Right now, Sacramento’s housing market is seeing somewhat of a revival, far earlier than recession forecasters and market crash doomsayers could even imagine.
Just like our beloved Sacramento Kings, the upstart Sactown housing market is upsetting expectations.
Despite mortgage rates that nearly doubled from early 2022 to 2023 (but seriously, rates are pretty good again!), the national narrative of a housing market meltdown with huge price reductions just hasn’t come to fruition in California’s capital city.
In fact, we’re starting to see early signs of a market rebound, with far more competition among buyers, multiple offers (on listings priced correctly), and even bidding wars once again!
There’s one huge reason for the relative health of our market – inventory. Or, more accurately, a lack of housing inventory. In fact, the supply of homes for sale is now down to one month or less, an unparalleled shortage of available listings.
That – more than prices and mortgage rates – dictates the health and positivity of a housing market in the long-term, so today I wanted to touch on seven factors that are contributing to our historic housing shortage.
1. Paltry New Home Construction
For several years, new home builders didn’t focus on residential projects in the Sacramento region, or chose to build apartments and other commercial units, not residential homes.
2. Rapidly Growing Region
Sacramento has seen positive population growth in large numbers, with more and more people choosing to move to the capital city of California for its stable, diverse economy, wonderful quality of life, and lower cost of living. More people mean more housing demand!
3. High Housing Demand!
As the seat of California’s government and home to plenty of universities and new businesses, Sacramento is enjoying somewhat of a renaissance. Many people who move to our city want to buy (and have the funds to do so), which increases demand.
4. Bay Area Buyers are Flocking
Whether they’re looking to invest in rentals, move to Sacramento and plant roots, or do some sort of hybrid commute, there are still plenty of buyers from the Bay Area that are gobbling up new listings, decreasing inventory.
5. We still have Pent-Up Demand from Covid
We’re hearing less and less about Covid these days (thank goodness!) but one lingering effect is what it did to our housing market. There are still plenty of buyers who were working from home, didn’t want to buy or sell during Covid, etc. who are now ready to get out there and purchase a home, built-up demand has depleted our listing inventory even more!
6. There are Plenty of Mortgage Rate Refugees
I coined the term “mortgage rate refugees” to describe all of those people who would LOVE to sell their home (and cash in on record equity), but they don’t want to jeopardize their low mortgage rate. While it’s tempting to hold onto that great rate in the low to mid 2’s, these folks should be in the game – not on the sidelines, which will only add much-needed inventory to our housing market.
7. People are Reluctant to Move
And our final reason why inventory is so low is closely related to that last point. There are plenty of people I talk to who are eager to sell and make a big profit after years of hot home appreciation, but they’re reluctant to do so because they’re worried about what home they can buy next.
The “But where will we move next?” homeowners who normally would be racing to list their homes are only dropping our inventory levels even more.
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So, what does this mean for you? If you’re a homeowner right now, I highly recommend you contact me to talk about your options. Listing your home for sale this spring or summer in Sacramento means you have a HUGE competitive advantage – the stark lack of listing inventory.
Smart sellers can cash-in on record equity (before it starts disappearing), create a buzz and even bidding war, and have PLENTY of means to buy their dream home in today’s market.
Contact me for more information or to see what your house is worth today!
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