Sacramento is tied with Miami for having the least affordable new homes market in the United States, according to a study.
An October 28 report by real estate technology firm Knock examined median new home construction mortgages in comparison to household income figures in the nation’s 50 largest metro areas.
The study found that new construction home prices in Sacramento average at $650,000. Residents in the California capital would need an income of $128,447 to come up with the average down payment of $39,000, but the median household income in Sacramento is $76,706, the study shows. Knock reports that 80 percent of households in Sacramento are being priced out of new homes, which is the same as Miami.
The Sacramento Bee spoke with Kelly Pleasant, who owns Pleasant Real Estate Group in California. Pleasant estimates the price of new construction homes in the area to range from $500,000 – $550,000, slightly under Knock’s assessment. He says the market has become less competitive in the past month and a half, which he said is a norm when fall rolls around, according to the Bee.
“Instead of maybe 10 offers (per listing), you’re seeing five offers,” Pleasant told the outlet. “Instead of $50,000 or $60,000 over, maybe you’re getting it at list price or $20,000 over.”
The Bee reports that Bay Area residents and Southern California residents have been looking to move up to Sacramento amid the pandemic, which has only exacerbated the issue of affordable housing in the city. Pleasant told the outlet he had witnessed the trend first hand as he has had an increase of clients from both the Bay Area and southern parts of the state.
On a national level, Knock reports that “the minimum total household income for a mortgage on a $390,900 home, with a 6% down payment, typically falls just under $80,000. At this level, nearly 60% of U.S. households would not be eligible.”
Knock co-founder and CEO Sean Black issued a press release regarding the October 28 report, according to CISION.
“This analysis highlights how years of building undersupply and the current supply shortages are disproportionately impacting lower-income homebuyers looking for alternatives in a housing market where homes are garnering multiple offers and selling for over asking price,” Black stated.
“Although more new homes are expected to come onto the market in 2022, wages have not kept up with home price growth, keeping new construction out of reach for many, especially first-time buyers who don’t have the benefit of equity from a home sale,” the Knock CEO added.
Rounding out the top five states with the highest percentage of households being priced out of new homes are Las Vegas at 65 percent, Phoenix at 63 percent, and Denver at 62 percent, per Knock’s report.