Sacramento Multifamily Market Report – September 2024

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Despite economic fluctuations, Sacramento’s multifamily market has demonstrated resilience in 2024. The California capital has experienced a mixed but stable performance, with both positive and negative trends influencing the multifamily housing sector. However, the region remains steady, with rental rates showing little fluctuation and continued employment growth providing stability. Here’s a detailed look at the latest data and trends shaping Sacramento’s multifamily landscape.

 

Flat Rental Growth in Sacramento

As of September 2024, advertised asking rents in Sacramento averaged $1,916. Despite significant national economic volatility, Sacramento’s rental market has held steady. While rental prices have flattened on a trailing three-month (T3) basis, they remain 30 basis points lower than the national average. This points to continued affordability in the area, particularly in comparison to larger California markets.

– Rents in Sacramento: $1,916 (T3 basis)
– National rate comparison: 30 basis points lower than the national average

 

Occupancy Rates and Market Performance

Occupancy in Sacramento’s stabilized properties remains solid, although it decreased by 10 basis points year-over-year to 94.7%. The Lifestyle segment—which caters to high-end tenants—experienced a 30-basis-point increase in occupancy, showing continued strength in luxury rentals. These figures reflect overall market stability, even as economic challenges slightly impact overall occupancy.

– Overall occupancy: 94.7%
– Lifestyle segment occupancy: 30 basis points increase

 

Employment Growth Continues to Fuel Demand

Sacramento’s employment sector has proven a key driver of rental demand. In the 12 months leading up to March 2024, the city’s employment grew by 2.5%, with 32,600 net jobs added. This growth rate outpaced the national average by 90 basis points. Sacramento’s education and health services sectors were the standout performers, adding 17,900 jobs, with significant job creation expected from ongoing large-scale projects.

One such project is the UC Davis Medical Center’s California Towerz, a $3.7 billion healthcare development that will include 332 inpatient beds and span 900,000 square feet upon completion in 2030. This project is a cornerstone of future economic growth for the region, providing job opportunities that will likely continue to support multifamily demand.

– Job growth: 32,600 net jobs added (2.5% increase)
– Key sectors: Education and health services (+17,900 jobs)
– UC Davis Medical Center: $3.7 billion California Tower project to be completed by 2030

 

Supply and Development in Sacramento

The supply side of Sacramento’s multifamily market has remained constrained in 2024. By September, only 645 units were delivered, accounting for 0.5% of the metro’s stock. This delivery rate remains 40 basis points below the national average, underscoring a slowdown in new construction due to rising costs and economic uncertainty. Additionally, construction starts have also declined since the start of the year, pointing to a more cautious development environment.

– Units delivered: 645 units (0.5% of total stock)
– Construction starts: Down from the start of 2024

 

Sharp Decline in Transaction Activity

A noticeable trend in Sacramento’s multifamily market is the significant drop in transaction volume. So far in 2024, only $36 million worth of multifamily properties have been traded, a dramatic decrease compared to the $1 billion-plus in sales seen in 2021 and 2022. Despite this, smaller deals—such as the sale of Greenbriar for $29 million are still closing, showing that there is still some interest in targeted assets.

– Transaction volume: $36 million in assets traded
– Example deal: Greenbriar sold for $29 million ($210,144 per unit)

 

Cautious Optimism for the Sacramento Multifamily Market

Sacramento’s multifamily market remains relatively stable in September 2024, driven by robust employment growth and steady demand. While occupancy has softened slightly and transaction volume has slowed, ongoing job creation and long-term projects like the UC Davis Medical Center promise future growth for the region. For now, Sacramento remains a viable, steady market in an otherwise turbulent economic climate.

At Real Property Management Select, we stay ahead of market trends and keep you informed on the latest developments in Sacramento’s rental market. From changes in occupancy rates to new legislation, we’ve got you covered. Let us handle the complexities so you can focus on your investments.

Stay up-to-date with the latest market insights and trends by following our blog.

California Rental Laws Changed in 2024: What Landlords Need To Know

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The office of California Governor Gavin Newsom signed 56 housing bills into law in 2023, many of which have significant impacts on rental property owners. These laws, coming into effect throughout 2024, introduce changes that will affect how landlords manage their properties and interact with tenants.

In this blog, we’ll explore 5 key legal updates that California landlords should be aware of in 2024, along with a brief overview of what landlords cannot do under these new regulations.

What a Landlord Cannot Do in California in 2024

– Rent Increase Limits: Under the Tenant Protection Act, rent increases for most residential tenants in California are capped at 10% total or 5% + CPI, whichever is lower, over a 12-month period.

– No-Fault Evictions: Landlords cannot evict tenants without cause. This includes situations where the property is being withdrawn from the rental market or used for renovations without clear justification.

– Owner Move-In Restrictions: If a landlord terminates a lease to move into the property, they cannot re-list it on the rental market within 12 months.

– Remodeling Restrictions: If you’re terminating a lease to remodel, landlords must provide detailed renovation plans. Tenants have the right to receive this information in advance.

– Security Deposit Regulations: California landlords are limited to charging no more than one month’s rent as a security deposit for unfurnished properties. The deposit must be returned within 21 days of the tenant vacating, and any deductions must be supported by an itemized list with receipts.

– Credit History Protections: If a rental applicant receives government housing assistance, landlords cannot discriminate based on credit history alone.

– Application Fee Caps: The tenant application fee in California is capped at $62.02 for 2024, adjusted annually for inflation.

– Maintenance and Repairs: Landlords must maintain properties to ensure tenant safety. Tenants may use the “repair and deduct” option if emergency repairs are not addressed, allowing them to fix the problem and deduct the cost from their rent.

