Q4 2022 Multifamily Real Estate Report: Sacramento, CA
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Sacramento is known for its Farm-to-Fork food industry, California Gold Rush, and lively arts and history.
The population of Sacramento was 2,186,000 by Q4 2022 with a 1.44% growth rate. The unemployment rate for the city was 3.5% at the end of the year.
Sacramento multifamily real estate saw mild performance in Q4 2022, seeing quarter-over-quarter declines in most of the sector’s primary metrics.
General Area Overview & Demographics
Sacramento is the capital city of California and is the sixth-largest city in the state, with a population of 513,625 according to the 2019 U.S. Census estimate. The racial makeup of Sacramento is 56.1% White, 24.5% Hispanic or Latino, 14.3% African American, 9.7% Asian, 1.5% from other races, and 2.9% from two or more races.
Sacramento, CA Median Household Income & Population
According to the 2019 American Community Survey, the median household income in Sacramento was estimated to be $62,073. The city is home to a wide range of incomes; 12% of households earn an income of less than $15,000 per year and 18% earn more than $150,000 annually.
The median age in Sacramento is 34.5 years old, with 25.9% of the population under 18 and 10.8% over 65 years of age. The city is predominantly composed of young adults aged 18-39 (51%), while those aged 40-64 make up 36% of the total population.
Several higher education institutions are located in the city, including the University of California Davis, Cosumnes River College, American River College, and Sierra College. The city also has several private universities such as William Jessup University, Lincoln Law School of Sacramento, and the University of Phoenix.
The city is home to numerous landmarks such as the California State Railroad Museum, Sutter’s Fort Historic Park, and Old Sacramento State Historic Park. It also has exciting nightlife, with popular venues like Lowbrau Bierhall, Fox & Goose Public House, and a burgeoning craft beer scene. Sacramento is also a hub for music and culture, with events like the Sacramento Music Festival, and the Tom Wilson Blues Fest.
Sacramento enjoys a Mediterranean climate, with generally warm, dry summers and mild, wet winters. The average high temperature during the summer months is around 90 degrees Fahrenheit (32 Celsius), while winter temperatures remain between 40-50 degrees Fahrenheit (4-10 Celsius). On rare occasions, it does snow in the area but usually melts away quickly.
Summary of Sacramento Multifamily Real Estate Performance in Q4 2022
Occupancies for Sacramento multifamily real estate declined in the fourth quarter, ending 2022 at about 96%.
Overall, occupancies declined 1.1% year-over-year from 2021. Multifamily absorption was negative in Q4 2022 for Sacramento at -771 units.
What are multifamily rents like in Sacramento?
Average monthly asking rents for Sacramento multifamily real estate in Q4 2022 were approximately $1,647 per unit.
This was nearly a 4% decline quarter-over-quarter from Q3: California rents, since Q3 2022, have largely continued to decline.
Purchase & Leasing Activity
Total multifamily sales volume in Sacramento for the year came in at approximately $80 million. The average sales price per unit in 2022 was $254,243, an approximate $50,000 average increase in price per unit year-over-year from 2021.
In Q4 2022, the average sales price was $157,915 per unit.
Notable Multifamily Real Estate Deals in Sacramento in Q4 2022
No notable multifamily real estate deals were reported in Sacramento during the fourth quarter.
New Multifamily Real Estate Development Activity in Sacramento in Q4 2022
New 2022 deliveries for Sacramento multifamily real estate totaled 1,974 units, totaling just over 4,000 square feet. 665 units came online in the fourth quarter.
New units in the city’s construction pipeline totaled 6,505 in the fourth quarter. Many of these units are projected to be completed in 2023.
Market Forecast for Sacramento Multifamily Real Estate Market
Transaction volume is projected to increase in Class B and C property in H2 2023 for Sacramento multifamily real estate, but the vacancy rate is likely to increase in 2023. Average rents will likely remain stable.
Takeaways for Multifamily Real Estate Investors
Investors will likely do well to acquire Class B and C multifamily properties in Sacramento as renters are desiring more affordable housing in the current inflationary environment.
Thousands of new multifamily units are in the city’s construction pipeline, which is a good sign that the market is slated to remain active.
Do your research, stay diligent, and happy investing.
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