Investing in Sacramento real estate might just be the right move for you! That is if you’re looking for affordable investment properties in the California housing market 2019. It’s not just the house prices that make it a good place for buying a rental property, there’s much more. So let’s get into the Sacramento housing market 2019.
Related: California Is Emerging as the Best Place to Invest in Real Estate in the Coming Years
Why You Should Invest in the Sacramento Housing Market 2019
Economic Recovery
So why is Sacramento a good place to invest in real estate? Let’s talk recession recovery. Sacramento is in one of the last counties in California to reach an initial pre-recession jobs recovery. Job growth plays a big role in the economy of a city, and a good housing market follows a good economy. The market saw seven years of increasing prices. Now, the Sacramento real estate market 2019 might finally witness a slowdown, giving investors an opportunity to enter the market.
Sales Price and Home Sales Volume
The Sacramento housing market 2019 should see a 2.3 percent increase in average sales prices, which is only slightly higher than the national average of 2.2 percent. Sales volume is only expected to drop 1 percent in 2019, still below the national average of 2 percent.
Sacramento’s sales volume is actually quite impressive compared to other cities in the state. In 2018, sales were only 1.5 percent below the 2017 rate. This is nothing compared to the 8 percent drop in sales volume in the Los Angeles housing market during the same time frame.
The main reason for the higher performance in sales volume is the consistency of inventory in the Sacramento housing market. This can be attributed to the impacting factor of construction. California’s more expensive cities struggle with new construction projects due to outdated zoning laws. The Sacramento housing market 2019 is ready for the construction to allow inventory to meet buyer demand and keep a steady sales volume.
Single Family and Multi Family Construction
Buying an investment property in a market with no inventory can prove to be difficult, so checking out new construction is important. Single family residential construction has been increasing gradually over recent years, but multi family construction hasn’t been as busy.
However, the rental vacancy rate for multi family homes averaged at 3.3 percent in Q3 2018. With vacancy rates below what’s normal, the Sacramento housing market 2019 can expect multi family construction to pick up.
Employment Will Match Population Levels
Sacramento has a significant dependence on state and local government jobs, which were slow to return after the recession. And with its population growing about 1 percent every year since 2008, it was estimated that Sacramento is going to need an additional 50,000 jobs to match its population level. It looks like that target is going to be met in 2019.
Income Is on the Rise
A major factor making Sacramento one of the more affordable cities in California is the increasing income. It actually surpassed its pre-recession peak in income in 2011- a year before the rest of the state caught up.
We can expect incomes to rise beyond the inflation rate once the added jobs level out with the population scale. A boost in income will definitely add support to the Sacramento housing market 2019. It can make the market attractive to new residents and boost rental demand as the population grows.
Airbnb Sacramento Is Legal
Short term rentals have become a huge player in the real estate investing industry. So it makes perfect sense to ask is Airbnb legal in Sacramento before you invest in an Airbnb rental there.
Although the opposition has asked for tighter Airbnb regulations, Airbnb is legal in the city of Sacramento. So for the Sacramento housing market 2019, it looks like investing in short term rentals won’t get you in any trouble. Just make sure to apply for the required city permits and if you’re an out-of-state investor, or don’t live in your rental, you need to have an in-town manager. Non-resident hosts also have a 90-day rental limit per year.
Related: 8 Best Cities for Airbnb Investment in 2019
Sacramento Housing Market 2019- The Data
Before buying a Sacramento real estate investment, it’s important to check out the city’s numbers. Mashvisor’s investment property calculator analyzes the performance levels of rental property investments in any city of your choosing. Today, we’ve got some data for the Sacramento housing market 2019 so you have an idea of the property price and returns to expect from Sacramento investment properties.
- Median Property Price: $389,117
- Price per Square Foot: $267
- Days on Market: 75
- Price to Rent Ratio: 22
- Monthly Traditional Rental Income: $1,495
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $2,213
- Airbnb Cash on Cash Return: 2%
- Airbnb Occupancy Rate: 55%
Clearly, you can see the median property price in the Sacramento housing market 2019 makes it quite the affordable market in California, especially when compared to the Los Angeles median price of $932,371, and San Diego’s $795,647.
Related: Should You Invest in Sacramento Real Estate in 2018?
The return metrics aren’t very high, but this is to be expected since these are average numbers for all Sacramento rental properties. Let’s take a look at the data for some neighborhoods in Sacramento for a better feel of the returns in local markets.
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Best Neighborhoods in Sacramento
To find the best area to buy rental property in Sacramento, you need to know how investment properties perform on a more local level. So we’ve analyzed a couple of neighborhoods in the Sacramento housing market 2019 and found the best areas for top-performing, relatively cheap real estate.
Gardenland
- Median Property Price: $304,950
- Price per Square Foot: $250
- Price to Rent Ratio: 16
- Monthly Traditional Rental Income: $1,570
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $3,685
- Airbnb Cash on Cash Return: 7%
- Airbnb Occupancy Rate: 55%
Campus Commons
- Median Property Price: $204,000
- Price per Square Foot: $167
- Days on Market: 77
- Price to Rent Ratio: 13
- Monthly Traditional Rental Income: $1,290
- Traditional Cash on Cash Return: 2%
- Monthly Airbnb Rental Income: $2,516
- Airbnb Cash on Cash Return: 6%
- Airbnb Occupancy Rate: 68%
West Tahoe Park
- Median Property Price: $241,000
- Price per Square Foot: $210
- Days on Market: 91
- Price to Rent Ratio: 15
- Monthly Traditional Rental Income: $1,345
- Traditional Cash on Cash Return: 2%
- Median Property Price: $471,633
- Price per Square Foot: $259
- Days on Market: 64
- Price to Rent Ratio: 24
- Monthly Airbnb Rental Income: $3,982
- Airbnb Cash on Cash Return: 6%
- Airbnb Occupancy Rate: 72%
To start your search for investment properties in the Sacramento housing market 2019, click here.
Related: The 10 Best Places to Buy Rental Property in California in 2019
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