Sacramento Multifamily Report – Fall 2020
With rents and occupancy inching up, the metro is faring much better than the nearby Bay Area.
Sacramento’s multifamily fundamentals held up well through the year’s first three quarters, outperforming major markets and the nation. The average rent rose 0.6 percent on a trailing three-month basis through September to $1,575, while the U.S. rate inched up 0.1 percent to $1,463. The occupancy rate in stabilized properties pointed to solid demand, with the rate rising 10 basis points to 96.2 percent, in the year ending in August.
But the metro is not out of the woods yet, even though the unemployment rate rose from an all-time high of 14.0 percent in April to 11.6 percent in July. Moreover, due to a high number of unemployment claims, on Sept. 20, officials suspended the processing of new applications for two weeks. The job market marked the fourth-consecutive month of contractions, down 6.8 percent in July and 20 basis points above the U.S. rate. All sectors lost jobs, except financial activities. Government jobs and professional and business services–which account for a respective 24.0 percent and 14.3 percent of the workforce–have fared well, shrinking by 4.7 percent and 2.4 percent, respectively.
The pandemic has stalled sales activity. Just $341 million in multifamily assets traded through September, with the price per unit rising 11.2 percent to $200,606. Meanwhile, developers marked an all-time high in supply, with 1,460 units delivered and 4,678 underway. Accounting for these factors, we expect rents to rise 1.9 percent in 2020.