Why is the Central Valley’s rental market booming? Here’s how local prices stack up
The Central Valley is the nation’s hottest rental market, according to a new report.
The data, analyzed by RENTCafé, an online rental listing site, shows the region leading a group of midsize hubs across the country. Spokane, Wash.; Boise, Idaho; Sacramento; and California’s Inland Empire — which includes cities like Riverside and San Bernardino — round out the top five spots.
The site ranked markets based on a number of competitivity markers, from the percentage of occupied apartments to rental vacancy days and trending rent prices.
Nationally, apartments were vacant for an average of 39 days during the first quarter of 2021. During that same time period, 94% of rentals were occupied, with an average of 11 renters competing per apartment, according to data from Yardi Systems. In the Central Valley, apartment vacancies last an average of 30 days. In the region, 98% of rentals are occupied, and an average of 25 renters compete for each apartment.
As the COVID-19 pandemic required millions of Americans to work from home, many were able to move out of more expensive cities — like Los Angeles and San Francisco — causing an influx of residents in the state’s more historically affordable areas.
But rental prices are on the rise in the Central Valley, too. According to RENTCafé data from March, the average rent for an apartment in Modesto is $1,402, a 9% increase compared to the previous year. Only 6% of apartments in Modesto have rent prices below $1,000, according to the March data.
Of the households in Modesto, 29% are renter-occupied, while 70% are owner-occupied.
The pandemic only exacerbated the issues faced by many tenants across the region and state who struggle to pay their climbing rent prices. A 2021 report from the California Budget and Policy Center found that even before the pandemic, over half of California’s renter households are cost-burdened, meaning they paid more than 30% of their total income in rent, and more than a quarter of households were severely cost-burdened, where more than 50% of their income goes toward rent.
A statewide rental assistance program, launched in early 2021, has seen large draws in the region. County officials were awarded $16.4 million from the U.S. Treasury’s $25 billion Emergency Rental Assistance Program to help tenants with past-due rent and utilities. There also is $19.5 million available from the state in federal Emergency Rental Assistance Program funding.
The Central Valley’s status as a rental hotspot is part of a broader trend of renters seeking out midsize cities for cheaper places to live and more space to do it in.
“Renters are distinctly looking to get more square footage or more amenities for the same price, within these hubs and close to them,” Doug Ressler, the manager of business intelligence at Yardi Matrix, said in the release. “Residents from large gateway markets are ‘trading up,’ and with work-from-home policies, exurb locations close to these areas are also benefiting from this behavior.”
This story was produced with financial support from the Stanislaus Community Foundation, along with the GroundTruth Project’s Report for America initiative. The Modesto Bee maintains full editorial control of this work.
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