs, the California economy will surge and more buyers will be buying. Lofty home prices and high mortgage payments are the key stopping point and that in turn feeds higher rent prices which fuels inflation.
“With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid-5% range by the end of next year,” said C.A.R. Senior Vice President and Chief Economist Jordan Levine.
CAR’s data shows strong upward pressure on prices this year with active listings on the decline. High mortgage rates for longer means many homeowners will choose to avoid selling and face much higher mortgage payments, which are increasingly an issue for the inflation-weary.
House Price Growth in California all type. Screenshot courtesy of CAR.
Consistent with that theme, the August home sales report, perhaps surprisingly, reflects CAR’s suggested outlook for 2024. Homeowners are asking high, but now only 44% are receiving that price offer.
Home prices in California rose again in August, the biggest increase in 14 months. Single family home prices rose 3.3% while sales dropped by 5.3% vs July.
The Bay Area, infamous for high home prices and stiff competition for housing, is unique in California’s housing landscape. Of course, it’s relatively expensive and difficult to be a homebuyer almost anywhere in California, but these complications are multiplied exponentially in the Bay Area, leading to what many have deemed a housing crisis.
But have high home prices and competition finally reached their tipping point? Signs across the Bay Area point to: yes.
The Bay Area’s housing market is cooling in more ways than one, according to a recent Trulia report.
The average days on market has increased across the Bay Area in 2018. This increase has been most significant in the:
As homes have sat longer on the market, the share of listings receiving a price cut has also increased in cities across the Bay Area, including in the:
After nearly seven years of consistently rising home prices and competition for limited inventory, Bay Area homebuyers are finally beginning to see some relief. But for sellers and real estate professionals, a slower market can be problematic.
As homes have begun to sit longer and more price cuts have occurred, home prices are starting to decline. In fact, mid-tier prices in San Francisco have experienced a decline each month since June 2018.
This may be news to our readers, as most media reports choose to focus on annual gains — after all, prices can be volatile on a month-to-month basis, and mid-tier home prices are still 9% above a year earlier in San Francisco due to gains experienced earlier in the year. But first tuesday is confident that the decline in home prices in the latter half of 2018 is only the start of a longer trend.
This forecast is based on three criteria:
What are real estate professionals to do with this information?
Armed with knowledge of a coming slowdown, real estate professionals can prepare today by:
Sacramento’s housing market is in a modest deceleration, particularly in sales volume, according to realtor.com.
Trends emerging in the last few months in residential real estate are likely to continue in 2019, according to a forecast from realtor.com.
The online arm of the National Association of Realtors released its official prediction for sales prices and volume Wednesday. Here is more from that and a chat with realtor.com’s director of economic research, Javier Vivas.
1. Sacramento should see 2.3 percent growth in average sales price in 2019, while the actual number of sales will drop by 1 percent. Nationally the figure is 2.2 percent for price appreciation, while sales will drop by 2 percent.
2. Vivas said Sacramento’s housing market is in a modest deceleration, particularly in sales volume. A lack of affordability both locally and in the Bay Area has pushed many would-be buyers to gear back, with the Bay Area market causing fewer people to sell homes and head east for cheaper options.
3. In addition to affordability, Vivas said, Sacramento isn’t poised to see as much job growth in the future, taking away a reason for people to migrate here. And while millennials are expected to be the main driver in housing in most markets even through the next recession, he said, a slightly older demographic of 35- to 44-year olds is likely to be a bigger sales force locally, he said.
4. A slowdown in growth doesn't mean housing is headed into negative territory, Vivas said. “It’s still very much a seller’s market in many places,” he said. But buyer confidence in the economy overall is actually higher than it is in housing, he added.
5. If buyer sentiment is having a strong effect anywhere, it’s in entry-level homes, where inventory is scarce. Vivas said those buyers have seen prices, and more recently interest rates, rising to levels they can’t afford, leading them to delay buying at all.