STOCKTON, Calif. — Army veteran and Stockton native Jack Swanson began the search to buy his first home in his hometown with his girlfriend earlier this year.
Hoping to take advantage of his opportunity for a Veterans Affairs loan, Swanson began his initial search in North Stockton – where he was quickly humbled by the opinions.
“It took about two seconds to find out we are nowhere near the range to afford anything like that,” Swanson said.
With average home prices rising in Stockton, Swanson said they immediately gave up that dream of being close to family and began searching in less desired areas.
“We started looking in downtown, south side and east side,” Swanson said. “We’ve looked in Lodi and even Manteca, because we’re more willing to make the commute than spend an extra $50,000 to $100,000.”
However, Swanson's struggle to afford the current housing rates is being felt across the region.
A recent report by ZeroDown Real Estate reveals the rise in median home prices in Stockton has created a significant decrease in homes sold while demand remains high.
According to the report, the city’s current median home value sits at around $477,000, an increase of 7% from just the last 12 weeks, and it is continuing to rise.
At the same time, the amount of homes sold in Stockton in the past year has decreased by 30% while the number of homes built has increased by 7%.
Economics Professor and Department Chair at University of the Pacific, Sharmila King, said prices are likely going to continue to go up before they come down any time soon.
“Prices tend to rise relatively quickly compared to falling,” King said. “For example, you'll see prices rise, but then they won't come down as fast, so even though there might be a drop off in demand because of affordability, prices are going to take a while to catch up and also to decline.”
In addition to general inflation and rising interest rates, King said there are a number of factors specific to the Stockton region that can be attributed to rising home costs.
“You've got individuals in the Bay Area who probably have a much higher income level, and they're buying homes in the Stockton area,” King said. “If we didn't have that added pressure, then I imagine that prices would have to fall faster and that's not likely to happen.”
Amid the pandemic as people work remotely, many who live in the Bay Area have taken advantage of the opportunity to reduce their cost of living.
“In the Bay Area, if you're working from home and you only have to commute once or twice a week, it makes sense to buy a home in Stockton where you can get a lot more house for your money for your income,” King said.
This surge in home ownership from outside cities has had massive impacts on the local housing market, according to King.
“On top of the fact that you have buyers from the Bay Area, we also have these large corporations specializing in real estate investment buying up swabs of homes,” King said. “That tends to hit first-time homebuyers the most.”
While not unique to Stockton, this phenomenon being felt across the county is also impacting areas where low-income residents are being shut out of housing opportunities.
“A lot of the corporations that are buying out homes tend to be in low-income neighborhoods, and of course, that's further in impacting, you know, low-income households,” King said. “They're basically buying their homes to rent, and that's also shutting them out of the rental market as well.”
With home ownership becoming out of reach for many and the potential threat of a recession facing the economy, King said she suggests people like Swanson looking to buy a home or anyone experiencing the housing squeeze to save as much as they can for now and have patience.
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