The Richter rent scale for Manteca apartments went off the charts in 2020 when it came to renting a two bedroom one bathroom apartment at the Union North complex.
At the end of 2019 you could snag a unit for $1,715 a month. As 2020 draws to a close, it will set you back $2,280 for that same apartment. That’s a 20.6 percent increase in 12 months.
It is the most jolting of a number of trends that popped up in the 30th annual Manteca Bulletin rent survey. The trends point to a surge in demand for apartments that is applying more upward pressure on rents.
The median rent for selected complexes built after 1970 that are included in the Bulletin survey are up 8.6 percent. Those complexes include Union Court, Paseo Villas, Stonegate, Park Place, Laurel Glenn, Vista Verde, Sandpiper, and Tesoro.
Making it more ominous for those looking for shelter in Manteca median home prices have shoot up 10.5 percent to $463,000 during 2020.
After shocks of two tectonic housing events occurring — accelerated growth in the Bay Area tech sector and the pandemic that has seen many employees switch to working mostly or entirely from home to wipeout cost and time issues associated with longer distance commutes — are likely to continue.
That’s because housing prices in the Silicon Valley continued to increase this year as apartment rents dropped.
The most startling example is San Jose. Median housing prices jumped 15.2 percent to $1,104,088. At the same time the median apartment rent in San Jose slipped 7 percent to $2,554.
The upward pressure on housing prices and the downward movement on apartment rents are universal within the San Jose, San Francisco, and Oakland triangle.
Head east over the Altamont Pass and into the Northern San Joaquin Valley and you’ll see both apartment rents and housing prices increasing.
A survey of apartment complex managers, new home sales personal, and real estate agents point to the following trends in the Manteca housing market.
*There is an uptick in renters from the Bay Area now buying homes in the South County.
*There is also an increase in people who have gone from renting in the Bay Area to renting in Manteca while not changing employment.
*A growing number of two bedroom apartments are being co-leased by individuals not in a relationship. The trend is what makes it possible for complexes like Union North to command $2,280 a month for a two bedroom, one bathroom unit that split two ways is $1,140 a month.
*There is a small segment of two bedrooms, two bathroom apartments being leased by two couples.
*Between 10 and 20 percent of the single family homes are being sold to either multigenerational families, unrelated individuals buying them together, or individuals who buy that immediately rent rooms to help reduce the impact of mortgage payments.
Why 2 bedrooms,
2 bathrooms units
are going up so much
As counterintuitive as it sounds, units with two bedrooms and two bathrooms that saw the highest percentage increase in rent for the third year in a row are considered the most affordable.
The rent in such units increased 13.9 percent in the past year for an average hike of $238 per month.
Banks such as Wells Fargo that lend to apartment developers have noted a trend on who is renting the two bedrooms, two bathroom apartments. It mirrors what Manteca apartment managers are saying about the growing percentage of unrelated people and even unrelated couples renting the two bedrooms, two bathroom units.
Renting an average one bedroom, one bathroom apartment in Manteca was $1,450 at the end of 2020.
The average $1,805 rent for a two bedroom, two bathroom unit was $1,805. Split in half that comes to $902.50. That is $547.50 less than a one bedroom and $224.50 less than the $1,125 a studio apartment at Westwood Village rents for per month.
The trend toward two bedrooms and two bathrooms being affordable options is why more than half — or 222 — of the 428 Valencia Place apartments under construction along Atherton Drive east of Bass Pro Sports are that configurations. There will be no apartments with two bedrooms and one bathroom.
The rest of the complex will consist of 140 one bedroom and one bathroom units, 24 three bedrooms and two bathroom units and 42 studio apartments at 515 square feet apiece.
Trends won’t go away
when pandemic ends
Workplace experts that keep tabs on tech and other employment sectors believe that many of the trends the pandemic started in terms of how and where people work will continue to a large degree once the health crisis dissipates.
That doesn’t mean no one will be going to a physical place to work. The expectation is there will be a number of jobs where you may work two to four days from home and the rest of the time physically report to a workplace.
Such a trend softens two blows that commuting from Manteca and surrounding areas to major Bay Area employment centers presented before the pandemic — tiring daily time consuming commutes as well as the high cost of commuting that can nearly wipeout housing savings.
And given how Altamont Corridor Express (ACE) service is on target to expand in 2023 and Valley Link rail commute connection from River Islands at Lathrop to the BART station in Pleasanton moving forward with a possible 2028 startup date, the days one has to commute — whether it is one of five days a week — will be less stressful and less expensive.
Manteca is just $5 away
from a $2,500 apartment
Thirty years ago when the Bulletin started its rent survey, the most expensive apartment in Manteca rented for $825.
Today that dubious honor goes to a three bedroom, two bathroom unit at Tesoro that now commands $2,495 a month. It rented for $2,425 a month in 2019.
The $70 a month hike brings it within $5 of costing 2,500 to rent.
Other notable trends within the Manteca apartment market:
*The average Manteca apartment today rents for $1,829 as opposed to $425 in 1991. That is a 330 percent increase in 30 years. At the same time the median price of a house closing escrow in 1991 went from $125,900 to $463,000 this year. The increase reflects a 241.5 percent rise in the price at the close of escrow.
*When housing prices plunged from 2007 to 2011 by an average of 45 percent apartment rents were either stagnant during that time period or continued to see 3 to 5 percent increases.
*Manteca’s average overall apartment rent per month is $171 less a month than Tracy this year compared to $161 less a month in 2019. It is currently $498 less to rent in Manteca than Livermore compared to $490 in 2019, it is $805 less a month to rent in Manteca than Pleasanton compared to $985 in 2019 and $1,440 less a month to rent in Manteca than San Jose compared to $1,498 in 2019. The overall average rent in San Jose is $3,311 a month for apartments reflecting a 7 percent drop from 2019.
*Average rents for 2020 were $316 a month cheaper in Modesto and $357 less per month in Stockton.
*Rents have now increased in the upper single digits for three years in a row. The jump was 8.6 percent in 2020, 7.1 percent in 2019, and 7.8 percent in 2018. Rents rose in 2017 by 2.4 percent. That followed two years of double digit rent hikes: 10.7 percent in 2016 and 13.7 percent in 2015.
Rents have not stopped climbing since 2010 — the last year there was a glut of foreclosed homes in Manteca. That’s when many renters were able to purchase homes with monthly mortgage payments that were lower than their apartment rents. The Obama-era tax credit of up to $7,500 for first-time homebuyers eliminated the need for many apartment renters to come up with much money for the down payment.
Some Union North unit
rents shoot up $585 a
month in just two years
The 46-year-old Union North complex with 91 units has experienced the biggest rent increases over the past two years.
The 2-1 units have gone up $330 since December 2018. The Union North 2-2 units are renting for $585 more than they were in December 2018.
Part of the increase has to do with the sale of the complex in 2018. A group of investors from Clovis won a competitive bidding war to pay a sub-market record $17.2 million for the 91-unit Union North complexion on North Union Road.
The sale of Union North that was built in two phases — the first in 1974 and the second in 1979 — set a record price per square foot for an existing apartment complex in the Manteca-Lathrop-Ripon area. That translates into $229 per square foot or $186,957 per unit.
But while the sale obviously led to the rent increases, the record price paid nor would the rents have increased that significantly if the supply wasn’t dwarfed by demand in Manteca.
To contact Dennis Wyatt, email [email protected]