Sacramento Real Estate Blog

Let’s take a quick look at the inventory numbers for residential income property and see how different types stack up, and also how the inventory compares to straight residential property. Before I even open up MLS, here’s my prediction: Multi-unit residential income properties will have higher inventory, except perhaps in the 5 units and more categeory, than either single family homes or condos.

It’s nice to set yourself up as a straw man. Let’s see if I’m right. I’ll use average sales data for the past 12 months as a baseline, and compare it to current actives. This will be for Sacramento County, based on current MLS numbers as of today:

OK, well, I was almost right, except I got the 5-unit plus category wrong. Sure enough, residential income property’s inventory rises linearly with the number of units, and the 5-unit plus category is not an exception to that rule. Don’t ask me why I thought it would be — I’ve seen similar numbers before but I guess I naively assumed that apartment complex investors would have adjusted their prices by now to make things happen.

This study confirms the idea I’ve heard taught before that single family homes are in a sense the most “liquid”, being the easiest of all categories to sell in any market. I also suspect that a large part of what’s making up the inventory are investor-dumped properties, as a result of which the investment property categories are faring the worse.

What’s nice to see are the low numbers for halfplexes. I suspect that the low cost of entry for these homes coupled with the absence of the HOA fees that one pays in a condo, together with the small supply overall, accounts for the fact that the inventory numbers here are almost as low as they are for single family homes.