Booming demand helps
Sacramento is the nation’s hottest housing market, as more Bay Area folks able to work from home head east and compete with capital region residents for houses on the market, lifting prices and making multiple offers common for more than half of sales.
With a dramatic decline in existing homes on the market — homes entered escrow in seven days and only one month of supply in December, according to the California Association of Realtors — more consumers are looking at new homes in the Sacramento region.
New-home sales were at the highest level last year since 2005, despite a significant slowdown during the first few months of Covid and the subsequent lockdown, according to the North State Building Industry Association.
Builders sold 7,073 homes last year in Sacramento, Placer, El Dorado, Yolo, Yuba and Sutter counties, a 33% increase compared to the 5,337 homes in 2019 — and more than double the sales in 2015.
“Current home designs are meeting today’s needs of working and schooling from home, and builders are rapidly bringing new product to the market that will be even more tailored to these needs,” says Aren Bazzocco, BIA chairman and division president for homebuilder Taylor Morrison. “Additionally, the Sacramento region continues to benefit from the exodus of Bay Area people looking for more expansive housing and a slower lifestyle. We see no signs that demand for new homes in the region will slow down any time soon.”
Red-hot sales in December
Indeed, Sacramento-area home builders completed 660 sales in December, double the homes sold a year ago — and 2.5 times the average for the month, often the slowest during the year. In fact, December was the third best-selling month in 2020, though far behind the 880 homes sold in July.
Sacramento County accounted for almost half of the new homes sold (3,623) in the region during the year, followed by Placer County at 2,150 homes.
El Dorado County, largely the community of El Dorado Hills, had the largest percentage increase in new-home sales in the region at 87%, followed by Yuba (up 71%), and Placer and Yolo counties up 41%.
More than two of every five homes (42%) sold for $400,000 to $500,000 (see chart, below. for homes sold at each price range).
‘Need to continue a steady pace of building’
But the boom times could slow, soon, warns BIA president and CEO Michael Strech.
Only 6,920 single-family home building permits were issued in the six-county region for the first 11 months of 2020, down slightly compared to 2019 — and fewer than homes sold in 2020, according to the Construction Industry Research Board.
“In the long run, to meet the need for housing and maintain affordability, we will need to continue a steady pace of building, which will require cooperation from our local officials to approve new communities and issue building permits,” Strech says. “Fortunately, most local officials understand the need for more housing, but it’s an issue we will be watching closely in the years to come.”