Amid housing crisis, Sacramento tops a new list: Least affordable new home market in US
The Sacramento region, experiencing a severe housing crisis, now holds the top spot on a new undesirable list: Least affordable new home market in the country.
The Capital Region tied with Miami for the spot, according to a report released Thursday by Knock, a real estate technology firm. Knock analyzed household income figures and compared them with median new home construction mortgages for the top 50 largest metropolitan areas in the country.
Eighty percent of Sacramento and Miami region households are priced out of buying a newly constructed home, the report found. In third place was Las Vegas, with 65%, followed by Phoenix at 63% and Denver at 62%.
The median new construction home price in the Sacramento region is $650,000, which requires an average down payment of $39,000, according to the report. In order to afford the down payment, Sacramentans need an income of at least $128,447, but the median household income here is only $76,706, the report said.
First-time home buyers need to save for 21 months to afford a 6% down payment for a new home in Sacramento, behind only Miami, which was at 30 months, the report said.
Kelly Pleasant, owner of Pleasant Real Estate Group in Sacramento, said he’d estimate the new home price average is a bit lower, around $500,000 to $550,000.
In the last 45 days Pleasant has seen the Sacramento become less competitive, which typically happens in the fall, but there is still a big shortage of homes here, he said.
“Instead of maybe 10 offers (per listing), you’re seeing five offers,” Pleasant said. “Instead of $50,000 or $60,000 over, maybe you’re getting it at list price or $20,000 over.”
The Crocker Village development in Curtis Park, where about 200 new homes are under construction, are all purchased except for about 14, said Matt Edwards, community sales manager. The prices are $975,000 to $1.6 million, he said.
“You can’t keep up with consumption,” Pleasant said. “Builders are behind.”
The lack of supply disproportionately impacts lower-income home buyers, Knock co-founder and CEO Sean Black said in a news release.
“Although more new homes are expected to come onto the market in 2022, wages have not kept up with home price growth, keeping new construction out of reach for many, especially first-time buyers who don’t have the benefit of equity from a home sale,” Black said in the release.
The new report comes as Sacramento’s housing crisis is being exacerbated by higher-income Bay Area workers moving to the Capital Region during the pandemic, seeking cheaper housing prices and more space to work remotely.
During the pandemic, Pleasant, like most Sacramento realtors, has seen an increase in clients from the Bay Area and Southern California looking to move to Sacramento.
“They’re getting more for their money,” Pleasant said. “You can really get a nice home on a nice lot. But you do still have a lot of people from Sacramento (looking to buy homes here).”
A whopping 45,580 new housing units, including 16,769 for low-income residents, are needed in the city by 2029, according to a state-mandated report. Home values in the region jumped 21% in the last year — among the biggest increases in the country.
The crisis extends to the rental market, as well. The typical apartment rent in the Sacramento region is now $1,760 a month — higher than in Seattle, Washington, D.C., and New York.
This story was originally published October 30, 2021 at 5:00 AM.
