According to a report published on Wednesday, by Realty company Lyon Real Estate (and Sacramento-based reporting company TrendGraphix Inc ) homes selling below $400,000 in the four-county region known as ‘Greater Sacramento’ are “scarce.” The report cites both low supply and “insatiable buyer demand” as primary factors.
June’s median price up 9% compared to 2016. The steady growth in our local economy and relative affordability compared to the San Francisco Bay Area continue to attract more buyers.
Not since before the 2007 housing crash have homes been selling at these prices… but, today’s home-buyers market is an entirely different animal. The report states that there was an “astounding” 15,437 homes listed for sale in Greater Sacramento the last time the median home sale price crested $400K… but now, there are only 4,014 listings across four counties, a 15% decline from a year ago.
Less than 1,500 of those homes are listed under $400K. Using an online mortgage calculator, a $400K mortgage (including PMI & insurance at 4.5%) would require a whopping $2,419.23 monthly payment; even with $50,000 down, such a loan would require an annual income of at least $80,000 according to most home-loan approval standards. According to 2015 US Census data, the annual median income for Sacramento rose to just under $63K. It seems that most Sacramentans are already priced out of the market.
These numbers are even more disconcerting considering the population of California in 2016–increased by over 300,000 residents according to a report by the CA Department of Finance. Sacramento is the fastest growing large city in California, adding nearly 7,000 residents in within the city limits in 2016; West Sacramento grew by over 1,000 people during the same time period.
What about renting? According to the same Dept. of Finance reports, most of the population of California is housed in multi-family units:
Multi-family housing comprised more than 50 percent of all new units in 93 of the 482 cities in California. Statewide, multi-family units represent 54.2 percent of unit growth last year, continuing a four-year trend. (source: http://www.dof.ca.gov/Forecasting/Demographics/Estimates/E-1/documents/E-1_2016PressRelease.pdf )
But, the rental market is experiencing steep growth as well, which translates to higher rates. A Yardi Matrix report found that rents in Sacramento rose 10.5% in 2016… the highest year-over-year rent growth in the nation to an average of $1,275 per month.
According to the “Emerging Projects” section of the Downtown Sacramento Partnership website, there are eight residential development projects currently under construction in just the Sacramento Downtown & Midtown corridor, which will theoretically add a total of 719 residential units to the city. Directly across the river however, lies a far more impressive development: The Bridge District (TBD) is a 188 acre site between Raley Field and The Tower Bridge; their plan includes 4,000 residential units. In 2016, the City of Roseville had 3,961 residential units in planning stages.
The lack of available, affordable housing in California is so severe that in June 2017 ‘landmark’ legislation was signed by both state Senate & Assembly such as Senate Bill 35, from Sen. Scott Wiener (D-San Francisco) which would hopefully streamline the complicated & lengthy housing development approval process.
But, with the median price of a residence selling at over $400K, skyrocketing rental rates and with so few listings in the 4-county area available, where will prospective home-buyers turn… and will most simply be priced out of the market altogether?
L. R. Styles is a columnist & photographer for Belator Media