Modesto, California

Modesto’s home market is increasing. They are again beginning to build new houses.

However, it’s not like it was 10 and more years earlier. At that time it was common to spot model homes in all of the County of Stanislaus. Nowadays, there is a struggle for making a comeback when it comes to new house construction. 

Being able to see new streets coming in to new subdivisions is quite inspiring.

In 2017, 213 building permits for homes were taken out by new house companies. This was the 3rd year in a row of experiencing lukewarm new construction housing growth. This is a big number when you compare it to the statistic of a paltry 11 home building permits having been issued in the year 2014.

However, people aren’t very excited about current numbers. This is because it’s far from the 881 new housing permits that were issued in the peak year of 2005.

There is risk involved for the building industry to build new homes. Bankruptcy was the result for several construction companies 10 years ago when the recession hit. At that time new construction of new homes nearly came to a stop.

In moving on to commercial real estate, there is a strong advantage when you compare Modesto to the Bay Area. There is a lower cost to build in Modesto as well as lower lease and land rates when compared to any location in this vicinity.

This market is hot and it’s in the hands of the sellers. A major problem is that there is a very low inventory.

This is particularly true when it comes to industrial space. It is so low in Modesto, and the result is that companies that are wanting industrial space in 30, 60 or 90 days can’t get it. Commercial realtors are having to take their customers to Stockton that has a greater amount of inventory.

It’s like the seller’s market is sizzling too much. A seller’s market is great for those on the selling side -  High demand, low vacancy, higher lease prices, escalating real estate values, and it can be a fun experience.

But, if it gets too hot, you can have problems of very low inventory, and the seller’s market begins to melt. Balance in the market is good.