Nestled in the Central Valley region of California, Sacramento County boasts a thriving and dynamic housing market. As one of the most populous counties in the state, it offers a diverse range of opportunities for homebuyers and investors alike. Sacramento's housing market stands out compared to other California cities.
Fueled by a strong job market and a steady flow of residents, Sacramento has become a magnet for homebuyers. Let's take a look at the current Sacramento housing market trends.
Right now, the Sacramento housing market appears to be shifting towards a more balanced market after a period of strong seller's advantage, but still favors sellers more than buyers. This means neither buyers nor sellers have an overwhelming advantage, creating an interesting time for both. Let's explore why.
Current Sacramento Housing Market Trends:
Home Sales
Looking at the numbers from the Sacramento Association of REALTORS® for November 2024, we see a mixed bag. While the number of homes sold increased by 14.8% compared to November 2023, showing continued activity, it's down a significant 21% from October 2024. This month-over-month decline suggests a cooling market, possibly due to seasonal factors or increased interest rates. This is something I've noticed anecdotally in my conversations with clients – some are waiting for more clarity before committing to a purchase.
There were 822 homes sold in November 2024. Comparing this to November 2023, this number represents growth in the market, but the big drop month-over-month indicates that the market is slower.
I've noticed a pattern in my years of experience, and that's that seasonal fluctuations are normal. We tend to see a dip in sales during the holiday season, as families are often busy and possibly focused on other commitments rather than searching for a new house. That said, the long-term trend is crucial to consider.
Home Prices
The average sold price in November 2024 was $614,000, up 8.5% year-over-year, but only up 1.3% compared to October. This is interesting because while year-over-year growth signifies continued market value appreciation, the modest month-over-month increase hints at a slowing pace of price appreciation. The median sold price remained consistent with the previous month at $550,000, indicating a slight stagnation but still a higher value than the previous year.
The average price per square foot shows similar trends. At $339, it's up 3.4% year-over-year but down 0.9% month-over-month. This data shows a more balanced market emerging. It's not a rapid drop, but it’s certainly not the steep climb we saw in previous years.
This stabilization is crucial. In my opinion, we are seeing a healthy correction rather than a crash. While price increases have slowed, prices haven't plummeted, which I consider a positive sign for the market's overall health.
Housing Supply
November 2024 showed 1,680 homes for sale, a 30.9% increase year-over-year. This is significant! More inventory means more choices for buyers, which is exactly what we’ve been waiting for. However, this supply is down 10.2% from the previous month, showing that the market is still finding its balance.
The months of inventory, a key indicator of market dynamics, stood at 2 based on closed sales and 1.9 based on pending sales, both indicating a seller’s market although slightly softer than the previous year. While this is higher than previous years, it's still below the 6 months generally considered a buyer's market.
Market Trends
Several factors contribute to the current trends. Interest rates, while fluctuating, remain relatively high compared to the past few years, impacting affordability. Inflation has also played a part, affecting both the prices of homes and the costs associated with buying. And while the job market is generally strong in Sacramento, economic uncertainty might make some potential buyers hesitant.
The upward trend in days on market (30 days, up 25% year-over-year) further supports the shift toward a more balanced market. Properties are taking longer to sell, indicating less urgency for buyers. The sold/original list price ratio of 98% is also important. While it hasn't significantly changed year-over-year, it indicates that buyers are negotiating more effectively, achieving a slightly lower price.
The six-month trend shows both average and median sold prices slightly depreciating, signaling a more balanced market. The trend suggests that the rapid price increases of the past are over for now.
Is It a Buyer's or Seller's Housing Market?
Based on the data, I would say the Sacramento housing market is tilting towards a more balanced market, but it's still more favorable to sellers than buyers. The increased inventory provides more options for buyers, which is a welcome change, but prices are not plummeting. Sellers still have a slight advantage due to the relatively low months of inventory.
Are Home Prices Dropping?
Home prices aren't dramatically dropping, but the rate of price increases is significantly slowing down. The data shows a stabilization rather than a drop. This is a positive sign; it indicates a market correction rather than a collapse.
