Gas prices - which appear to be heading toward $5 a gallon -may be a wild card in the Manteca housing market recovery but not in the way you might think.
The upward swing in Manteca home prices historically have been tied to Bay Area demand. When roughly more than 60 percent of the buyers in the past 25 years have been from west of the Altamont Pass, prices have spiked upward at double and triple the rate of inflation.
And when the percentage of Bay Area buyers drops below 20 percent - such as today when more than half the resale buyers for owner-occupied homes are from the general Manteca area as well as in 1990 to 1993, housing prices drop.
So it would make sense the higher the price of gas would lower the number of Bay Area buyers which means the prices of homes will drop further, right?
Not so fast.
1. Housing costs to buy or rent in various pockets in core parts of the Bay Area are actually increasing fairly strong where high tech is rebounding.
A household with income in excess of $80,000 a year - and there are more of those in Manteca already than you think thanks to the power of Bay Area paychecks - is positioned to take advantage of prices where they have dropped currently in Manteca.
2. Commute costs are relative.
If you’re commuting in a vehicle getting 20 miles per gallon you’re crying uncle a lot louder than someone who is getting close to 40 mpg. Switching to more fuel efficient cars will ultimately take some of the sting out to the point where things may end up as almost a wash. Also you are seeing more commuters opt for the Altamont Commuter Express rail service as well as established commute bus routes to get west of the Altamont.
3. The majority of the buyers today already live and work in the Northern San Joaquin Valley.
The closer they live to the home they are buying, the less impacted they are by gas prices. Of course, it is also true that valley wages are lower than Bay Area wages for the same type of work.
4. Gas prices are driving up the cost of other facets of home ownership.
Setting aside electricity and natural gas costs for a moment, the price of everything is going up due to rising gasoline prices and growing demand in developing nations for everything from lumber to concrete.
Buying a home - especially a resale - means more than just the mortgage payment. If you need a new fence, a new roof, or other corrective work it is going to cost you more. It is partly because it is costing more for materials to be transported to market and for contractors to reach job sites. There are reports of fencing, as an example, already being up 5 percent plus in the past six months for the same job. It all adds up.
6. You’ve got to live somewhere.
Rents have started to inch up making buying more appealing. And as more and more people learn to control spending or do without “luxuries” as they focus on basics - of which having a roof over your head is one - people are going to start weighing opportunity costs.
If you keep spending $2,000 a year on high tech gadgets, eating out five times a week, having steak instead of hamburger and going to the movies three times a month - things of that nature it costs in terms of what you can’t do.
If you talk to people, they have already changed how they think about spending and owning a home. It may not translate right away every time into someone going into the market to buy, but more than a few people get it that as gas prices rise (transportation) and their rents go up those represent two of their most expensive monthly costs.