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Impact of Local Development on California Rental Markets: A Focus on Merced

Ashley Stayner • November 21, 2024
Impact of Local Development on California Rental Markets: A Focus on Merced - Article Banner

Maybe this will surprise you and maybe it won’t:


From 2008 to 2016, only 200 new homes were built in the city of Merced. 


That’s quite a lull. Fortunately, the city and local government have been making up for lost time. They’re on a course correction and investing a lot of resources into development. There’s a lot more construction happening now, and most of it is in the housing sector. Merced is trying to meet the housing needs of a growing population. Rents have gone up quite a bit over the last few years, and one of the things contributing to that price hike is a lack of inventory. 


Merced set a record for itself in 2020, adding around 2 million square feet of new construction projects. 


Local development can significantly alter the dynamics of rental markets. This is especially true in California, which is known for its pricier housing markets and its more competitive vibe. Merced has always been more affordable than most of its California cousins, but there are notable changes in Merced. Real estate investors should keep a keen eye on how local development impacts Merced's rental market because it feels like this may only be the beginning of something bigger. 


The Growth and Evolution of Merced


Merced is known for its abundant outdoor recreation and its commitment to research and higher education, among other things. It’s often referred to as the "Gateway to Yosemite," because it’s close to the national park. This area is more than its trees and parks and trails, however. It’s actually undergone rapid transformation in recent years, and it’s attracting a lot of new residents who might not have considered it previously. 


Thanks to substantial investments in infrastructure, education, and business, Merced’s real estate landscape is increasingly becoming a hotspot for investors.


Building Up Merced 


The city has spent the last four or five years preparing for a construction boom, and that boom has arrived. We’ve been watching, and much of Merced’s recent investments have increased the supply of affordable and attractive housing. In 2021 and 2022, the city approved new policies that had a huge impact on development and housing. For example, it established a residential density for areas zoned as commercial. It also created a streamlined permitting system and implemented an affordable-by-design policy, which encourages smaller, market-rate houses through fee discounts and other incentives.


All of this has had an impact on the housing supply. It’s given more people an opportunity to rent homes in Merced. 


Local development projects have not strictly been housing-related. Some of the other projects that have had an impact include: 


  • University of California, Merced Expansion

One of the most significant drivers of local development in Merced is the University of California, Merced. The university's 2020 Project has expanded the campus significantly, adding new buildings, research facilities, and student housing. This expansion promises to attract more students, faculty, and staff—leading to increased demand for rental properties.


  • High-Speed Rail Project

California's high-speed rail project, which aims to connect major cities across the state, includes a stop in Merced. Once operational, this rail system will make commuting more accessible, drawing new residents and businesses to the area. Investors should anticipate a boost in rental demand as the project progresses. Merced is one of four stops along the planned bullet train route, and the California High Speed Rail Authority hopes to have the Merced-Bakersfield high-speed train line operational by 2030.


  • Downtown Revitalization Projects

Merced’s downtown area is also witnessing an evolution, which is having an economic impact and drawing more people to the area. The city has invested in renovating historic buildings, improving public spaces, and attracting new businesses. These efforts not only enhance the quality of life for residents but also increase the appeal of downtown living, driving up rental demand.


Local Development’s Impact on Merced's Rental Market


What does this mean for you and your rental property? What does it mean for investors who are now thinking about buying property here? This is what we have noticed:


  • Increased Demand for Quality Housing

Tenants no longer have to settle for whatever’s available on the rental market. Local development projects are drawing more people to Merced, both temporarily and permanently. Students and university staff often seek off-campus housing, while new businesses bring employees who need rental accommodations. This influx leads to higher occupancy rates and, ultimately, higher rental prices.


  • Rising Property Values

With increased demand for rental properties, property values in Merced are on the rise. For real estate investors, this presents an opportunity for capital appreciation. Investment in properties can deliver investors substantial returns as the area's desirability continues to grow.


  • Diversification of Rental Properties

The development projects have led to a diversification of available rental properties. Investors can find opportunities in single-family homes, multi-family units, and newly developed apartment complexes. This variety allows investors to create stronger and less risky portfolios to meet different market demands.


Challenges to Consider


If only it was all good news. There’s always a risk, and sometimes there are unintended consequences. Here’s what we see as being some of the complexities that need to be navigated:


  • Market Volatility

While local development brings opportunities, it also introduces market volatility. Investors have to be prepared for fluctuations in rental demand and property values as projects progress and market conditions change.