Data Summary Table
| Metric | Nov 2024 vs. Oct 2024 | % Change | Nov 2024 vs. Nov 2023 | % Change | 6-Month Trend |
|---|---|---|---|---|---|
| Homes For Sale | 1,680 vs. 1,870 | -10.2% | 1,680 vs. 1,283 | +30.9% | Increasing |
| Homes Sold | 822 vs. 1,040 | -21% | 822 vs. 716 | +14.8% | Decreasing (MoM) |
| Homes Under Contract (Pended) | 866 vs. 994 | -12.9% | 866 vs. 738 | +17.3% | Decreasing (MoM) |
| Avg. Price per Sq. Ft. (Sold) | $339 vs. $342 | -0.9% | $339 vs. $328 | +3.4% | Neutral |
| Avg. Days on Market | 30 vs. 30 | 0% | 30 vs. 24 | +25% | Upward |
| Sold/List Price Ratio | 98% vs. 98% | 0% | 98% vs. 98% | 0% | Remains Steady |
| Avg. For Sale Price | $682K vs. $699K | -2.4% | $682K vs. $720K | -5.3% | Depreciating |
| Avg. Sold Price | $614K vs. $606K | +1.3% | $614K vs. $566K | +8.5% | Neutral |
| Median Sold Price | $550K vs. $550K | 0% | $550K vs. $526K | +4.6% | Depreciating |
| Months of Inventory (Closed) | 2 vs. 1.8 | +11.1% | 2 vs. 1.8 | +11.2% | Increasing |
Is Sacramento a Good Place to Buy a Home in 2025?
The decision to buy a home is deeply personal and depends on individual financial situations, lifestyle preferences, and long-term goals. However, here are some factors that make Sacramento an appealing place to call home:
- Relatively Affordable: While not as affordable as it once was, Sacramento still offers a more attainable cost of living compared to the Bay Area and Southern California, especially in terms of housing.
- Strong Job Market: Sacramento boasts a diverse economy with job opportunities in government, healthcare, education, and technology. The presence of major employers like UC Davis and state government agencies provides stability.
- Quality of Life: Known for its sunny weather, access to outdoor recreation, and vibrant cultural scene, Sacramento offers a high quality of life that continues to attract new residents.
- Central Location: Situated within driving distance of the Bay Area, Lake Tahoe, and the Napa Valley, Sacramento provides convenient access to some of California's most desirable destinations.
Renting vs. Buying in Sacramento: Weighing Your Options
The age-old debate of renting versus buying is particularly relevant in a market like Sacramento, where affordability is a key consideration.
Renting:
- Flexibility: Renting provides flexibility, allowing you to move more easily without the commitment of homeownership.
- Lower Upfront Costs: Renting typically requires a lower upfront investment compared to buying, as you don't need a down payment or closing costs.
- No Maintenance Responsibilities: As a renter, you are generally not responsible for property maintenance or repairs.
Buying:
- Building Equity: Mortgage payments gradually build equity in your home, providing a potential return on investment over time.
- Tax Advantages: Homeownership offers potential tax deductions for mortgage interest and property taxes.
- Stability and Control: Owning a home provides stability, a sense of community, and the freedom to customize your living space.
Sacramento Housing Market Forecast 2025-2026: Will Prices Drop?
So, you're wondering what's going on with the Sacramento housing market, right? Will prices go down? Are we heading for a crash? Well, based on the latest data, it looks like Sacramento home values are expected to stay pretty stable for the next year. While it's not predicted to explode with growth, neither is it predicted to take a nosedive.
What's the Forecast for Sacramento Home Values?
Looking at Zillow’s data, it's clear that the Sacramento housing market is expected to remain relatively flat. Here’s a breakdown of what their forecast suggests:
- December 2024: The forecast predicts a slight increase of 0.1% in home values. This is basically a standstill, indicating things will remain steady by the end of the year.
- February 2025: There's a small dip expected, with a projected decrease of 0.1%. Again, nothing drastic but a slight correction.
- November 2025: By the end of November 2025, the forecast indicates the home values will remain almost the same as now – a 0% change.
This all suggests that the Sacramento housing market is expected to remain consistent for the coming year. I've been following the market trends closely, and I see this as a sign that the market is stabilizing after some of the fluctuations we've seen recently. It means that buyers and sellers can approach the market with a sense of steadiness.
How Does Sacramento Compare to Other California Markets?
It's always helpful to see how Sacramento is doing compared to other cities in the state. Here's a look at how the forecasts for other California regions compare with Sacramento:
| Region | Dec 2024 Forecast | Feb 2025 Forecast | Nov 2025 Forecast |
|---|---|---|---|
| Sacramento, CA | 0.1% | -0.1% | 0% |
| Los Angeles, CA | 0.3% | 0.2% | 1.7% |
| San Francisco, CA | 0% | -0.4% | -1.7% |
| Riverside, CA | 0.1% | 0.2% | 2.4% |
| San Diego, CA | 0% | -0.1% | 2.5% |
| San Jose, CA | 0.6% | -0.6% | -0.2% |
| Fresno, CA | 0.2% | 0.4% | 1.8% |
| Bakersfield, CA | 0.3% | 0.7% | 3% |
| Oxnard, CA | -0.1% | -0.2% | 1% |
As you can see, Sacramento's forecast is among the more moderate ones. Cities like San Jose and San Francisco are expected to see a bit more volatility with possible decreases, while others like Bakersfield and Riverside are anticipating stronger growth. This all boils down to each area's unique economic situations and the individual dynamics of those markets.
Will Home Prices Crash in Sacramento?
