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Sacramento: Real Estate and Market Trends

Published on Monday - March 30, 2015

As the capital of California, Sacramento has been anything but quiet in the current recovery. Prices in the Sacramento real estate market have reached every end of the spectrum. The onset of the recession saw record lows, and recent appreciation rates all but erased the drop in prices. In fact, Sacramento real estate has appreciated by as much as 64.6 percent in the last three years. It wasn’t until the end of last year that the pace of appreciation started to temper, and even then, it is still higher than the national average.

At $268,700; the current median home price for the Sacramento real estate market is about $60,000 more than the national average. The evidence of appreciation is pretty straightforward. What is even more important is the rate homes were appreciating as recently as three years ago. Again, homes in the Sacramento housing market were appreciating at a rate of more than 64 percent. That is significant, considering it was on the heels of the housing crisis. Homeowners were automatically reintroduced to equity they thought they had lost. The following highlights how much equity has been gained relative to the year of the home’s purchase:

  • Homes purchased in the Sacramento housing market one year ago have appreciated, on average, by $22,119. The national average was $14,170 over the same period.
  • Homes purchased in the Sacramento housing market three years ago have appreciated, on average, by $113,667. The national average was $53,857 over the same period.
  • Homes purchased in the Sacramento housing market five years ago have appreciated, on average, by $94,389. The national average was $48,036 over the same period.
  • Homes purchased in the Sacramento housing market seven years ago have actually depreciated, on average, by $1,402. The national average increased $13,870 over the same period.
  • Homes purchased in the Sacramento housing market nine years ago have depreciated, on average, by $63,852. The national average also decreased $2,822 over the same period.

The recovery seems sustainable at this point, but it will likely take another two or three years to achieve a full economic recovery in the area. The Sacramento housing market needs significant contributions from the job sector for things to stay on trajectory. The unemployment rate is currently 6.2 percent, slightly over the national average. However, the year-over-year decrease is encouraging to say the least. In the last 12 months, unemployment dropped 1.3 percent. That is more than the national average can say. So yes – things are heading in the right direction. The rate in which jobs are growing should only contribute to the progression. The area’s one-year job growth rate is now at 2 percent, just over the national average.

As much as Sacramento real estate has appreciated in the last three years, it still remains affordable. In fact, Sacramento homes are more affordable than most others across the country. The average homeowner in the U.S. spends about 15.1 percent of their income on monthly mortgage payments, but Sacramento homeowners have gotten use to spending about 12.4 percent. While prices are high compared to some states in the South and Midwest, Sacramento is very affordable for a California market. San Diego, for example, is a popular destination that demands a loftier price tag.

Sacramento real estate investing has seen the amount of available foreclosures diminish in recent years, but that doesn’t mean they are not readily available to those who know where to look. According to RealtyTrac, just under 40 percent of all Sacramento foreclosures are considered to be “pre-foreclosures.” That is, the lender has filed a default notice on the property and legal action will soon take place. At 39.4 percent, pre-foreclosures are down 32 percent from the previous month and nearly 30 percent from the same time last year. Another 40 percent of the foreclosures in Sacramento are heading to auction – that number has remained unchanged from last year. Rounding out the last of Sacramento’s foreclosures are bank-owned properties. These make up the smallest group, at 20.5 percent.

Those interested in Sacramento real estate investing should know that distressed properties are being offered at a significant discount. Recent numbers suggest that foreclosure properties are selling for an average price of $196,000. That is $54,000 cheaper than the average non-distressed property, or a 21.6% discount.

While they may not have the foreclosures that Sacramento real estate investors are looking for, Trulia has identified the following neighborhoods as the most popular:

  • East Sacramento, with an average listing price of $678,479
  • Meadowview, with an average listing price of $185,180
  • South Land Park, with an average listing price of $430,062
  • Pocket, with an average listing price of $528,173
  • Curtis Park, with an average listing price of $489956

Of those that made the list, East Sacramento and Meadowview receive the most attention.

As the capital of one of the hottest real estate markets (California), Sacramento has taken the recovery and run with it. Jobs, while still exhibiting room for improvement are heading in the right direction, and housing activity is perfectly stable. There is no reason to believe the Sacramento housing market can’t continue its resurgence in 2015, and beyond.

Sacramento Housing Market Summary:

  • Current Median Home Price: $268,700
  • 1-Year Appreciation Rate: 7.3%
  • Unemployment Rate: 6.2%
  • 1-Year Job Growth Rate: 2%
  • Population: 479,686
  • Median Household Income: $57,027

Sacramento County Map:

Map of Sacramento neighborhoods

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