Sacramento’s meant to be THE investment in 2017. The City of Trees is the largest city in the state of California, and a new hub for real estate investing. We’re exploring opportunities for Sacramento real estate investments, so let’s dive right into this!
Sacramento Real Estate Market Overview
While November is usually a quiet period for real estate market, Sacramento’s has been described as a solid one in November 2016. Sales in November of 2016 were up 22.4% from November 2015. Not only has Sacramento real estate market has done very well in 2016, it is expected to become the #4 hottest in 2017 in terms of sales and prices – only preceded by Phoenix, Boston and Los Angeles. Sacramento’s real estate market in general has seen significant price increases to values higher than they’ve been in almost 9 years. At the same time, appreciation for Sacramento real estate are well above the national average. The market is definitely expected to foresee further substantial growth in 2017.
The increase in prices of Sacramento real estate properties can be attributed to two main factors. For one, the city has been suffering from a shortage in inventory of homes which has caused a spike in prices. The second reason is that demand for Sacramento real estate has seen an increase by investors and homebuyers from the Bay Area seeking more affordable homes. Respectively, Bay Area buyers are helping maintain Sacramento real estate in good shape, so the increase in prices is a good indicator.
It’s also important to mention that despite the increase in prices, home affordability has significantly improved in Sacramento compared to the national average. According to a Fortune Builders report, homeowners in Sacramento paid 13.9% of their income towards mortgage payments, while the national average pay was 15.8%.
Related: 6 Real Estate Market Trends of 2017
What About Airbnb Sacramento?
We ought to particularly explore investment opportunities for Airbnb Sacramento as most of the top neighborhoods in the city detect Airbnb investments as the ideal option, according to Mashvisor’s data. The Sacramento’s Airbnb market is not huge, but it’s gaining popularity among investors (and users) and is growing by the day. Experts believe 2017 is expected to be a big year for Airbnb Sacramento.
As with other Airbnb cities in the US, Sacramento’s undergone some legal regulations and legislation for the home-sharing service. Regulations passed by city council include the following. First, hosts may not host more than six people per night, and may not rent out the property for more than 184 nights annually. Additionally, the host may not rent the property for more than 90 days per year without being present at the property. A transient occupancy tax and a business operations tax must be paid by registered hosts as well.
The service in Sacramento remains illegal in some areas as many hosts are renting their homes, or part of their homes without being registered with permits, and without paying taxes. But in general, if you are considering investing in Airbnb Sacramento, make sure you abide by the law. Early 2017 is said to see some re-examination of the laws passed, so keep an eye out for any developments or new regulations regarding Airbnb Sacramento.
Related: Where Can You Find Airbnb Properties For Sale?
Sacramento Real Estate Top 4 Neighborhoods
South Natomas
South Natomas stands out because it has seen infrastructure and residential development over the past decade. The neighborhood is also well liked because it is more affordable than the northern part of the Natomas, and almost as equally good. It can be popular among Airbnb users because it is within close distance of downtown, yet still somewhat isolated and quiet. And when travelers go to Sacramento, they like to feel what it’s really like to live in Sacramento, and that is something South Natomas Airbnb listings definitely offer.
Keep in mind, these numbers represent city averages, which means a single property in Sacramento would have higher averages.
- Median Home Price: $254,950
- Airbnb Occupancy Rate: 53.6%
- Cash on Cash Return
- Airbnb: 9.82%
- Traditional: 1.79%
- Average Rental Income/month
- Airbnb: $2,754
- Traditional: $1,063
Midtown – Winn Park Capital Avenue
The neighborhood is appreciated for its location in downtown (or midtown), and is known for its small shops and restaurants which are locally owned. The neighborhood has got good amenities and is safe, which also makes it a favorite among locals and tourists alike.
- Median Home Price: $449,000
- Airbnb Occupancy Rate: 56.95%
- Cash on Cash Return
- Airbnb: 1.34%
- Traditional: 0.65%
- Average Rental Income/month
- Airbnb: $1,628
- Traditional: $1,337
Boulevard Park
Boulevard Park is one of Sacramento’s more historical neighborhoods. It is located in midtown. It’s known to be among the most beautiful neighborhoods in Sacramento, especially due to its proximity to the river. You must be aware however, that because the neighborhood is a historic district, there may be some imitations on what you can and cannot do to our property. Some houses may even be listed as historic landmarks, so make sure to research the neighborhood well and compare properties before you make the investment and/or changes to the property.
- Median Home Price: $604,500.00
- Airbnb Occupancy Rate: 53%
- Cash on Cash Return
- Airbnb: 1.37%
- Traditional: 0.69%
- Average Rental Income/month
- Airbnb: $1,954
- Traditional: $1,582
Woodlake
Located in the north of Sacramento, Woodlake is considered the home of career professionals and businessmen. It’s among the city’s most popular, and more affordable neighborhoods.
- Median Home Price: $339,950
- Airbnb Occupancy Rate: 55%
- Cash on Cash Return
- Airbnb: 4.78%
- Traditional: 2.84%
- Average Rental Income/month
- Airbnb: $1,924
- Traditional: $1,407
So, what do we make of Sacramento real estate?
Overall, we would say it’s definitely time to jump into Sacramento real estate! It’s a growing market, it’s got several affordable options, and is evidently profitable – what’s a better investment?
Finally, to make the most out of Sacramento real estate, use Mashvisor’s investment analytical tools to view information on CoC return, cap and occupancy rates, rental income, optimal investments in each neighborhood, property comps, and much more. Type in “Sacramento” in our search option to view and compare the multiple listings and make the best investment in Sacramento real estate.
Related: How to Buy a Rental Property Using Mashvisor