Merced housing prices are growing the fastest in the Valley, report says. Here’s why
Home prices grew faster in Merced County in 2018 than in any other county in the Central San Joaquin Valley, according to a recently released business report.
At 9.97 percent, Merced’s increase was spurred by the persistent lack of houses for sale compared to high demand, according to the 2018 Business Forecast from Gökçe Soydemir, a business economics professor at California State University, Stanislaus.
Stockton and Modesto at 9.91 percent and 9.79 percent in 2018, respectively, weren’t far behind. Prices grew slower in the southern part of the Valley, the report says.
Soydemir predicts the cost of housing to continue to rise in Merced County though at a slower rate in the new year.
“The shortage in housing supply contributes to the increase in home prices in the Valley,” he wrote in the report. “The growth in housing prices is expected to slow further following the increase in mortgage rates to 5 percent, curtailing the demand for housing despite the existing shortage in inventory.”
The median home value in Merced is $244,000, according to the most recent numbers from real estate tracker Zillow, compared to $223,000 from December 2017. However the average home is currently listed at $275,000, Zillow said.
City leaders have said they are looking at ways to improve Merced’s dismal 1-percent vacancy rate in a city of majority renters. The lack of housing in Merced causes prices to rise, experts say. Building has not kept pace with growth.
The city has projected it will have issued more than 600 permits to build single-family homes by the end of the year, according to staffers. That’s compared to the 170 issued in 2017, and very few in the 10 years before that.
Along with new single-family homes, leaders approved a program to encourage in-law suites, which city staffers call “accessory dwelling units,” though it would likely make only a small dent in the problem. Then there are about 800 apartment units lined up for construction, staffers have said, but those are contingent on developers getting funding.
On the low-income side of housing, the city of Merced and Merced County have partnered to build 120 affordable housing units at the southern end of town, including 30 for people who are homeless.
The site of about 5 acres is at B Street and Childs Avenue, according to Mark Hamilton, the city of Merced’s housing specialist. The city has built similar projects in other areas of south Merced, he said.
The City Council recently approved the plan to apply for funding through the California Tax Credit Board, according to city staffers. The Central California Alliance for Health would assist with the permanent supportive housing offered to the homeless housing, according to plans.
This story was originally published December 17, 2018 at 7:45 AM with the headline "Merced housing prices are growing the fastest in the Valley, report says. Here’s why."