  • Regulatory Environment

Understanding the local regulatory environment is crucial. Merced may introduce new zoning laws, building codes, or rental regulations in response to development projects. Staying informed about these changes can help investors make strategic decisions. You’ll especially want to watch these if you’re interested in short-term rentals or vacation properties.

Inform Key Projects

Local development is reshaping Merced's rental market, offering promising opportunities for real estate investors. By staying informed about key projects, you can better position yourself to take advantage of the evolving landscape. 


Let’s talk about development and how to best position yourself and your rental properties. Contact us at Wisdom Property Management. We lease, manage, and maintain rental homes in Merced, Atwater, Livingston, Winton, and Delhi. 

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Leveraging Social Media to Market Rental Properties in California: Tips for Merced Landlords
By Ashley Stayner January 16, 2025
It is time to get social, and we’re going to insist you become an influencer even if you don’t naturally gravitate towards the likes of Instagram, Facebook, and other social media platforms. Leveraging social media to market rental properties in Merced and throughout California is essential. You gain a lot more traction on social sites than you do by simply posting a listing on Zillow or HotPads. All of your potential renters are on social media, and you should be there too. Let’s talk about some tips, assuming you’re not already going viral on the ‘gram. Part One: Put Together Your Profile A successful social media strategy starts with a profile that will attract the kind of attention you want. If you’re already a presence on social media, that’s great. If you’re just getting started to better market your rental home , be intentional about how you present yourself. Your audience will likely be potential renters who will view your page and consider the homes you have to offer. If you’re posting homes for rent on your personal social media pages, you can easily include all of the people you already know in your network. However, you also want to make sure your personal page is professional. If you’re prone to angry political posts, you might alienate a lot of potential renters on the other side. Your social media presence, as a landlord, needs to be welcoming to everyone. Generally, we recommend that you establish a separate profile for the work you plan to do sharing your rentals. This will help narrow your social media postings on that particular profile to the rental property you’re marketing or related topics. Visitors won’t get confused, and they won’t have to scroll past photos of your pets and vacations to find the homes you offer for rent. Before you start posting about your available rental properties, you’ll want to make sure you have all of the pertinent information on your profile. There has to be updated contact information, for example. You’ll also want a credible profile photo. Maybe it’s a snapshot of the property you’re trying to rent. It could be a picture of the neighborhood or even a photo of the state or region you’re in. A picture of yourself is also fine, as long as it’s professional. Reaching the Right Social Media Audiences When we’re talking about social media marketing, it’s important to understand that the audience is everything. Social spaces are crowded, and you want to reach the right people. According to the Pew Research Center, more than 72 percent of Americans use social media daily. By using hashtags, joining local or industry-specific groups, and following popular sites and spots throughout Merced, you’ll focus on the people who are looking for a new rental home or on the people who know people who are looking for a new rental home. Create a Social Media-Friendly Listing What will get the most attention on social media sites? Photos and videos. These will be your most important tools when we talk about posting your rental listing on social media sites. This is the type of content that gets attention. It gets likes. It gets shares. It gets comments. All of those things will expand your audience and increase your reach. Although text plays an essential role in social media, and you’ll use it to share details such as: Rental amount Move-in ready dates Rental qualifications Security deposit amounts Images and videos are especially crucial. You’ll want to upload clear and crisp photos so that they render well on mobile devices. You’ll want short, engaging videos that showcase your property and provide people with a glimpse of how things look. If you want to be more impactful with how you market Merced homes for rent on social media, focus on the property’s layout, show real-time room sizes, give viewers a close-up of amenities , and an idea of the property’s location. When you have special features to show off, such as walk-in pantries, garden tubs, smart home technology like video doorbells, and fenced backyards, video is a great way to show those things off while giving viewers an idea of what it’s like to actually be there. Plenty of social media platforms are built for video; you can use Instagram reels, Facebook and Instagram live videos, Snapchat story updates, and of course YouTube. Hashtags are Essential Please tell us you know what a hashtag is. They’re helpful when you’re posting because they get the attention of your target audience. Using hashtags on your posts makes them more accessible because when people search for a particular hashtag, your post will be there, ready for them to view. Use specific hashtags that identify your location, the type of property, or the neighborhood name. Try #Mercedrentals, #Mercedhomeforrent, #Mercedapartment, and similar hashtags to get attention and focus on your desired audience. Promote Your Merced Rental Listing
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