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Rising Home Values and Ownership in Modesto: George Lucas' Hometown Experiences Housing Market Boom
CATEGORY
Property Value
DATA
Percent Owner Occupied
Housing Prices
Median Rent
Population
Loading Content...
Property Value
Percent Owner Occupied
Housing Prices
Median Rent
Population
Modesto, a vibrant city in California's Central Valley, has experienced significant changes in its housing market over the past decade. Known for its agricultural heritage and as the birthplace of filmmaker George Lucas, Modesto has seen a gradual shift towards homeownership, accompanied by substantial increases in both average home prices and average rent prices.
The trend in homeownership in Modesto has shown a steady increase from 2013 to 2022. In 2013, the homeownership rate stood at 53%, and by 2022, it had risen to 61%. This 8 percentage point increase coincided with a dramatic rise in average home prices. In 2013, the average home price in Modesto was $157,888. By 2022, this figure had skyrocketed to $438,127, representing a staggering 177% increase over nine years. This trend suggests that despite the rapid appreciation in home values, more Modesto residents were able to enter the housing market as owners.
The relationship between federal interest rates and homeownership rates in Modesto appears to follow the well-established trend of lower interest rates encouraging homeownership. For instance, from 2013 to 2016, when interest rates were at historic lows (ranging from 0.11% to 0.40%), homeownership rates increased from 53% to 55%. As interest rates began to rise more significantly from 2017 onwards, the pace of homeownership growth slowed but continued to increase, reaching 61% by 2022 when the federal interest rate was 1.68%.
Conversely, the percentage of renters in Modesto has decreased from 47% in 2013 to 39% in 2022. Despite this decline in the renter population, average rent prices have shown a consistent upward trend. In 2013, the average rent was $963 per month. By 2022, it had increased to $1,517, representing a 57.5% rise over nine years. This increase in average rent prices, despite a decreasing proportion of renters, could be attributed to factors such as rising property values and increased demand for rental properties from those priced out of the homeownership market.
Looking at the most recent data for 2023 and 2024, we see a slight dip in average home prices in 2023 to $426,483, followed by a rebound to $442,278 in 2024. This occurs against a backdrop of significantly higher federal interest rates, which reached 5.02% in 2023 and 5.33% in 2024. These higher interest rates may be contributing to a moderation in home price growth.
Applying predictive models to forecast 5-year trends, we can expect average home prices in Modesto to continue their upward trajectory, albeit at a potentially slower pace due to higher interest rates. Average rent prices are also likely to increase, driven by ongoing demand for rental properties and the overall appreciation of real estate in the area.
In summary, Modesto has experienced a clear trend towards increased homeownership over the past decade, despite rapidly rising home prices. This trend has been supported by historically low interest rates for much of the period. Meanwhile, average rent prices have also increased significantly, even as the proportion of renters has decreased. The city's housing market appears to be resilient, with both homeownership and property values showing strong growth trends that are likely to continue in the coming years, albeit potentially at a more moderate pace due to recent interest rate increases.
