Sacramento Multifamily Report – Summer 2019
The metro is now largely a landlord’s market due to limited inventory growth and the Bay Area’s exodus.
Sacramento rent evolution, click to enlarge
Sacramento is now largely a landlord’s market due to limited inventory growth and the Bay Area’s exodus. Pressured by a limited multifamily supply, the average rent in the metro rose 5.4 percent year-over-year through July to $1,524, posting the third-largest increase among major metros and outpacing the national rate by 200 basis points.
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Employment growth in the metro moderated in the past 12 months but is still bettering the 1.7 percent national average by 80 basis points. Traditionally anchored by state government jobs, the Sacramento economy is slowly diversifying, with education and health services growing by 6,000 positions in the 12 months ending in June, followed by the mining, logging and construction sector, which added 3,000 jobs. Both are slated for sustained improvement in the foreseeable future, considering the various developments underway in the metro, including Centene’s 68-acre campus in Natomas, the $520 million Natural Resources Building and the redevelopment of the Powerhouse Science Center.
Sacramento sales volume and number of properties sold, click to enlarge
Deliveries were scarce, totaling just 312 units by July. Transaction activity picked up pace in the second quarter, bringing the total investment value to $456 million, or an average per-unit price of $155,703. With less than 1,000 units projected for delivery in 2019, we expect rents to rise 3.8 percent by year-end.
