Strengthening Demand Boosts Rent Expansion
Sacramento’s multifamily fundamentals held up well through the year’s first three quarters, outperforming major markets and the nation. The average rent rose 0.6% on a trailing three-month basis through September to $1,575, while the U.S. rate inched up 0.1% to $1,463. The occupancy rate in stabilized properties pointed to solid demand, with the rate rising 10 basis points to 96.2%, in the year ending in August.
But the metro is not out of the woods yet, even though the unemployment rate rose from an all-time high of 14.0% in April to 11.6% in July. Moreover, due to a high number of unemployment
claims, on Sept. 20, officials suspended the processing of new applications for two weeks. The job market marked the fourth-consecutive month of contractions, down 6.8% in July and 20 basis points above the U.S. rate. All sectors lost jobs, except financial activities. Government jobs and professional and business services–which account for a respective 24.0% and 14.3% of the workforce–have fared well, shrinking by 4.7% and 2.4%, respectively.
The pandemic has stalled sales activity. Just $341 million in multifamily assets traded through September, with the price per unit rising 11.2% to $200,606. Meanwhile, developers marked an all-time high in supply, with 1,460 units delivered and 4,678 underway. Accounting for these factors, we expect rents to rise 1.9% in 2020.
Read the full Matrix Multifamily Sacramento Report-Fall 2020