CALIFORNIA, USA — A recent reheating of the Greater Sacramento real estate market is impacting more than homeowners. A finance expert has more on why someone’s good investment could mean higher costs for others.
“If you’re a renter, it’s tough to find a property,” said Towerpoint Wealth president Joseph Eschleman.
There isn’t a ton of supply in the Sacramento housing market right now. Inflation and high interest rates are making the cost of borrowing money more expensive, so more people are staying put.
“People who already have a low mortgage interest rate, they don't want to move,” said Eschleman.
It means less houses on the market, which is driving up the demand for people who want a home, meaning prices can go up.
“Now that the weather's turning and people are starting to think a little bit more about potentially moving, we're seeing some demand where prices are not white hot like they were in 2021, but they're not bad,” he said.
The lack of housing supply has led to some strength coming out of the winter. This impacts anyone who wants to rent a home, too.
“Landlords have been able to get away with increasing rents, which has been an attractive thing from the standpoint of buying and selling investment, real estate as well,” said Eschleman.
On the flipside — if you’re retiring or downsizing — keeping your home as a rental might be something you want to think about.
“I'm not going to be so inclined to want to let that home go and that attractive mortgage rate go. Perhaps I hold on to that home, turn it into an investment property, because primarily that interest rate on my mortgage on that home is very attractive as compared to 6-6.5% today,” he said.
The bottom line? Experts say the Sacramento housing market is better than some might be led to believe.
It’s all about crunching numbers if you’re considering turning your home into a rental. It can be as simple as making a spreadsheet. Understand what your ultimate return on your investment is, weigh the rent you’ll charge with the cost of upkeep, and hopefully you get some appreciation in the price of your home over time.
If the numbers don’t pan out, it might not be the best idea for you.
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