by Rick Delgado
on Thursday, July 7th, 2016 at 10:39am.
Rental rates in Sacramento continue to increase, which is a boon for property owners and real estate investors earning passive income from renting out their homes or condos.
According to new reports from two condo rental data companies, over the past 12 months Sacramento's rents went up by almost 12% from May 2015 to May 2016 - higher than any other city in the U.S., according to Yardi Matrix.
Sacramento's rental growth is ahead of cities like Seattle, Portland and Los Angeles which are places with a healthy increase in the number of jobs.
Another rental data firm, RealPage, found Sacramento's went up 9.7% over the previous year up to the second quarter of 2016.
The new numbers come despite initial thoughts condo rental growth would flatten in the spring as experts thought more projects opening up and a slightly slower economy in the Bay Area would negatively impact rentals.
Truth is both Yardi Matrix and ReaPage discovered rental rates still rising and occupancy rates staying high. In Sacramento, for example, occupancy rates were 96.7% in both April and May, according to Yardi Matrix.
For Sacramento, a lack of new condo growth plus people moving in from more expensive areas like San Francisco has contributed to the high rental rates, even though the Tri-County area has seen modest economic growth.
Yardi Matrix’s report noted the number of new units in Sacramento in May as a percentage of the entire rental stock was 0.4%. The number had been 0.7% in previous months, and both numbers are way below the rate of new units seen in high rental growth cities such as Seattle and San Francisco.
Looking ahead to the end of 2016, Yard Matrix is projecting rental growth in Sacramento of 8.8%. However, the rate has been 10% or above so far this year in reality, and the lack of many new apartments in the region anytime soon would suggest it’s unlikely to be less during the second half of the year.