CLASS C: INFLATION IMPACTING RENTERS ON THE EDGE

Class C multifamily vacancy stood at 5.0% as of the close of Q2—an increase from the 4.7% reading of three months ago. One year ago, local vacancy stood at just 3.0%, but this metric has been climbing now for four consecutive quarters.

Sacramento recorded negative net absorption to the tune of -257 units in Q2. Year-to-date net absorption now stands at -708 units. While some of this occupancy loss may be attributable to tenants trading up, given the inflationary pressures of the past year we think it more likely that the local trend of negative net absorption for Class C space is due to some tenants on the fringes being priced out or doubling up (taking on roommates, moving in with family, etc.).

Despite modest occupancy declines, there are no local submarkets where Class C vacancy is more than 6.2% (Carmichael/Citrus Heights). While Class A rents have declined 3.3% over the past year, and Class B rates have remained stable, the current average asking rent of $1,484 for Class C units is up modestly (1.5%) from where it stood a year ago.