Rents are on the move again.
The annual Manteca Bulletin survey of apartment rents in Manteca shows most complexes have increased the monthly rental of units $20 to $35 a month.
Unlike housing prices that peaked in 2006 and plummeted almost 60 percent, apartment rents reached a plateau in 2009. They then either held steady for two years or retreated by as much as 10 percent. Based on rent movements in 2011, monthly rents will return to the level they peaked at in 2009 by late 2013. Meanwhile, Manteca home prices have essentially stagnated.
Some experts have pooh-poohed the idea of homeownership as being a long-term financial advantage given the collapse of the housing market that was triggered by overbuilding leveraged by funny money loans. But what pertains to most of the United States doesn’t pertain to chronic high growth markets such as the Bay Area and the surrounding areas that are under their economic influence.
Rents for apartments in Manteca from 1998 to 2008 were significantly higher than the monthly cost of buying a decent home in most other places in this country.
The fact rents didn’t collapse nearly as much as housing prices is a clear sign that what we are now experiencing in home sales in terms of prices ultimately will be a relatively short-lived occurrence. Prices will go up and so will rent.
Ultimately homes or apartments can’t rent below costs for a sustained period of time. It isn’t a viable model.
Prices may not return like gang busters but they are going to go up.
Apartments are even more problematic. It is expensive to build new ones meaning that what does get built will demand higher rents that will put a squeeze on the working class.
The 153-unit Bellagio apartments now under construction on Atherton Drive will provide some relief. But it will be fleeting. As growth continues, Manteca will no longer have a tool to make such affordable housing possible since the state is pulling the plug on redevelopment agencies as a one-time quick fix for state budget woes.
People who were in a position to do so and bought homes to jump off the rent escalator during the past four years are starting to look like they made a real shrewd move.
In one instance, a long-time renter secured a home smaller than 1,200 square feet for a month payment of $780 including taxes and insurance. That was about $30 more than she was paying in 2008 for a rental home that was slightly smaller.
Today, she could rent an apartment at about half the complexes in Manteca for that amount or less assuming she’d settle for a one bedroom and one bathroom apartment. By the time 2013 ends, the odds are that they’ll be few - if any - apartment options left for $780 or less.