Stockton CA Second-Highest Rental Increases in the Country
Stockton California is just one of the major cities in California where rent prices are going through the roof. Housing prices everywhere are increasing but Stockton has seen the second-highest rent increases in the country. Of course, there is a price to living in California and we know that $800,000 in California can buy a completely different house that $800,000 in Texas, however, for investors, this means great news.
However, we're not talking about price gouging because a lot of tenants say that within 6 to 12 months the rent could increase between $50 and $100, which is quite a bit more than the national average. Rents in Stockton has seen a 25% increase just over the last year were a one-bedroom home or apartment is renting for about $1400.
The average rent in Stockton is $1200, in Sacramento, it's $1400, which is still far below the highest in San Francisco, where the average comes in at about $3700 for a similar property. Because of this, many people are becoming commuters to the bay area.
What a lot of investors already know is that Stockton was the epicenter of the foreclosure crisis. The values of Stockton homes plummeted during that time so this city really had the toughest climb. Investors of scooped up properties and rented them out when the rent was low and because the market has changed significantly, the number of homes for sale in Stockton is down 33%, however, rents continue to increase because investors were smart during that time. Supply and demand will naturally drive up the cost of home values and rental prices.
But there is a drawback to investors. The rent cap and higher building costs are discouraging investors and landlords. For instance, buildings built in 2003 at a cost of about $25 million equals out to about $83,000 per unit. Given that same building today, the cost is $36 million to build, which translates into $232,000 a unit. That's 277% increase. [Source]
Real estate attorneys, lawmakers, investors and agents alike need to figure out a way to make building more affordable. Decreasing the amount of housing available certainly is not the answer.
For us, as investors, it can be an easy place to snatch up great properties, turn around and gain monthly cash flow profits. However, we don't want to get too big for our britches and contribute to another housing bust.
For more information on Stockton real estate, give me a call or visit my website at WestbrookREI.com
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