Sacramento multifamily performance improved further as in-migration accelerated, fueled in large part by the Bay Area’s spillover effect, itself exacerbated by work-from-home policies produced by the pandemic. Increased rental demand placed the metro among the nation’s top performers, with rents up 8.3 percent year-over-year through May, to $1,676. Meanwhile, occupancy climbed 110 basis points over 12 months, to 97.1 percent as of April.
Unemployment dropped to 6.6 percent in April, behind the 6.1 percent U.S. rate, according to preliminary Bureau of Labor Statistics data. Meanwhile, Sacramento employment posted a 5.9 percent drop in the 12 months ending in March. Two sectors gained jobs during the period—trade, transportation and utilities (up 0.8 percent) and construction (4.6 percent). Meanwhile, the public sector shrunk by just 2.8 percent. The metro’s economic diversification remains an ongoing challenge, with government jobs still representing nearly one-quarter of the workforce. While the public sector acted as a shield during the pandemic, the downturn took large chunks out of normally consistent revenue sources, and some public budgets could be in jeopardy.
Just 65 units came online in 2021 through May, but developers had an additional 6,462 units underway. We expect 1,457 apartments to come online this year, behind last year’s 2,078-unit decade high, but still significant for the supply-constrained metro.