RECORD SALES VOLUME AND ELEVATED OCCUPANCY LEVELS IN RED HOT SACRAMENTO
Market occupancy rose 40 basis points in the third quarter to 96.8 percent, a five-year high. Rent increases are moderating due to new units hitting the market and slowing wage growth leading landlords to adjust rent hikes accordingly. The market is still hot with occupancy levels well above equilibrium and annual rent growth at more than three times the national average. Although annual rent growth recorded less than 4 percent over the last two quarters, the market jumped 2 percent in the third quarter alone. Investors do not appear to be worried by the possibility of rent control coming to Sacramento with a record-high quarterly sales volume of $491.9 million. City leaders are looking at multiple measures to alleviate rising housing costs, from a 2020 rent control initiative to waiving development fees and streamlining the permitting process. Even though we are seeing thousands of new units delivering and in development, construction is still well below pre-2009 when we saw an average of 2,500 units a year deliver from 2005 to 2008. There are 1,477 new units projected to complete in the Sacramento region this year, with another 1,821 poised to deliver in 2019 as developers remain bullish on the market’s fundamentals moving forward. Sacramento apartments remain a sound investment despite the looming specter of rent control.