A recent study revealed that a lot of people who are leaving the San Francisco Bay Area because of high home prices are moving to Sacramento, the state’s capital. But they might be surprised by how hot the Sacramento housing market is in 2017, despite the lower home prices that are available.
Some Home Buyers Moving Out of the Expensive Bay Area
The real estate brokerage Redfin recently published an analysis of relocation patterns within the state of California. Specifically, they looked at home buyers who were moving out of the Bay Area because it’s too expensive.
Here are some highlights from their report:
- To compile its “Migration Report,” Redfin sampled nearly 1 million home searchers in 75 metropolitan areas, during the first three months of 2017.
- They discovered that nearly 20% of home seekers currently living in the Bay Area were looking outside of the area for their next real estate purchase.
- The most common in-state destination for buyers who were leaving the Bay Area was the state capital of Sacramento, where house prices are much lower.
Sacramento Housing Market Is Hot Right Now
But what will the Bay Area “bailouts” find when they reach Sacramento? Here’s a comparison of current real estate conditions in these two regions, as of spring 2017:
Clearly, homes are more affordable in Sacramento than in the San Francisco Bay Area. According to the real estate data company Zillow, the median home value in the state capital was $293,600, as of May 2017.
For the sake of comparison, here’s a sampling of Bay Area median home values for the same period:
- Berkeley: $1,095,200
- Hayward: $578,600
- Oakland: $676,900
- Palo Alto: $2,526,300
- San Francisco: $1,167,200
- San Jose: $862,800
Given these figures, it’s easy to see why Sacramento’s $293,600 median house value is so attractive to home buyers who are planning to leave the more expensive Bay Area. You can get a lot more house for your money by moving inland.
But people who move to Sacramento to buy a home might be surprised by just how hot the local housing market is, as we approach the summer of 2017.
At the end of 2016, the housing analysts at Realtor.com published a list of what (in their view) would be the hottest real estate markets of 2017. They looked at the nation’s 100 largest metro areas, and ranked them based on factors including home-price appreciation and home buyer demand.
Sacramento was ranked as the fourth hottest housing market in the country.
Like many cities in California, housing inventory in Sacramento is currently falling short of demand. There just aren’t enough homes on the market to satisfy the current level of demand. This forces buyers to compete for limited availability, which is partly why home prices in the area are expected to rise faster than the national average over the next year.
Bottom line: Home buyers moving from the more expensive Bay Area can certainly get more for their money when buying a housing in Sacramento. But don’t let the price difference fool you. The Sacramento housing market is hot right now, partly due to limited inventory. So be prepared for some competition.