Based on the data I've analyzed, and my experience following real estate, a crash in Sacramento seems unlikely in the near future. The forecast indicates a period of relative stability, which doesn't suggest a sudden plummet in prices. We're not seeing the dramatic spikes that often precede a crash; instead, it’s a measured and rather balanced market right now. Of course, the housing market is not predictable, and things can change but all indications are showing it should remain quite consistent.
Looking Ahead to 2026
Predicting the market for 2026 is a bit trickier, as things can change quite a bit in a year. However, considering that the market is expected to be relatively steady over the next year, I would cautiously forecast that we could see slow and modest growth in 2026, rather than a rapid surge or significant decline. This means we would see slight upticks in prices, but nothing like what we witnessed during the recent boom. However, this is a personal opinion and based on the data we have currently, things can change rapidly. I will keep an eye on the market and update my analysis to keep you informed.
In Conclusion
The Sacramento housing market is expected to remain quite stable for the next year, based on Zillow's latest forecast. While slight fluctuations may occur, a dramatic drop in prices or a crash appears unlikely at this time. So, if you're in the market, whether buying or selling, it's a good idea to be prepared for moderate and consistent trends.
Should You Invest in the Sacramento Real Estate Market in 2025?
When considering whether buying a house in Sacramento is a good investment, it's crucial to examine various factors that contribute to the real estate market's attractiveness. Let's delve into the key aspects to help you make an informed decision.
Sacramento Rental Property Market
One of the key indicators of a strong real estate market is the demand for rental properties. In Sacramento, the rental property market has been robust, with a growing number of individuals and families looking for quality housing. This demand is driven by various factors, including the city's growing job market and its appeal as a place to live.
Investing in a rental property in Sacramento can provide a steady income stream, especially if you choose the right location and property type. It's essential to research neighborhoods and assess rental rates to ensure your investment is profitable.
Sacramento's Cost of Living & Quality of Life
Sacramento boasts a relatively lower cost of living compared to many other major California cities. This makes it an attractive destination for individuals and families looking for affordable housing options and a good quality of life.
The city offers a diverse range of amenities, including parks, cultural attractions, and a vibrant culinary scene. Sacramento's pleasant climate and proximity to outdoor recreational activities also contribute to its high quality of life.
These factors not only make it an attractive place to live but can also drive property value appreciation over time, enhancing the potential for a return on your investment.
Sacramento's Diverse Job Market & Economic Growth
Sacramento's job market has shown considerable growth in recent years. The city is home to a diverse range of industries, including healthcare, government, technology, and education. The presence of government agencies, such as the California State Government, further stabilizes the job market.
A strong and diverse job market can positively impact the demand for housing. Job opportunities attract professionals and families to the area, driving both rental and home purchase markets.
Population Growth of the Sacramento Metro Area
Population growth is a significant factor in the real estate market's health. The Sacramento metropolitan area has been experiencing steady population growth, driven by its economic opportunities and quality of life. An increasing population can lead to higher demand for housing, potentially driving property values upward.
Real Estate Appreciation Trends
One of the primary reasons why buying a house in Sacramento may be a good investment is the city's history of real estate appreciation. Over the past decade, Sacramento has experienced consistent and significant property value appreciation. This trend can be attributed to several factors, including an increase in demand for housing, a limited housing supply, and Sacramento's growing appeal as a desirable place to live.
Investors and homeowners who purchased properties in Sacramento a few years ago have witnessed substantial gains in their property values. While past performance does not guarantee future results, this trend is a positive indicator for potential real estate investors.
Investment Property Tax Benefits
Investing in real estate in Sacramento can offer tax benefits that make it an even more attractive investment. These benefits can include deductions for mortgage interest, property taxes, and depreciation. Be sure to consult with a tax advisor to understand how these deductions can positively impact your overall financial picture.
Resilience in Economic Downturns
During economic downturns, real estate in Sacramento has demonstrated resilience. While property values may experience fluctuations, the city's diversified economy and government stability have often shielded it from severe declines seen in other areas. This stability can provide a sense of security for investors concerned about economic uncertainties.
Other Factors
Other factors that contribute to the attractiveness of Sacramento's real estate market include:
- Transportation Infrastructure: Sacramento benefits from a well-developed transportation infrastructure, including highways and an international airport, making it accessible to residents and businesses.
- Education: The city is home to reputable educational institutions, including universities and colleges, making it an appealing location for students and academics.
- Cultural and Recreational Opportunities: Sacramento offers a rich cultural scene, with museums, theaters, and historic landmarks, providing diverse recreational opportunities for residents.
Consulting Real Estate Professionals
To make a well-informed decision, it's highly recommended to consult with real estate professionals who are knowledgeable about the Sacramento market. Real estate agents, appraisers, and property managers can provide insights into current market conditions, trends, and specific investment opportunities.