– Local Ordinances: State laws and city-specific ordinances override any lease agreements, meaning landlords must comply with both state and local rules, even if their lease states otherwise.

5 Major Changes for Landlords in 2024

Here are five important updates that will affect rental property owners in 2024:

  1. Mandatory Rent Reporting (AB 2747): Landlords of buildings with 15 or more units must now give tenants the option to report on-time rent payments to credit bureaus, helping tenants improve their credit scores. Landlords can charge tenants a fee of up to $10 for this service.
  2. Domestic Violence Survivor Protections (SB 1065): Survivors of domestic violence now have greater protection. Landlords cannot evict tenants who are survivors, and tenants may break their lease early if needed, with proper documentation.
  3. Extended Relocation Assistance (AB 1482): If landlords use a no-fault eviction, such as for substantial renovations, they are required to offer extended relocation assistance or reduce rent during the construction period.
  4. Environmental Efficiency Standards (SB 1137): Landlords of newly constructed buildings must now adhere to energy-efficient requirements, including water and energy-saving measures, starting in 2024.
  5. Eviction Data Submission (SB 1260): Landlords are now required to submit eviction data to local authorities, increasing transparency and reducing unlawful evictions.

Stay Compliant in 2024 and Beyond

As California’s housing laws continue to evolve, it’s crucial for landlords to stay informed and ensure compliance. These new regulations highlight the importance of keeping up with legal requirements to avoid fines or disputes. 

For stress-free property management and to stay updated on the latest rental laws, trust the experts at Real Property Management Select. We help you navigate these changes with ease, ensuring your properties remain compliant while maximizing your returns.

Keep updated with us for more tips and insights on rental property management and legal updates throughout 2024.

New Bill Requires Landlords to Report On-Time Rent Payments to Credit Bureaus

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In Sacramento, renters may soon see a positive change in their credit scores, thanks to Assembly Bill 2747. Proposed by Assemblymember Matt Haney (D-San Francisco), the bill has passed through the California State Legislature and is now on its way to Governor Gavin Newsom’s desk for approval. If signed into law, it will require landlords to offer tenants the option to report their on-time rent payments to credit bureau agencies.

Currently, renters face an unfair credit reporting system—missed rent payments are reported and negatively impact credit scores, but timely rent payments often go unreported. Haney highlights that many renters in California pay their rent on time, but their credit scores do not reflect their financial responsibility. AB 2747 aims to fix this by allowing tenants to opt into positive rent reporting, giving them an opportunity to improve their credit scores.

This bill applies to buildings with more than 15 units, and landlords may charge tenants a small fee of up to $10, or the actual cost of reporting, whichever is lower.

If keeping up with the ever-changing laws and regulations feels overwhelming, Real Property Management Select can help. We stay informed about the latest legislative changes so you can focus on more important things. 

For stress-free property management, let us take care of the details for you!

Understanding Key Property Management Terms with Natalie from Real Property Management Select

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At Real Property Management Select, we strive to make property management simple and clear. Our very own Natalie has taken a creative approach to explain common property management and real estate terms through an interactive video, where she pulls cards with key terms and breaks them down for you. In this blog, we’re covering a few of the terms discussed in the video to give you a sneak peek. Be sure to watch the full video for an in-depth explanation and stress-free property management tips!

  1. Tenant Screening

Tenant screening is a vital part of ensuring reliable occupants. At Real Property Management Select, we require applicants to meet certain criteria:

– A minimum credit score of 650

– Income must be three times the rent (before taxes)

– A background check

– Previous landlord verification

Once an applicant meets these requirements, we offer them the opportunity to move in, typically requiring them to do so within two weeks.

  1. Comparables (Comps)

Setting the right rental price for your property is essential to attracting the best tenants. Natalie explains that when we pull comps, we analyze properties similar to yours within the same market. We use tools like Zillow and Rentometer to get accurate data, focusing on recent rental trends in your area within the last six months. This ensures that your property is competitively priced.

  1. Move-In and Move-Out Documentation

Before a tenant moves in, our team conducts a detailed inspection of the property, documenting the condition with pictures. The same process is repeated when they move out. This comparison helps us accurately assess any damages and appropriately handle the security deposit. It’s a thorough approach that ensures transparency and fairness.

  1. Single-Family Residential

We specialize in managing single-family homes. While we also handle some multi-family properties, the majority of our focus is on single-family dwellings, ensuring personalized attention to each property. We do not rent out individual rooms, but rather manage entire properties.

  1. Lease Renewal

As the end of a tenant’s lease approaches, we begin discussing options for renewal 60 to 90 days in advance. This gives you the opportunity to assess whether you’d like to renew the lease, increase rent, or switch to a month-to-month agreement. We call this our Annual Investment Review, where we evaluate the year and plan ahead based on the tenant’s performance and your investment goals.

  1. Co-Signer

In cases where applicants may not meet all financial requirements, we do allow co-signers. These individuals must also meet our screening standards and are equally responsible for rent payments. This option helps potential tenants gain approval while ensuring rent payments are secure.

  1. Section 8

Real Property Management Select welcomes Section 8 tenants, as long as they meet all qualifications. While Section 8 includes an additional inspection process, we’ve had success with these tenants and believe in providing equal opportunity housing. The program guarantees that a portion of the rent is paid directly to you, offering added financial security.

  1. Notice to Quit

In cases of non-payment or lease violations, we issue a notice to quit. This legal notice gives tenants a set period of time to pay outstanding rent or rectify the violation. If they fail to comply, we can proceed with eviction. Common reasons for issuing a notice include unpaid rent or unauthorized pets, but we always aim to resolve issues promptly and professionally.

For stress-free property management, stay informed with Real Property Management Select. Watch the full video where Natalie dives deeper into these terms and explains how we make property management easy for you!