Luxury sales in Sacramento have doubled over the past five years, as buyers flee the heated housing market in the San Francisco Bay Area, according to an analysis by Mansion Global of housing data from Realtor.com.
"We’re seeing demand in the Bay Area spill over into Sacramento," said Javier Vivas, director of economic research as Realtor.
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Dizzying price growth in San Francisco and neighboring counties, encompassing Silicon Valley and wine country, have priced so many residents out of the housing market that for two years, the U.S. Census has recorded more people moving out than in. House hunters from the Bay Area have found that for the price of a median home in San Francisco, they can get double the space in Sacramento County and its environs, according to brokers and analysts.
Sacramento County, which is 80 miles northeast of San Francisco, recorded 233 sales over $1 million in 2017, a 32% spike from the year prior and double the number of 2014, according to the data from Realtor. In March, it took homes in the top 5% of the market an average of only 54 days to sell.
"These are well-off families who are not able to afford the typical home in the Bay Area," Mr. Vivas said. "Affordability is making every age group wonder if they have better options elsewhere."
The median price of a condo in San Francisco is now hovering around $1.176 million and it’s $1.6 million for a house, according to first quarter data from Paragon Real Estate Group.
By contrast, the typical home in Sacramento selling for $1 million is a single-family house spanning about 4,500 square feet with four bedrooms and an office, said Nick Sadek, a Sacramento real estate agent and head of Nick Sadek Sotheby’s International Realty.
"Owners in the Bay Area are saying if I sell my home for $1 million, then where can I move?" Mr. Sadek said. It’s an dilemma that has discouraged potential sellers in San Francisco from listing their properties.
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But what classifies as "affordable housing" on the coast falls into the luxury segment 80 miles east.
"They are amazed at what they can get up here," Mr. Sadek said, adding that buyers from the Bay Area get a minimum 50% discount on a comparable property in Sacramento.
Transplants include people who can work remotely for a few days a week, people who make the 90-minute commute everyday, millennials who made money in tech and want to buy their first home and retirees who are downsizing, the experts said.
This year is poised to deliver another record in million-dollar home sales in the Sacramento, said Pat Shea, president of Lyon Real Estate, an affiliate of Luxury Portfolio.
In the first quarter, the number of luxury contracts signed for homes over $900,000 in the Greater Sacramento region nearly doubled from last year, Mr. Shea said in Lyon’s first quarter report. "We’re off to such a rapid start this year that I expect that we’ll be breaking luxury home sales records in Sacramento."