Summer 2023 Sacramento Market Snapshot
Photo by Stephen Leonardi on Unsplash
California's population may be shrinking, but the Sacramento region is on the grow. Six of the nine counties with population increases in Northern California — Amador, Calaveras, San Joaquin, Placer, Yolo and Yuba — grew by more than 1.5% between April 2020 and July 2022. Nearly a third came from the Bay Area, and about half as many from Southern California.
That flow from the Bay Area to the Sacramento region may turn the area into a so-called "megaregion." In 2020 alone, migration between San Francisco County and Sacramento County grew 70% from the previous year, and the region is projected to grow another 4% in the next 5 years, largely buoyed by this continued migration.
The market dynamics paint an interesting story. For starters, much as it is in many markets in the West, inventory is low. Really low.
According to Sacramento appraisal blogger Ryan Lindquist, so far this year, “we’ve seen about seven thousand fewer new listings hit the market in 2023 in the Sacramento region compared to last year, and over ten thousand fewer from the pre-2020 normal. By the end of the year, we could pretty easily be missing about 10,000 new listings from last year.” This of course puts buyers in a tough spot. Attractive listings are getting snapped up swiftly, especially in desirable neighborhoods. Of course, as is the case in many areas, this may be largely driven by people who bought or refinanced before last spring, when rates began to climb. Hopefully, rates will once again begin to creep down, and owners may not feel so married to their mortgages.
Ironically, this dearth of inventory has not had a dramatic impact on pricing so far. In fact, we appear to be approaching a point of convergence where prices will align with what they were in both 2021, when demand was climbing, and 2022, right around the point when an uptick in rates began to deflate demand. These charts, again by Ryan Lindquist, illustrate this trend.
And now what you’ve definitely been wondering: How much does a pool factor into value in real estate? As we weather multiple bursts of 100+° weather, pools are a hot (get it?) commodity. There’s no simple answer as to how a pool may impact the value of a property, though some trends are clear: Larger properties are more likely to have them, for obvious reasons, as will higher price point homes. Some areas, like in the downtown grid, have very few, due to lack of open land, and in other areas, like Arden-Arcade, Granite Bay, and El Dorado Hills, they’re practically de facto. The question becomes how much is having a pool worth to you.
Another way to look at it is to assess how much it would cost if you bought a property that did not have a pool and had one installed. Again, prices can vary radically and of course this is one case where size definitely matters. By way of example, friends and neighbors of ours had a pool installed in their back yard, after about five years of owning. It’s about 400 square feet, with a hot tub installed in one corner, and cost $86,000 to put in including passive solar and concrete patio. All this to say, you could look at properties at lower price points and add the pool yourself, and potentially save money and increase your valuation. The one pro tip we learned from them is that the shape as well as the size matters a lot. Keep it a simple rectangle for maximum efficiency. Diagonals and curves can drive up the cost significantly.
Interestingly, there was a significant spike in sales with pools during the pandemic. Aligning with the aforementioned migration trends, we’re going to go out on a limb and at least partially attribute that to Bay Area people making the leap and getting their first taste of summer heat.
For deeper dives on these and other market trends, read Ryan’s blog and follow him on social. He’s smart, erudite, and witty.