How Sacramento’s real estate market is ‘cooling’ faster than nearly any other U.S. metro

Sacramento’s real estate market is in a summer cool down — or is it getting back to normal?

New data released this week shows the Sacramento region’s market is cooling off faster than just about any other metro in the country, with the exception of San Jose. That’s according to Redfin, the national real estate firm, which analyzed “year-over-year changes in prices, price drops, supply, pending sales, sale-to-list ratio and the share of homes that went off market in two weeks from February to May” to determine its rankings.

Other regions where the real estate markets are cooling off include Oakland, Seattle and Stockton.

A separate analysis by Redfin showed that roughly 49% of home listings in the region in June had a price drop. That was the sixth-highest percentage in the nation. Many of the markets with significant shares of homes with a price drop were popular destinations during the pandemic, including Sacramento, Boise, Idaho, Salt Lake City and Tampa, Florida.

“Higher mortgage rates and a potential recession are causing prospective buyers in popular migration destinations to press the pause button, and they’re also having a big impact on workers in big job centers who rely on their stock portfolio for down payments,” Redfin Senior Economist Sheharyar Bokhari said in a company blog post.

Redfin described Sacramento and other inland markets as “pandemic boomtowns” that are seeing dramatic turns. In Sacramento, prices have shot up more than 40% since 2020, but price increases have begun to slow.

Local real estate analyst and appraiser Ryan Lundquist found similar evidence of a shift. Homes are staying on the market longer, the inventory of available homes on the market is spiking and the number of sales has dropped, he found.

“In short, many metrics are hovering around normal or almost normal levels for the time being, so I can understand when people say the housing market is normalizing or trying to find balance,” Lundquist wrote in a blog post. “It’s like we were on a honeymoon for two years, and now it’s real life instead of an endless mai tai vacation vibe.”

Lundquist also found a significant number of listings with price drops. He said 43.7% of active listings last week in the region had a price reduction. There have been a lot of big price drops in the market; roughly 11% of listings had a reduction of more than $100,000, according to Lundquist.

The median price for a home in the four-county region stood at $610,000 in June, according to Lundquist’s data. That was a drop of $15,000 over May’s median price, an indication, Lundquist wrote, that “prices are softening.”

The most expensive real estate remains in Placer County, where the median price was $715,000 in June, according to Lundquist.