There’s always a lot of news swirling around about the real estate market, housing prices, interest rates, and rents. Keeping up with the latest trends can be challenging, but even more challenging is understanding how these trends impact you specifically and your Elk Grove investment properties.
We want to share some of the latest trends in our market right now, but we want to make sure you understand what they mean to you. Most of what we talk about will depend on your existing properties, the investments you might want to make in the future, your own financial stability, and your willingness to invest in upgrades and updates that will make your properties more appealing. If you’re thinking about refinancing, the dropping interest rates will impact you in a particular way. If it’s time for a new roof or an updated hot water heater, you’ll want to pay special attention to the sustainability trends in Elk Grove rental homes.
Let’s take a general look at how the current market trends are hitting, and when you’re ready to talk about your specific portfolio or property, we’ll be here to help.
Increasing Home Sales in Elk Grove, CA
Talk to the California Association of Realtors, and they’ll tell you that they expect to see a 10.5% increase in home sales throughout the state in 2025. They also believe that median home prices will rise by about 4.6%.
That’s great for the sales market. What does it mean for your rental property?
This means that the pool of tenants may shrink slightly as people who have put off buying property finally move into the sales market. Even though home prices might be higher, the cost of getting a mortgage will be lower because interest rates are coming down from their historic highs.
This does not have to worry anyone renting out a home. Demand in Elk Grove for well-maintained rental homes in desirable neighborhoods remains high. The median rent at the end of 2024 is $2,850. That’s a comfortable place to be as a rental property owner, and we don’t expect that rents will trend downward.
Even as housing sales increase, inventory is still an issue. This could create more competition in the real estate market, so if you’re an investor looking to make an acquisition, be prepared to move quickly. Get your financing in order.
Economic and Population Trends in Elk Grove, CA
It’s difficult to ignore the fact that the population in Elk Grove has steadily increased over the last 20 years. It has not been a dramatic jump but a slow climb. That’s created a good base of tenants in our market.
We expect more attention on our market as investors look for places to buy and rent out homes.
Located just south of Sacramento, Elk Grove has become a sought-after destination for real estate investors because of its diverse and growing neighborhoods, excellent schools, and stable economic opportunities. All of these things make it a great place for renters and property investors. If you’re in the market already, you know this. If you’re thinking about buying here, you should know that our market is attractive because of:
- Strong rental demand. A diverse population, including young professionals and entrepreneurs as well as retirees and families, has driven up demand for rental properties.
- Steady population growth. Elk Grove has seen consistent growth thanks to its quality of life and proximity to job markets in Sacramento.
- Rising property values. Home prices in Elk Grove have appreciated over the years, creating opportunities for both capital gains and rental income.
This is an excellent alternative to pricier markets in the Bay area. One of the most important trends we’re seeing is the focus on markets that are not overpriced, overly competitive, and difficult to enter.
By staying informed about local trends, investors can position themselves to capitalize on Elk Grove’s growing appeal as markets like ours continue to become trendier among investors.
Tenant Protection Trends
It’s no secret that California is a tenant-friendly state.
But don’t let the long list of tenant protections cause hesitation if you want to invest. If you’re a fair and transparent landlord with an interest in supporting a strong community with attractive housing, you’ll not find the laws too prohibitive. Some of the new regulations and legal issues you want to understand include:
- Security deposit rules. The law changed around how much can be collected. Most property owners cannot ask for more than the equivalent of one month’s rent as a security deposit. And, in 2025, you’ll be required to provide tenants with photos of the property before they move in, photos after they move out, and photos once you’ve completed any work for which you will charge the security deposit.
- Credit reporting. Landlords will have to offer tenants the opportunity to have their on-time rental payments reported to at least one major credit bureau. You can charge up to $10 for this service.
- Application fees and screening. The state wants you to screen applications in the order in which they come in and to approve the first application that meets all of your rental criteria. Only then can you collect a screening fee.
These are just a few of the new laws taking hold in 2025. What will this mean for your rental property in Elk Grove? You have to be vigilant about remaining compliant. Don’t invite a complaint or a claim into your rental property business.
Tenant Trends: Smart Home Tech and Sustainability
A profitable rental property remains occupied with good tenants. It inspires lease renewals that help owners avoid expensive vacancies and turnover costs. Your Elk Grove rental home will need to make some specific updates and upgrades in order to attract and retain the best qualified tenants. We’re not talking about the usual improvements: fresh paint and tile backsplash. Instead, we’re talking about smart home technology and sustainable features. These are the things that modern tenants in Elk Grove really care about.
- Smart Home Tech
Smart homes are becoming a standard expectation among tenants, especially in a tech-savvy city like Elk Grove, where there is a growing population of entrepreneurs, remote workers, and start-ups. Rental homes earn the most money and attract the best tenants. They are equipped with devices and systems that can be remotely controlled and automated, providing enhanced security, energy efficiency, and convenience.
Some of the most popular technologies among tenants and owners include:
- Smart Security Systems. Think about security cameras outside of buildings, smart locks on doors, and alarm systems that can be monitored and controlled via smartphones.
- Energy Management Solutions. These are not only great for tech-seeking tenants but also for those who care about sustainability and energy efficiency. Install smart thermostats, lighting systems, and energy-efficient appliances that reduce utility costs.
- Home Automation. Tenants rely on devices like smart speakers, automated lighting, and integrated entertainment systems that enhance the living experience.
Start small with digital keypads and video doorbells. Or, go all in and market your rental property as a fully smart home. This will demonstrate your understanding of tenant trends and show prospective residents that you’re willing to meet their demands.
- Sustainable Features and Greener Living
A huge trend that we’re seeing in housing markets across California is the push for more efficiency, more sustainability, and less of an environmental footprint. This isn’t always easy to accomplish in a residential rental home. But forward-thinking owners and investors are trying.
Why does it matter for your investment?
- Reducing Utility Costs
One of the most immediate and noticeable benefits of energy-efficient upgrades is the reduction in utility costs. By installing high-efficiency appliances, LED lighting, and energy-saving HVAC systems, you can significantly decrease the amount of electricity, gas, and water your property consumes. These savings not only benefit your tenants but can also make your property more attractive to potential renters who are conscious of their living expenses. And, during turnover periods, when you’re paying for the utilities, you will encounter lower costs.
- Increased Elk Grove Property Value
Energy-efficient upgrades can increase the overall value of your rental property. You’ll increase rental values in the short term, and when it’s time to sell, buyers will be willing to pay a premium for properties with modern, energy-efficient features. This can be particularly advantageous if you ever decide to sell your property or refinance your mortgage.
- Improved Tenant Satisfaction and Retention
Energy-efficient upgrades can significantly improve the comfort of your rental property. High-performance windows, better insulation, and efficient heating and cooling systems can help maintain consistent indoor temperatures year-round. This is especially advantageous during colder winters and hotter summers. You’ll want efficient air conditioning and dependable insulation. When tenants are comfortable in their living spaces, they are more likely to renew their leases, reducing tenant turnover and vacancy rates.
These are some of the trends that we believe will have the largest impact on the Elk Grove properties we manage. If you’d like to talk about how you’re preparing or what you should do to prepare your own rentals, please get in touch. Contact our team at Key Realty Center.
Broker-Owner Rod Luman has three decades of experience in the real estate industry. A lot has changed over the past three decades, but nothing has changed property management as much as computer technology. Today Key Realty Center uses cutting-edge tools to research market conditions and set rental prices, to thoroughly screen tenants, schedule and track maintenance, and provide extensive reporting for owners and tenants.