Should You Rent or Own in Sacramento’s Core?

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.) This trend is expected to continue over the next 3-5 years

3.) Meaning more opportunities for apartment developers and investors

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. Home prices are expected to increase, along with rental rates – but at a much slower rate. Currently it is less expensive to rent than to buy in the following zip codes: 95818, 95819, 95811, 95816.

Politics 

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%
  • Annual rent increases would be tied to the Consumer Price Index, with a minimum increase of 2% and a maximum of 5%;
  • Restrict landlords’ ability to evict by requiring certain criteria to be met;
  • 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.

19th and J Street

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, https://sacramentobacon.com/

Technology and Innovations in Development Enhance Sacramento’s Value Proposition

Sacramento has followed a consistent trend of economic, social, and political growth for the last few years. As new opportunities arise, non-government jobs are being created while the population increases every year. To keep up with the increased demand, High Density Residential (HDR) urban housing projects are cropping up throughout Sacramento’s CORE. Nikky Mohanah’s Micro Unit HDR project at 19 & J Street in Midtown Sacramento is slated for completion this year and will  serve work force and millennial individuals who would rather rent than buy.  HDR projects like 19J are working to fill a housing void that has needed attention for a long time as the supply of affordable urban housing has diminished.  19J offers micro units consisting of less than 400 square feet for around $1,000 a month.  19J also is introducing stackable parking, designed by HRG Architects,and administered by City Lift.

Just as the real estate market adjusts with projects like 19J, transportation options including alternative fuel vehicles, ride sharing services (JUMP Bikes, Uber and Lyft)  have become the norm.    Innovations in housing and transportation are essential to Sacramento’s future.  All these innovations improve quality of life, reduce waste and cut transportation costs.

Envoy Technologies, a provider of shared on-demand, community-based electric vehicles, has become associated with Sacramento’s housing market through new partnerships encouraging the use of electric vehicles. Envoy also offers a “envoy car sharing” program that pairs well with the proposed housing projects in Sacramento. In this program they offer both charging stations and on demand electric vehicles as amenities for properties. By Increasing the value of rental units and clearing the air, envoy seems to be on the right track. 

This seemingly coordinated response (involving multiple industries) to changes in Sacramento’s economy and demographics is illustrated throughout the City’s CORE and we will see more HDR developments like 19J in the  future – particularly when the various modes of transportation expand. For more information on Sacramento’s growth, please click here.

For more information on developments such as 19J feel free to give us a call at (916) 930-0001.

This post was co-authored by Emma Bacon.