As Sacramento’s skyline continues to welcome new additions and development is spurring increases to property values in the Downtown region, one may be curious as to what the changes mean to their ability to acquire property. Renting and owning property both come with benefits and disadvantages, so which is the better option? Review of Sacramento’s Business Journal’s year-end commentary on renting and buying property in Sacramento reveals several takeaways including:

1.) More often than not, it’s cheaper to rent.

2.) Analysts expect this trend to continue over the next 3-5 years.

3.) Meaning more opportunities for apartment developers and investors

Why Renting Is Winning Right Now

Currently, monthly mortgage rates take 32.9% of the median family’s income after a 3.5% down payment; while renting a 3-bedroom apartment takes 26.4% of the median family’s income. This gap is expected to get bigger, in favor of renters. Economists expect home prices and rental rates to increase, but at a much slower pace.Currently it is less expensive to rent than to buy in the following zip codes: 95818, 95819, 95811, 95816.

Politics are a driving factor in pricing of rental properties, rent prices, landlord’s incomes and their affectivity. The Sacramento Community Stabilization and Fair Rent Charter Amendment recently qualified for the 2020 city ballot and will strive to accomplish the following:

• Cap rental increases at 5%
• The measure would tie annual rent increases to the Consumer Price Index, with a minimum increase of 2% and a maximum of 5%.
• Require landlords to meet specific criteria before evicting tenants.
• Require landlords to pay rental assistance of at least $5,500 to relocate a tenant if the owner wants to do substantial repairs, move in, take the unit off the housing market or demolish it;
• Establish independent rental housing Board to govern over rent adjustments;

Groups favoring this bill include labor unions and various housing advocates.  

Many businesses, developers and apartment owners oppose the bill; these groups feel that this bill would only deter landlords from maintaining rental properties. Mayor Darrell Steinberg has also expressed concern that the bill could result in less affordable housing construction. Mayor Steinberg does support temporary rent control that would only apply to at least 20-year old buildings.

The new additions to the Sacramento skyline will surely impact the market and will pose drastic changes to the way of life in the Sacramento Core; one should consider the pros and cons of renting and purchasing in the current climate. Got questions? Call us at (916) 930-0001, or check out our website,Sacramentobacon