Weakening Demand Transforms Fundamentals
Sacramento’s multifamily market experienced the effects of weakening demand, posting a negative absorption rate (-0.3%) and a 1.4% drop in the occupancy rate in stabilized properties year-over-year through December, to a still solid 95.4%. Meanwhile, the average rent contracted 0.3% on a trailing three-month basis through January, on par with the U.S. figure for the first time in 18 months. Sacramento’s $1,912 overall average rate led the $1,701 national figure.
Unemployment improved to 3.3% in December, outperforming the U.S. (3.5%), state (4.1%) and Los Angeles (3.9%) rates, according to preliminary data from the Bureau of Labor Statistics. The job market expanded by 3.4%, or 34,000 positions, in the 12 months ending in November. Nearly half of the additions were in the metro’s two largest sectors—education and health services (11,100 jobs) and government (4,600 jobs). In early 2023, the Sacramento International Airport announced a $1.3 billion expansion project over the next five years to keep up with increasing passenger traffic.
Sacramento’s stock expanded 1.3% year-over-year in December, which is above its five-year average. Developers had 6,695 units underway in January, with a considerable drop in construction starts. Meanwhile, investment surpassed $1.3 billion in 2022, with the price per unit increasing by a strong 23.1% year-over-year to $273,419, leading the $211,873 U.S. figure.
Read the full Matrix Multifamily Sacramento Report-March 2023