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Market Report

Sacramento Multifamily Market Report

3Q 2022

Multi-Decade Construction Record Lifts Vacancy;
Sacramento's Rate Still Tight by Historic Standards

Demand reaches an inflection point. Across 2020 and 2021, more units were absorbed on a net basis than in the previous six years combined. This allowed vacancy to breach the sub-2 percent threshold at the turn of the calendar, the first time this has happened since 2001. The tides shifted during the opening six months of 2022, however, as net absorption was measured at negative 670 units — the weakest two-quarter span in almost five years. Sacramento is experiencing a demand normalization, after a historic stretch that resulted in fewer than 3,000 rentals being available throughout the entire metro earlier this year. Even with the reversal during the first half, the number of vacant units held below the 2019 year-end level, which will continue to drive competition between prospective tenants and facilitate rent growth. The average effective monthly rate is expected to eclipse $2,000 by the culmination of 2022, but Sacramento remains the most affordable of the major California markets.
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