Sacramento is the capital city of the state of California. With nearly 510,000 residents, it is the 6th largest city in California and the 9th largest capital in the US. The Sacramento real estate market benefits from the fact that the population growth rate for the city is twice the national rate. And with about 54% of the population renting rather than owning their own home (according to NeighborhoodScout), Sacramento rental properties enjoy high demand and occupancy rates.
Sacramento is a major economic and cultural center on the West Coast. The state and local government have a strong presence in the city, as it is the state capital, and they constitute the largest employment sector in the area. The city is home to the California State University, Sacramento and University of California, Davis, making it an important educational hub. Sacramento is also a major center for the California healthcare industry, as it houses a number of medical centers, including the world-renowned UC Davis Medical Center, the UC Davis School of Medicine, and Sutter Health. The city’s numerous research centers and well-educated workforce have drawn many technology-related companies to the area.
One of the most historic cities in California, Sacramento is a notable tourist destination. More than 25 million people flock to the Sacramento region each year to visit its numerous museums and landmarks, including the California State Capitol Museum, the California Hall of Fame, the California State Railroad Museum, the Crocker Art Museum, and the Old Sacramento State Historic Park. Other industries contributing to the local economy include agriculture, energy, advanced manufacturing, transportation, business and financial services, and retail.
The Sacramento real estate market was named as one of the most important US Markets to Watch by PWC in its annual Emerging Trends in Real Estate: United States and Canada 2019 report. According to the report, Sacramento is one of the most affordable markets in the Pacific region in terms of home prices. In fact, the city is seeing many companies and workers moving in from higher-cost areas. Investing in the Sacramento housing market is, therefore, a great option.
|Facts and Market Trends in Sacramento|
|Homes For Sale91|
|Traditional Vacancy rate4.70%|
|Airbnb Occupancy Rate73.39%|
|Median Rent Price$1,380|
|Median Days on Market45|
|Price to Rent Ratio23.3|
|Average Cap Rate|
|Average Rental Income|
|Median Household Income$67,902|
|RENTAL STRATEGY||STUDIOS||1 ROOM||2 ROOMS||3 ROOMS||4 ROOMS|
The Sacramento real estate market has witnessed a strong real estate appreciation in recent years. Since Q1 of 2000, Sacramento properties have experienced a total appreciation of 127.57% according to NeighborhoodScout, which is an average annual home appreciation rate of 4.36%. Property value is still climbing in the Sacramento housing market as Zillow reports an appreciation of 3.1% over the past year. However, Sacramento home prices remain affordable relative to California which has some of the highest home prices in the nation. This makes Sacramento a good place for property investment.
The Sacramento housing market is currently a seller’s market. There is a limited number of homes for sale on the market, while demand from homebuyers and real estate investors continues to rise as the population grows.
The Airbnb industry is booming in Sacramento. With it being such a tourist-friendly location, Sacramento short-term rental properties are a great real estate investment. According to AirDNA, the median monthly revenue earned in the last month by Sacramento Airbnb listings was $2,428.
Under the city’s short-term rental ordinance, Sacramento Airbnb hosts are allowed to rent out any residential dwelling unit, or a portion of such a unit, for stays of 30 days or less, but they must first obtain a city-issued permit. This means that the practice of operating non-owner occupied rentals in the city is legal. However, there is some bad news for non-resident hosts since they cannot rent out their property for more than 90 days per year without obtaining a special permit.
The ordinance also prohibits Sacramento Airbnb hosts from renting to more than 6 guests at a time and requires them to maintain a rental registry for a 3-year period. As for tax payments, hosts are required to pay an annual business tax as a hotel of $50 and collect and remit a transient occupancy tax of 12% from guests.