According to Realtor.com, in January 2021, the median list price of homes in Sacramento City was $395K, trending up 12.9% year-over-year. The median listing price per square foot was $269. The median sale price was $400K. Sacramento City is a seller's real estate market which means that more people are looking to buy than there are homes available.
Sellers that are just getting into the market are seeing they can set their asking price a little higher than what they may have expected because inventory is so low and the buyer pool is still growing. Ideally, a buyer would prefer a sale to list price ratio that’s closer to 90% and a seller would always prefer scenarios that can yield a ratio of 100% or higher. For Sacramento, the Sale-to-List Price Ratio of 101.17% shows that sellers have managed to hold good leverage in these negotiations in the past month.
Below is the latest monthly report of the Sacramento housing market released by the Sacramento Association of REALTORS®. The report shows key housing metrics of Sacramento County and the City of West Sacramento for January 2021.
(Data for Sacramento County and the City of West Sacramento)Monthly StatisticsCurrent MonthLast MonthChangeLast YearChangeListings Published this Month1,2681,07418.1%1,489-14.8%Active Listing Inventory719735-2.2%1,409-49.0%Pending Sales This Month1,4621,488-1.7%1,32510.3%Number of REO Sales06-100%12-100%Number of Short Sales35-40%250.0%Equity Sales1,0511,517-30.7%93013.0%Other (non-REO/-Short Sale/-Equ000%0N/ATotal Number of Closed Escrows 1,0541,528-31.0%94411.7%Months Inventory0.7 Months0.5 Months40.0%1.5 Months-53.3%Dollar Value of Closed Escrows$513,410,840$748,521,940-31.4% $390,089,22131.6%Median$445,500$444,5000.2%$375,00018.8%Mean$487,107$489,870-0.6%$413,23017.9%
What are the Sacramento real estate market predictions for 2021? Is the Sacramento housing market shaping up to continue the trend of the last few years as one of the hottest markets in California? We have already mentioned above that Sacramento is predicted to be the hottest houisng market for 2021. The combined home price and sales growth are expected to be 24.6% in the houisng market of Sacramento–Roseville–Arden-Arcade, Calif.
Let us also look at the price trends recorded by Zillow over the past few years. Since 2012, the median home prices in Sacramento City have appreciated by a whopping 160%. Currently, the typical value of homes in Sacramento is $399,683 (only includes the middle price tier of homes). Over the past year alone, the Sacramento home values have gone up by 12.5%.
Here is the graphical representation of historical Sacramento house prices and the latest forecast until January 2022.
Here is another short and crisp Sacramento housing market forecast by LittleBigHomes.com for the 3 years ending with the 3rd Quarter of 2021. They estimate that the probability of rising home prices in Sacramento is 74% during this period. If this price forecast is correct, the Sacramento home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The change in home prices for Sacramento–Roseville–Arden-Arcade, CA are shown below for the three-time periods by LittleBigHomes.com (up to 3rd Quarter, 2018). The Sacramento Home Price Index has increased for the last 25 consecutive quarters. Over the last thirty years, home prices in the Sacramento Real Estate Market have gained by 257%.
The highest annual change in the value of houses in the Sacramento Real Estate Market was 27% in the twelve months ended with the 3rd Quarter of 2004. The worst annual change in home values in the Sacramento Market was -22% in the twelve months ended with the 3rd Quarter of 2008.
Time PeriodSacramento Metropolitan Area Real Estate AppreciationLast 5 Years50%Last 10 Years46%Last 20 Years165%
The question now is what happens moving forward. These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? The demand outpaces the supply in this region. Home sales have rebounded since June with January's figures showing an increase of 11.7% as compared to last year.
In the last 10 years, Sacramento has experienced some of the highest home appreciation rates of any community in the nation. NeighborhoodScout's data shows that Sacramento real estate appreciated 109.72% over the last ten years, which is an average annual home appreciation rate of 7.69%.
This puts Sacramento in the top 10% nationally for real estate appreciation. In the latest quarter, Sacramento's real estate appreciation rate was 1.69%, which annualizes to a rate of 6.94%. The significant supply-and-demand imbalance is the reason that Sacramento could one of the hottest real estate markets in 2021.
In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, the Sacramento housing market can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. This region is very much skewed to sellers due to a persistent imbalance in supply and demand.
Housing inventory in Sacramento is down by a “staggering” 53.3% year-over-year. In January, the month's supply of inventory was 0.7 months. This is again significantly lower than the national inventory. Due to pent-up demand and diminishing housing inventory home prices in the area will likely continue rising over the coming months.
Sacramento’s population has grown steadily over the past few years. A lot of Bay Area residents are now eyeing markets like Sacramento and Fresno. The main reason being that it's more affordable than expensive coastal markets in California. According to the U.S. Census Bureau, Sacramento’s population grew by around 10% from 2010 to 2019. This trend of migration will continue to fuel housing demand within the region.
For buyers in Sacramento County, mortgage rates are at their lowest (lower than 3% for a 30-year fixed-rate mortgage). Therefore, this is a good time for them to enter the market and scoop up their favorite deals. Whether you’re looking to buy or sell, timing your local market is an important part of real estate investment.
Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Sacramento in 2021 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.