Most renters are not seeing the benefits of declining home values, according to a report from the University of the Pacific’s Business Forecasting Center.
The report, which focuses on the effects of the foreclosure crisis on rental housing in San Joaquin County, shows that though the purchase price of homes has fallen, rent has continued to rise.
“Since the housing bubble burst in 2007, home prices in San Joaquin County have fallen below the U.S. level by most measures,” the report reads, citing data from the federal American Community Survey. “In contrast, median rental costs rose more slowly during the boom but have remained high, growing about 15 percent since 2007.”
Other sources examined by the Center, including data from statistics firm RealFacts, showed a slight decline in rental rates post-recession. Those statistics indicated a 10 percent annual increase in rents from 1998 through 2001, but then a 5 percent drop since 2008 – still nowhere near the decline in home values.
That disconnect could indicate a change in the sorts of housing available, the report says. As more higher-priced single-family homes come onto the market, median rents rise accordingly despite a decrease in some rental rates.
The difference between rents and home values could also point to an increasing demand for rental housing, as foreclosure victims are forced to rent. While those individuals may desire to rent a unit in multi-family construction, the vast majority of recent housing growth has been single-family housing, the Center said, leading to a scarcity of multi-family units which drives up costs.
Stanislaus County’s median gross rent was $941 in 2009, near the middle of Valley rents. Merced County was the lowest, at $808, while San Joaquin County was the most costly, at $998.
The county compares well with the California average, $1,155, but is nearly $100 more than the national average, $842.
In Turlock specifically, the median rent – inclusive of monthly rent, plus average monthly cost of utilities for electricity, heating, cooking, water and sewer – was $877 in 2009, the last year ACS data was available. That’s a 12 percent, $95 increase since 2005, when the median rent was $782.
In that same time span, the median value of owner-occupied homes plummeted 39 percent, from $359,700 in 2005 to $220,000 in 2009. But homeowners with a mortgage still paid an average of $1,919 in 2009, nearly twice as much as renters.
According to Turlock Housing Program Services Manager Maryn Pitt, despite the cost increase, rental units are tough to find.
“What we’re finding in Homeless Prevention and Rapid Rehousing is that there’s a shortage of rental units,” Pitt said.
The ACS report shows 24,365 housing units in Turlock as of 2009, with 91.2 percent of those occupied. While Turlock’s rental units account for about half of the city’s total housing supply, less than 10 percent of those units were vacant in 2009, according to the report.
When Turlockers do find rental units, the cost is often hard to bear, Pitt said.
A near majority of Turlockers, 48.1 percent, paid more than 35 percent of their household income in rent, per ACS statistics. Nearly 60 percent of renters spent 30 percent or more of household income on housing. Financial experts recommend spending no more than 30 percent of household income on rent.
The Housing Authority of the County of Stanislaus offers vouchers to families earning less than 30 percent of the area median income, offsetting the difference between housing costs and 30 percent of the family’s income. In Turlock, the Housing Authority sees “reasonable” rents as ranging from $645 for a studio to $840 for a two bedroom, $1,205 for a three bedroom, or $1,595 for a four bedroom.
But waitlists for those vouchers can be many years long, and application periods are limited. In November 2010, when the Housing Authority opened voucher applications for less than a week, more than 15,000 applications were submitted. That was only the third time applications were accepted since 2005, and the Housing Authority has not announced any upcoming application periods.
To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.
