Sacramento Housing Market Trends and Forecast for 2024

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.

As of now, the Sacramento housing market leans more towards being a seller’s market. This is evidenced by the consistent upward trend in median home prices and the surge in sales volume. In a seller’s market, there is typically high demand for homes, resulting in increased competition among buyers and potentially leading to multiple offers and bidding wars. Sellers have the advantage of commanding higher prices and favorable terms, making it a favorable environment for those looking to sell their properties.

How is the Sacramento housing market doing currently?

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.

Key Statistics

In February 2024, existing, single-family home sales in California reached a total of 290,020 on a seasonally adjusted annualized rate. This marked a significant increase of 12.8 percent from the previous month and a modest rise of 1.3 percent compared to February 2023.

The median home price statewide for February stood at $806,490, reflecting a 2.2 percent uptick from January and a substantial 9.7 percent surge from the same period last year.

The Sacramento County Perspective

Zooming into Sacramento County, we gain deeper insights into the local housing market dynamics. February 2024 saw a median sold price of $530,000 for existing single-family homes, showing a notable increase from both January 2024 and February 2023.

• Price Movement: There was a month-over-month increase of 2.9 percent, indicating a steady appreciation in property values within the county.
• Year-over-Year Growth: Comparing to February 2023, the median sold price demonstrated a robust year-over-year growth of 6.2 percent, underlining the sustained demand and appreciation in the local real estate market.
• Sales Volume: Furthermore, the sales volume in Sacramento County experienced a remarkable month-over-month surge of 18.0 percent, showcasing a heightened level of activity among buyers and sellers alike.
• Long-term Trends: When examining the broader trend in the Central Valley region, encompassing Sacramento and neighboring areas, we observe a consistent pattern of growth. The median sold price for February 2024 reached $478,200, reflecting a substantial increase from both the previous month and the same period last year.

In Central Valley: February 2024 Median Sold Price of Existing Single-Family Homes

Examining the housing market in the Central Valley region, which encompasses Sacramento and its neighboring areas, we find noteworthy trends that shed light on the broader real estate landscape.

• Median Sold Price: In February 2024, the median sold price for existing single-family homes in the Central Valley stood at $478,200. This figure reflects a significant increase from both the previous month and the same period last year, indicating robust appreciation in property values.
• Month-to-Month Price Change: There was a notable month-to-month price change of 4.0%, underscoring the rapid pace at which home prices are ascending in the region. This uptick signifies heightened demand and competition among buyers.
• Year-over-Year Price Change: Comparing to February 2023, the median sold price exhibited a substantial year-over-year increase of 6.3%, highlighting the sustained growth and appreciation in real estate values within the Central Valley.
• Sales Volume: Additionally, the sales volume in February 2024 saw a month-over-month increase of 11.2%, indicating a surge in transactional activity within the region. This heightened level of sales activity suggests a strong market demand and investor confidence in the area’s real estate market.
• Year-over-Year Sales Change: Despite the significant month-over-month increase, the year-over-year change in sales volume remained relatively steady, with a modest uptick of 0.8% compared to February 2023. This indicates a consistent level of market activity over the past year.

Market Outlook

The current state of the Sacramento housing market paints a picture of resilience and stability. Despite the challenges posed by fluctuating mortgage interest rates, homebuyers remain active, drawn by the region’s appealing lifestyle, economic opportunities, and relatively affordable housing options compared to other parts of California.

Looking ahead, it is essential for both buyers and sellers to stay informed about market trends, mortgage rates, and economic indicators. While uncertainties may arise, maintaining a proactive approach and seeking guidance from real estate professionals can help navigate the evolving landscape with confidence.

Are Home Prices Dropping in Sacramento?

Contrary to the notion of home prices dropping, the data suggests a continued appreciation in property values within Sacramento County. Both month-over-month and year-over-year comparisons reveal positive growth in median sold prices, indicating a stable and appreciating market. While minor fluctuations may occur in response to various factors such as economic conditions and interest rates, the overall trajectory points towards sustained appreciation rather than a significant decline in home prices.

Sacramento Single-Family Housing Market Data

In February 2024, the Sacramento housing market witnessed a notable surge in sales volume and median sales price. Let’s take a closer look at the key statistics provided by the Sacramento Association of REALTORS®.

