A Good Time to Buy a Home in Sacramento? (2023 Market Update)

The Sacramento real estate market has been on a roller coaster ride for the past three years. During the latter part of 2020, and all throughout 2021, Sacramento became one of the nation’s “pandemic boomtowns” as new residents poured in from all over the country.

But then in 2022, the Sacramento real estate market slowed considerably, as part of a nationwide cooling trend spurred by rising mortgage rates.

As a result of these ups and downs, many home buyers who are considering a purchase in Sacramento are wondering the same thing: Is 2023 a good time to buy a home in Sacramento? And what about next year? What might the market be like in 2024?

While the Sacramento-area real estate scene has cooled considerably from the overheated days of the pandemic period, it remains highly competitive. That’s largely due to an ongoing shortage in the number of homes for sale, relative to the number of buyers seeking them.

Is Now a Good Time to Buy in Sacramento?

From a price perspective, now could be a very good time to buy a home in Sacramento, California. Home prices in the area rose sharply during the pandemic, peaked in the summer of 2022, and declined into the start of 2023.

Because of this, the median home price in Sacramento is currently about $30,000 less than last year’s record high. But it seems that the downturn in prices might be coming to an end, suggesting that another period of steady price growth could be near.

In 2023, a person buying a home in the Sacramento area could come in at the “bottom” of the market and therefore enjoy more buying power.

But don’t let the short-term drop in prices fool you. The Sacramento real estate market remains highly competitive for buyers, mainly due to low inventory levels. So let’s shift gears now and talk about the supply situation.

Tight Inventory Conditions Continue in 2023

For several years now, a lack of supply has made the Sacramento housing market challenging for home buyers. Supply shortages have been a problem for a while, going back before the COVID pandemic (which depleted them even further).

Low supply has also affected local real estate markets all across the state of California. The pandemic exacerbated the situation by causing a statewide surge in home-buying activity.

Supply levels rose during 2022, due to a sharp rise in mortgage rates that reduced the number of home purchases. But since the start of 2023, inventory levels have declined again, resulting in a more competitive market for buyers.

When this article was published, in July 2023, the Sacramento metro area had about a 1.5-month supply of homes for sale. That’s an improvement from the record-low levels of 2021, but still significantly lower than what’s considered to be a balanced market.

According to a June 2023 housing market report from Realtor.com:

Active inventory decreased in 28 out of 50 of the largest metros compared to last year. Western markets reported the largest yearly declines, with the top three in California metros: San Jose, (-44.1%), San Diego (-35.9%), and Sacramento (-33.4%).

When it comes to prices, the latter half of 2023 could be a good time to buy a home in the Sacramento area. But from a supply standpoint, buyers could continue to face challenges when it comes to finding a suitable property within their budget.

The Pace of Home Sales Has Accelerated

Anyone planning to buy a home in Sacramento during the second half of 2023 should be prepared to hit the ground running. While the real estate market cooled during 2022, the overall pace of home sales has increased over the past few months.

As of early summer 2023, the median number of “days on market” across the Sacramento metro area was down to just 10 days. At the start of this year, the typical time on market was closer to 50 days. This shows that homes are currently selling a lot more quickly in the Sacramento area, compared to six or seven months ago.

This goes hand-in-hand with the inventory changes mentioned previously. Generally speaking, whenever supply levels drop within the real estate market, homes tend to sell more quickly. That’s because buyers are competing for fewer properties, which ramps up the level of competition.

Home Prices Moving Sideways, for Now

As mentioned earlier, home prices within the Sacramento-area real estate market have declined over the past year or so. That same trend has affected housing markets all across the state of California and nationwide.

But over the past three or four months, home prices in Sacramento have leveled off. The latest numbers from Zillow even show a slight increase in prices during the past few months. So we could be witnessing the so-called bottom of the real estate market in Sacramento, with a period of level prices stretching into the second half of this year.

Historically speaking, homes located within the Sacramento metro area tend to hold their value well over time. Over the past 40 years or so, prices within this market have only experienced two measurable downturns. The first occurred during the Great Recession of 2007 – 2008. The other price decline is the one we are witnessing right now.

The point being, Sacramento home buyers probably shouldn’t be too concerned about the recent drop in prices. It could actually benefit them by making a home purchase more affordable. And as history shows, Sacramento real estate tends to be a solid investment over time.

Need a mortgage loan? While we’re located in the Bay Area, Bridgepoint Funding also helps home buyers and homeowners in Sacramento and throughout the Central Valley. We offer a broad range of home loan options and can help you choose the right one for your situation.