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Waiting for home prices in Sacramento to plummet? It's not likely to happen anytime soon.
While prices may not surge, they’re also unlikely to drop significantly in the coming year.
Let’s explore why Sacramento’s market is set to remain stable in 2025 and what that means for buyers and sellers.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) The California Association of Realtors actually predicts a 4.6% increase in home price
The California Association of Realtors predicts a 4.6% increase in the state's median home price, reaching $909,400 in 2025, following a 6.8% rise in 2024.
This indicates a robust housing market driven by strong demand, population growth, limited supply, and economic stability.
Sacramento is expected to mirror this trend, with continued growth in home prices, making it a promising time for homeowners and buyers.
Source: California Association of Realtors
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2) Sacramento homes sell in an average of 20 days (much faster than the national average)
As of September 2024, Sacramento homes sell in an average of 20 days, much faster than the national average of 58.2 days, indicating strong demand and a competitive market.
This quick turnover suggests demand exceeds supply, putting upward pressure on prices.
Consequently, home prices in Sacramento are unlikely to fall in 2025, with current conditions supporting price stability and potential increases, making it an attractive market for homeowners and investors.
Source: Redfin
3) Sacramento's housing market has only 1.7 months of inventory
In October 2023, Sacramento's housing market has a Months of Inventory figure of 1.7 months, with 1,178 homes for sale, indicating a seller's market.
This low inventory leads to competition among buyers, driving prices up or keeping them stable.
A balanced market typically has six months of inventory, but Sacramento's low supply gives sellers an advantage, sustaining or increasing home prices.
Consequently, home prices are unlikely to fall in 2025, as demand continues to exceed supply, maintaining price stability or growth.
This highlights the resilience of Sacramento's housing market against price declines.
Sources: Sacramento Association of Realtors, Norada Real Estate Investments, Zillow
4) Sacramento's median home sale price actually increased by 2.0% from the previous year
In September 2024, Sacramento's median home sale price reached $500,000, a 2.0% increase from the previous year, indicating a robust real estate market.
This growth reflects strong demand and economic stability, driven by job opportunities, population growth, and a desirable living environment.
The consistent appreciation suggests that home prices are unlikely to fall in 2025, supporting market confidence and making Sacramento a wise investment.
Source: Redfin
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5) Sacramento's housing market is expected to grow 3-5% annually through 2025
Sacramento's housing market is projected to see a 3-5% annual price increase through 2025, driven by high demand and limited inventory.
Neighborhoods like East Sacramento and Land Park may experience even stronger growth due to their desirability.
The surge in demand is fueled by population growth, a strong local economy, and buyers from pricier areas seeking affordability, while the supply remains tight with few new constructions.
This supply-demand imbalance supports continued price appreciation, making Sacramento a stable investment.
Source: The Luxury Playbook
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6) In Sacramento's housing market, 50.2% of sales actually exceed the list price
In Sacramento's housing market, 50.2% of sales exceed the list price, indicating strong demand and competitive bidding.
This trend, driven by limited supply, suggests buyers are willing to pay premiums, leading to bidding wars and upward pressure on prices.
Consequently, home prices in Sacramento are unlikely to fall in 2025, as demand continues to outpace supply, keeping the market stable and thriving.
Sources: Norada Real Estate Investments, Zillow
7) The Railyards Development, the largest sustainable infill project in the nation, should boost the market
The Railyards Development, the nation's largest sustainable infill project, is transforming 244 acres into a vibrant mixed-use community in Sacramento, including residential, commercial, and cultural spaces.
This project is expected to attract new residents and businesses, increasing housing demand and likely stabilizing or driving up home prices.
As a catalyst for economic growth, the development enhances Sacramento's real estate market resilience, making it appealing for homeowners and buyers.
Source: Railyards
8) Sacramento's mortgage rates stabilize with a 30-year fixed-rate at 6.875%, reducing uncertainty
As of November 2024, Sacramento's mortgage rates show stabilization.
The 30-year fixed-rate mortgage is about 6.875% with a 7.257% APR, the 15-year fixed-rate is 6.125% with a 6.745% APR, and the 5-year ARM is 7.760%.
This steadiness reduces uncertainty, encouraging home buying as buyers can plan finances confidently.
Despite higher rates, demand remains strong, with slight home value increases.
Consequently, Sacramento's home prices are unlikely to fall in 2025, supported by stable rates and sustained demand.
Sources: Total Mortage, NerdWallet
9) Rental rates in Sacramento are rising 4% to 6% annually, driven by young professionals
Rental rates in Sacramento are rising 4% to 6% annually, indicating a strong rental market driven by young professionals.
This robust market attracts investors, limiting housing inventory and stabilizing home prices.
In Midtown, South Natomas, and Downtown, high rental demand boosts rates and maintains price stability.
Investor interest keeps housing inventory low, preventing price drops due to high buyer competition.
Consequently, Sacramento home prices are unlikely to fall in 2025, as rising rental rates and strong demand from renters and investors support market stability.
Source: The Luxury Playbook
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10) Old Sacramento Waterfront upgrades should help stabilize home prices
Sacramento has approved infrastructure improvements for the Old Sacramento Waterfront, including new public spaces and attractions, to boost tourism and local engagement.
These enhancements aim to increase the region's economic vitality by making it a more attractive destination.
As a result, demand for housing is expected to rise, likely preventing a drop in home prices in 2025.
The strategic investments in infrastructure and attractions are set to enhance the city's appeal and support home price stability and growth.
Source: Capradio
11) The $45 million Dos Rios Light Rail Station in Sacramento should boost property values
The $45 million Dos Rios Light Rail Station in Sacramento's River District will enhance connectivity and accessibility, boosting property values.
Improved transportation attracts homeowners and investors, increasing housing demand.
This development suggests that home prices in Sacramento are unlikely to fall in 2025.
The station's operation will make the River District more desirable, supporting stable or rising home prices.
Source: Hoodline
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So, will home prices in Sacramento fall in 2025? Not likely!
Home prices in Sacramento are expected to remain stable or even increase in 2025.
Several factors contribute to this outlook. The California Association of Realtors predicts a 4.6% increase in the state's median home price, reaching $909,400 in 2025. This suggests a robust housing market driven by strong demand, population growth, and limited supply.
In Sacramento, homes sell in an average of 20 days, much faster than the national average of 58.2 days, indicating a competitive market. The city's housing market has only 1.7 months of inventory, a clear sign of a seller's market where demand exceeds supply.
Additionally, Sacramento's median home sale price increased by 2.0% from the previous year, reaching $500,000. This growth reflects strong demand and economic stability. The Railyards Development and the new Dos Rios Light Rail Station are expected to further boost the market by attracting new residents and businesses.
With rental rates rising 4% to 6% annually and significant infrastructure improvements underway, Sacramento's housing market is poised for continued stability and growth. All these factors combined make it unlikely for home prices to fall in 2025.