Sacramento Multifamily Report – Winter 2020
Tepid development and the Bay Area's spillover effect continue to push area rents to new heights.
Sacramento rent evolution, click to enlarge
The market that has long been considered California’s overlooked middle child has been enjoying more attention in recent quarters. In the context of ongoing low supply, the aftershock of the Bay Area’s tech boom is still strongly felt in Sacramento’s multifamily sector, where the average rent rose 5.3 percent year-over-year through November 2019, outpacing the national rate of growth by 220 basis points. That ranked Sacramento third across all major U.S. metros, following Phoenix (7.5 percent) and Las Vegas (6.0 percent).
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Employment growth moderated, with the expansion rate at 1.8 percent year-over-year through September, on par with the national average. The state capital gained 18,500 jobs, with education and health services (6,200 positions) in the lead, followed by the mining, logging and construction sector, which added 5,700 jobs. Accounting for expansions of health-care companies and a handful of major projects under development, both sectors are likely to continue expanding, slowly diversifying the city’s government-centric workforce. The government sector, in fact, lost 900 positions in the 12 months ending in September.
Sacramento sales volume and number of properties sold, click to enlarge
Deliveries remained tepid, with only 629 units coming online in 2019 through November. Meanwhile, more than $900 million in multifamily assets traded last year through October, as investors continued to mainly target value-add plays in the absence of significant newer stock.
