The number of building permits for new housing issued in the City of Sacramento dipped 7.5 percent in 2023 as higher interest rates made it more difficult for developers to obtain financing.
In an annual update on Sacramento’s progress toward meeting housing goals, staff said the City issued permits for 2,603 units in 2023, down from 2,813 in 2022. The number of units affordable to very-low and low-income households totaled 763, or 29 percent of total production. That compares with 1,270 units of lower income housing in 2022, which comprised 45 percent of the total.
For the third year in a row, hundreds of Sacramento homeowners took advantage of a streamlined City process to build one or more accessory dwelling units. The City issued permits for 246 ADUs in 2023, up 7 percent from 228 in 2022.
By comparison, just 30 ADUs were permitted in 2018.
Councilmember Eric Guerra noted that while housing construction was down — reflecting national market trends — Sacramento continued to add hundreds of affordable housing units. During the last housing construction boom, before the Great Recession, housing production was higher than today but affordable units represented a tiny percentage of the whole.
With “the policies we have taken over the last three years, you immediately see the diversification of (housing) options,” Guerra said.
Sacramento has adopted numerous policies to encourage the construction of lower-cost housing, including waiving City development fees for affordable housing.
The 2040 General Plan recently adopted by the City Council is the first in the country to the restrict the size of a single-family home and eliminate caps on the number of units that can be built in a single-family zone, provided that construction still meets standards such as the maximum floor area ratio and height. These changes will encourage the construction of unit types that are, by design, more affordable than the standard single-family home, such as small homes on small lots, triplexes, fourplexes, and sixplexes.
“Although our housing production numbers are lower than we would like to see, it’s encouraging to see the number of affordable units we are producing,” said Associate Planner Greta Soos. “This is being achieved through deed-restricted unit production and more affordable product types like accessory dwelling units and compact multi-unit developments.”
Visit the Housing Element web page for more information.