"Granny flats" remained bright spot as Sacramento housing construction slowed in 2023

Sacramento (March 28, 2024) The number of building permits 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 1,066 units of affordable housing in 2022, which comprised 38 percent of the total.

The new ARY Place affordable housing project in Midtown Sacramento

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. “We’re beating and surpassing every other city with the amount of affordable housing we’re doing.”

Sacramento has adopted numerous policies to encourage housing construction, including waiving city development fees for affordable housing. The general plan recently adopted by the City Council is the first in the country to encourage infill by removing unit caps on parcels in single-family zones, provided that construction still meets standards for height and lot coverage.