Just how high are rents in the Sacramento region? Even Seattle is more affordable
Sacramento rents hit the throttle during the COVID-19 pandemic, rising faster than all but five other major cities in the United States and leapfrogging the likes of Seattle, according to an analysis of the 50 largest metropolitan areas.
Rents on average jumped 7.5% in the Sacramento region in February compared to the previous February, just before the pandemic struck, the Zillow online real estate service reports. That was the sixth highest increase in the country, behind Providence, R.I., Riverside, Memphis, Tenn., Phoenix and Las Vegas.
Nationally, rents essentially have held steady during the 12 months of the pandemic, rising less than 1%, according to Zillow. But that number belies a notable geography-based shift during the pandemic: Some larger and denser cities saw dropping rates as residents moved to smaller and more moderately price urban areas.
That trend was especially evident in Northern California. San Francisco rents dropped 9% and San Jose rents dropped 8.3%, due in large part to the much-reported trend of Bay Area residents leaving the area because they can telework from home rather than be required to live close to the office.
A LinkedIn analysis last month found that Sacramento was the third most popular destination for professionals who left the Bay Area in 2020, behind tech meccas Seattle and Austin.
The average rent in Sacramento hit $1,882 in February, according to Zillow estimates. That was a $131 a month increase over February of last year, the month before the pandemic hit. That estimate includes apartments, duplexes and other rentals, including single family residences being used as rentals in Sacramento, Placer, El Dorado and Yolo counties.
That pushed the average capital-region rent a few dollars higher than Seattle’s $1,854. Seattle was one of the handful of large cities nationally that saw a rent decrease last year. Sacramento’s average rent, according to Zillow, is also higher than the Portland area’s, which stood at $1,628.
By comparison more locally, San Francisco’s average rent was $2,831 in February and San Jose’s was $2,840.
“California has long been rather expensive. It was only a matter of time for that tide of demand to spread outward to more mid-sized cities,” Seattle-based Zillow economist Jeff Tucker said. “Sacramento is at that particular couple-hour distance from one of the super-star coastal areas, making it an interesting possibility for this hybrid work, where you go into the office a few days a month.”
Sacramento-area rent increases do not necessarily mean that landlords of existing units have dramatically increased rents during the pandemic. Instead, the increase in the overall “average” can be attributed in part to a mini-boom in construction of new apartment complexes in the last year, many of them larger projects with modern amenities and higher rents.
A state Department of Finance report issued Monday shows that California as a whole saw an increase in apartment construction during the pandemic.
Housing stock, both for rent and purchase, however, remains lower than needed in California, helping push rents upward even during the economic shutdowns of the last year. That is putting increasing pressure on local governments to figure out ways to increase affordability.
For now, renters are protected from eviction by a state eviction moratorium, which is scheduled to sunset on June 30, a little more than three months away.
Tenants are still responsible for paying unpaid amounts to property owners, but landlords cannot immediately evict tenants after the moratorium ends, if the tenants are back-filling unpaid rents.
Several rent assistance grant programs meanwhile launched last year in the region, and again this spring.
Sacramento County just closed applications for up to $100 million in federal and state grants, focused on very low income earners, with one goal to keep people from ending up on the street when the moratorium ends.
An upcoming second round of grants will be offered later this spring aimed at renters with incomes that are 80% of the area’s median income.
Placer and Yolo counties continue to offer similar grant programs to help renters.
The Sacramento City Council last month voted to use $31.5 million of Measure U tax revenue to provide subsidies to developers willing to build affordable apartment units along older commercial corridors in the city.
“How do we prevent the next inflow of homelessness? The answer has to start with this ... rental assistance,” Mayor Darrell Steinberg said last week.
This story was originally published March 24, 2021 at 5:00 AM with the headline "Just how high are rents in the Sacramento region? Even Seattle is more affordable."