Sacramento Tops New Homes List; Bay Area Buyers Fueling Growth

SACRAMENTO (CBS13) - Sacramento led every other Northern California city in new home construction last year and market observers say the growth has largely been fueled by Bay Area residents looking for more affordable housing.

Figures released by the California Dept. of Finance show Sacramento added 2,353 homes in 2018. San Francisco, Roseville, and Dublin were the only other Northern California cities in the top ten.

Separately, a study by the real estate brokerage firm Redfin says Sacramento was the number two market in the country for net inflow of homebuyers in the first quarter of 2019, topped only by Phoenix. Redfin says 5,987 homebuyers came from outside the Sacramento region — mostly from the Bay Area.

K. Hovnanian Homes regional president Mike Wyatt says Bay Area buyers account for about a quarter of the homes sold in the builder's Sacramento communities, and he says sales so far this year are up 31 percent.

"For us locally this is the busiest we've been probably in the last ten years," he said.

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Sacramento real estate broker Jim Amen, who employs more than 50 salespeople, says as many of a third of his company's clients come from the Bay Area and a number of them have been able to keep their jobs by telecommuting. Amen says they're drawn to Sacramento not just because housing is far more affordable here but also because the city is becoming more cosmopolitan and vibrant.

"A lot of my San Francisco clients feel that downtown and midtown are very reminiscent of San Francisco," he said.

Perhaps surprisingly, a respected housing market analyst says out-of-town buyers have not led to significant price spikes in the Sacramento housing market. Greg Paquin of the Gregory Group tracks home sales and market trends and says despite the influx of Bay Area buyers, home prices in the Capital have been increasing "in the low single digits."

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"There hasn't been a lot of upward pressure on pricing recently," Paquin said.

But Paquin says the key to Sacramento remaining a relatively affordable housing market is for suburban communities to allow higher density construction instead of just traditional single-family homes on large lots.

K. Hovnanian's Mike Wyatt agrees, saying local restrictions make it increasingly difficult to build homes that average people can buy.

"There's a housing crisis in California," he said. "If you look back to 2005-2006 and you look at the number of homes built, it's still double (back then) what it is today."