Want to hit the jackpot in 2016? Double down on Sacramento real estate. (And wait until you hear who’s saying it!)

Don’t listen to us. We’re biased about this real estate thing, being that we’re a real estate agency whose members make their living when people buy and sell their homes. It’s in our best interest to say rosy, optimistic things about the Sacramento real estate market, like when we predicted (VERY conservatively) solid 6-8% home equity gains in the greater Sacramento area over the next year with many markets hitting double digits, or when we reported that the Fed rate hike was just a innocuous blip on the national housing market’s radar.

But this time, you may want to listen because it’s not us saying this and if they’re right, Sacramento real estate will be a downright hot commodity in 2016 – one of the hottest markets in the entire country. If they’re right, you’ll want to go ALL IN on Sacramento real estate in 2016.

That’s the findings of a comprehensive economic forecast released this week by Realtor.com that listed the 10 up-and-coming metropolitan markets in the country. Realtor.com, the preeminent resource for everything housing, published the findings of their data and analysis by Chief Economist John Smoke.

Their opinion of California’s Queen City was that it would be one of the top ten real estate markets in 2016. In fact, Realtor and Smoke had Sacramento listed as the number four most up and coming real estate marketing in the country, behind only Providence, Rhode Island, St. Louis, Missouri, and San Diego, California.

Sacramento sat number four on the impressive list “where home buyers and sellers are the most motivated and active” according to Smoke and Realtor.com, with Atlanta, Georgia, New Orleans, Louisiana, Memphis, Tennessee, Charlotte, North Carolina, Virginia Beach, Virginia, and Boston, Massachusetts filling out the rest of the top ten.

Top 10 Real Estate Markets to Watch in 2016

            1          Providence, RI

            2          St. Louis, MO

            3          San Diego, CA

            4          Sacramento, CA

            5          Atlanta, GA

            6          New Orleans, LA

            7          Memphis, TN

            8          Charlotte, NC

            9          Virginia Beach, VA

            10       Boston, MA

To calculate these ten real estate jackpots, Realtor.com accounted for past trends, season variations for housing, and comprehensive economic data for every one of the 100 largest metropolitan markets in the country. Their statistical model further factored home sale and statistics, then spitting out a list of predicted future values for the coming year. They highlighted those markets where forecasted growth was equal to or better than the U.S. average, and voila…had their top ten.

In fact, Sacramento as well as the other nine markets on the list have real estate that’s in high demand, defined by 60% more listing page views than the U.S. overall average and inventory that sells 16 days faster than the U.S. average.

So why are we basing our advice to double down on Sacramento real estate on the recommendation of just one website, no matter how respected and diligent it is? Not at all. After Realtor.com released their findings, some of the biggest and most venerable media outlets and financial analysts parroted the prediction that Sacramento would come up all cherries, many of them including it in the top ten on their own lists, albeit based on a different combination of data and factors.

Here is a list of sources that either backed up Realtor.com’s placement of Sacramento in the top ten, or coronated the Queen City with their only list:

CNBC

CNN Money

Inman News

Money Talk News

Realty Today

Home Buying Institute

Housing Wire

And even a national real estate website that starts with a ‘T’ and rhymes with ‘Rulia’ backed up Sacramento’s top ten status.

All of these websites/news outlets pointed to a combination of surging demand based on growing household formation (Gen X’ers moving up and Millenials moving in), a surging job market, low unemployment numbers, and other key indicators. As far as I can tell, their statistical models don’t even factor in the Sacramento X Factor – the rise of downtown redevelopment around a new arena.

Either way, it seems Sacramento is in being lauded as one of the hottest real estate markets in the country for 2016, definitely worth doubling down for residents and investors. But by all means, don’t just take our word for it.

10 Real Estate Market Trends For 2016 (Part 2)

It's been a great year for real estate, both nationally and in our own Sacramento region, but what will 2016 hold? Here are five more trends that analysts,  economists, and housing experts expect to see this coming year. To read part one of this blog with trends one through six, click here. 

6. Interest rate rise stabilizes growth

We all know by now that the Fed just raised their benchmark rate by .25 points, which will bump up mortgage interest rates slightly, but that’s not bad news at all. In fact, the Fed is raising rates to temper inflation and slow growth since they see so many positive economic factors, like job numbers and housing. Interest rate increases will be gradual and aren’t expected to hamper buying since any increase will also mean the economy is healthier and jobs and wages heading in the right direction. No matter what, interest rates are still historically so low and the cost of buying is far less than renting in most areas.

7. City living in large metropolitan markets has seen its zenith

The cost of living, housing, and real estate in some large cities like Boston, New York, San Francisco, San Jose, Seattle, etc. have become prohibitive, driving some out of the cities or in search of suburbs or “second cities” that are still affordable. While urban living is still attractive to many Millenials and other young couples, as they age, they’re expected to head out to the suburbs. There, they’ll find lower housing prices, better values, and a better place to raise families. At present time, 37 percent of Millenials prefer living in the city versus 29 percent who prefer suburban living, but that number has shrunk, and faced with the choice of either staying an urbanite or being able to buy a house and move to the next stage of their life in the suburbs, the number of those 80 million Millenials who make the latter choice will be significant.

8. Location, location, bike trails and walking?

The suburbs may see a new influx of migration, but today’s young buyers will be looking for different amenities than their parents and grandparents did. Millenials, young buyers, and new suburbanites would love to recreate some of the access, convenience, and culture of city living, but in their own quieter neighborhoods. That means parks, bike trails, neighborhood markets, cafes, and restaurants, and easy access to trains and light rail for commuting without driving. Builders are keeping this in mind, creating “pocket” communities within greater suburbs for new homeowners to work, play, and raise their families without traveling far.

9. More loan products open the door for homeownership

Even as interest rates rise slightly, lending will be healthy in 2016, invigorated from a diverse new set of mortgage loans introduced into the market that will grant access to new homebuyers. As many Americans can now afford the monthly payment for a home but can’t scrape together the sizable 20% down payment traditionally needed to buy, there will be an array of purchase loans with less money down. In fact, Fannie Mae now has a loan that allows for multigenerational families to spread the cost of homeownership by counting income of boarders or renters and other family members. Likewise, Fannie Mae FNMA and Freddie Mac beginning to purchase loans with only 3% down payments, or 97% loan-to-value products, which is expected to greatly boost access to those loans, as now only about 11% of the mortgage market is comprised of loans with down payments of 3% or less. In all, the Mortgage Bankers Association predicts that new mortgage originations will rise to $905 billion in 2016, up from $821 billion in 2015, an encouraging sign.

10. The West will still be the best

In 2016, we’ll continue the trend set in 2015 of the largest gains in home prices concentrated in the western part of the country. From Denver to San Francisco, Austin to San Jose, Salt Lake City to Seattle, and many points in between, year-over-year gains were up to or exceeding 10% in major western cities in 2015. While those numbers may adjust back down to earth a little in 2016, analysts still expect the best gains for equity in the left half of the country.

So what’s our prediction for Sacramento?

Based on all of these ten factors we laid out and the economic climate of the greater Sacramento region, we predict that single-family home sales will increase by about 6-7 percent in 2016 over this year, and the median home sale price will increase by 7-10 percent.