Sales Volume and Median Sales Price Surge

There were 730 closed sales, marking a substantial 19.7% increase from January and a 4.4% rise compared to February 2023. The distribution of financing methods indicates that Conventional Financing dominated, representing 64% of sales, followed by Cash and FHA at 17.9% and 13.3%, respectively.

Moreover, the median sales price experienced a significant uptick, climbing 3.9% from $515,000 to $535,000. This increase reflects a 7.2% rise compared to February 2023, where the median sales price stood at $499,000. Essentially, this median figure denotes the midpoint, where half of the monthly sales surpass this price, while the other half fall below it.

Listing Inventory and Months of Inventory

The listing inventory also saw an upward trend, escalating by 6.1% from January to February, reaching a total of 1,181 units. Comparatively, this figure represents a 6.6% increase from February 2023, where the inventory stood at 1,111 units. Concurrently, the Months of Inventory decreased from 1.8 Months to 1.6 Months, signifying the time it would take for the current rate of sales to deplete the total active listing inventory.

Days on Market

One of the most striking revelations is the decline in Median Days on Market (DOM), dropping from 21 to 11 in February 2024, in contrast to 26 days recorded in February 2023. Out of the 730 sales recorded this month, 67.1% (490) were on the market for 30 days or less, while 85.1% (595) were on the market for 60 days or less.

Market Summary

In summary, the Sacramento single-family housing market experienced a resurgence in sales volume and median sales price during February 2024. The increase in listing inventory indicates a growing supply, albeit at a slower pace than the surge in demand. Notably, homes are now selling at a faster pace, as evidenced by the significant reduction in Median DOM. As the market dynamics evolve, it’s essential for both buyers and sellers to stay informed and adapt to these shifting trends.

Sacramento Housing Market Forecast for 2024 and 2025

Sacramento–Roseville–Arden-Arcade, a vibrant region in California, has witnessed noteworthy trends in its housing market. According to Zillow, as of February 29, 2024, the average home value in the Sacramento–Roseville–Arden-Arcade metropolitan area stands at $568,279, marking a 2.1% increase over the past year. Properties in this market typically go pending in around 17 days.

Key Housing Metrics Explained

• For Sale Inventory: The current number of properties available for sale in the Sacramento area is 3,486 as of February 29, 2024.
• New Listings: In February 2024, there were 1,260 new listings added to the Sacramento housing market.
• Median Sale to List Ratio: The median sale to list ratio, which reflects the relationship between the final sale price and the listing price, was recorded at 0.999 as of January 31, 2024.
• Median Sale Price: As of January 31, 2024, the median sale price for homes in Sacramento stood at $533,083.
• Median List Price: The median list price for properties in the Sacramento area was $598,667 as of February 29, 2024.
• Percent of Sales Over List Price: Approximately 35.3% of home sales in Sacramento were transacted above the list price as of January 31, 2024.
• Percent of Sales Under List Price: Conversely, 48.7% of home sales in the same period were below the list price.

Understanding Sacramento–Roseville–Arden-Arcade MSA

The Sacramento–Roseville–Arden-Arcade metropolitan statistical area (MSA) encompasses several counties, including Sacramento County, Placer County, El Dorado County, and Yolo County. This MSA is recognized for its diverse economy, cultural attractions, and desirable living environment.

With a population exceeding 2.6 million, the housing market in the Sacramento MSA is substantial, catering to a diverse range of residents and investors. The region’s strategic location within Northern California, coupled with its amenities and employment opportunities, contributes to its appeal among homebuyers.

Will the Sacramento Housing Market Crash?

As with any market, the possibility of a housing market crash cannot be entirely ruled out, but current indicators do not suggest an imminent crash in the Sacramento housing market. Factors such as steady demand, limited inventory, and a diversified local economy contribute to the market’s overall stability. However, unforeseen events or economic shifts could impact market dynamics in the future.

Is Now a Good Time to Buy a House in Sacramento?

For potential homebuyers considering entering the Sacramento housing market, timing is an important consideration. While market conditions favor sellers, opportunities still exist for buyers, especially those who are well-prepared and flexible in their approach. Low-interest rates as compared to last year  and the potential for future appreciation may make now an attractive time to buy for those who are financially ready and able to navigate the competitive 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

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.

References:

• https://www.car.org/
• https://www.sacrealtor.org/consumers/housing-statistics
• https://www.zillow.com/sacramento-ca/home-values
• https://www.realtor.com/realestateandhomes-search/Sacramento_CA/overview