Majority of Mercedians are renters

For the past eight years the Belmontes family has rented in Merced.

Paul Belmontes would like to own a house for his wife and three kids, but without a job that isn't going to happen anytime soon, however cheap houses are in Merced. "I would love to buy a house," he said.

It turns out the Belmontes are the norm, rather than the exception, in Merced.

Although local housing prices are at an all-time low, most people who live in the city of Merced are still renters.

Nearly 60 percent of all Merced residents rent, compared to a national average of almost half as much, according to the 2006-2008 American Community Survey by the U.S Census Bureau.

Even in nearby Modesto and Madera where poverty, joblessness and the foreclosure crisis have hit hard, the number of people living in their own homes is higher than in Merced.

While few people have hard and fast answers for why this is the case, many speculate that a lack of well-paying jobs is the main culprit.

Whatever the cause, the higher than usual number of renters -- high even before the real estate boom brought housing prices to record highs -- is now creating a kind of perfect storm for an already tight rental market. Many foreclosed homes go unrented for long periods of time, and people who have lost their homes are now renting. In addition, an ever-growing student body at UC Merced contributed to an already high number of renters in Merced.

Of Merced's 23,600 occupied units, only 9,545 were owner-occupied compared to 14,055 occupied by renters, according to the Census Bureau's survey. That's nearly 60 percent occupied by renters and 40 percent by homeowners. The nationwide percentage of owner-occupied homes in those same years was 67 percent.

And all the blame can't be laid at the feet of the foreclosure crisis. In 2000, before the housing boom out-priced many people or threw many former homeowners into the rental market, 46 percent of homes in Merced were owner-occupied. That's only a 6 percent drop when compared to the most recent numbers from the Census Bureau.

Even nearby cities with similar issues have lower rental rates.

In the city of Madera, according to the latest data, the ratio of renters to owners was roughly 50-50. In Modesto 67 percent of all housing units were occupied by owners.

Loren Gonella, a broker at Gonella Realty, was surprised to hear so many people are still renters in Merced.

According to Gonella, the housing affordability index is 89 percent in Merced, which means the vast majority of the adult population here should be able to afford a modest home. While there aren't a lot of houses still on the market and few new good jobs here, he was still taken aback at the number of renters.

The reason why there are so many renters eludes him. He speculated that it could be the lack of job opportunities in Merced that keep so many renting, even if prices are low.

Masoud Niroumand, housing manager for the city of Merced, agrees. He said the lack of homeowners in Merced is probably a result of the local economy. There just aren't enough good jobs here for people to buy houses, no matter how cheap they are, he said.

But from what he's seen, other forces are at work as well. Even some of the people who can afford houses are being pushed out by investors. During the last nine months Niroumand's office, which has a down-payment assistance program, has seen only a few of the 80 people eligible for their program get houses. Additionally, a lot of people who can afford to buy just don't have good credit or aren't being qualified for home loans.

While many may be able to afford homes now, for others earning minimum wage, the rents are too high. According to the Joint Center for Housing Studies at Harvard University, an average modest rental unit in Merced County is two to three times more than the minimum wage.

Many say the rents in Merced are going anywhere but down. And the number of rentals isn't increasing either.

Gonella and his colleagues said rents are going up for all the obvious reasons: lots of former homeowners who lost their houses are now renting; there are fewer houses for rent on the market and there are more UC students renting in town.

Kathy Hoffman, a property manager with Gonella Realty, said the influx of students this year was especially large. "At one point we had almost every house that we had available spoken for," she said.

One of those students, Jenna Short, a 28-year-old biology major at UC Merced, doesn't want to buy a house anytime soon, but she's definitely noticed a shortage in available rentals and a rise in rents. After her last landlord wanted to raise the rent by $50 a month, it took her four months to find a new place with rent that she wanted to pay.

Nonstudents who want to buy homes in Merced said they'd buy if their credit was better or if they had a job.

Athina Gonzales, a 26-year-old Target employee, said rents aren't getting any cheaper. And if she could buy, she would. But with bad credit she doesn't think that will happen.

Jeremy Choffel, a 29-year-old cook, also said he would love to buy a house, especially with such low prices right now. But his credit just isn't high enough. "I pay $1,150 a month (in rent) -- I could get a house for that, man," he said.

Choffel said he doesn't expect there to be an increase in homeowners in Merced until there are more jobs here. "No jobs," he said, means more renters.

Reporter Jonah Owen Lamb can be reached at (209) 385-2484 or jlamb@mercedsun-star.com.