What does the average starter home cost in Modesto? How it compares to California costs

With the cost of seemingly everything going up, is now a good time to buy a starter home in Modesto? Is there ever a “right time”?

“You can never time the market, in my opinion,” said Joyce Fritz, founder of 12 Doors Real Estate in Modesto. “You can analyze ‘til you’re blue in the face.”

If considering buying, a good starting point may be to determine the average cost of housing in the area and how that compares to surrounding cities, other regions or even other states. Here’s the average price of a starter home in Modesto, Fritz said, and how affordability compares to other areas:

How Modesto pricing compares to other communities

Fritz and her team ran statistics with different resources to determine an accurate median starter home price in Modesto, she said.

Data from RPR, a property database that provides Realtors with tools, data and reports, showed the median list price of starter homes in the city is $495,000. The median sales price is $440,000.

“I think how it compares (to other parts of California) is we are highly affordable,” Fritz said.

That’s especially true compared to the Bay Area, she said.

“We have always been and probably will always remain to be the breadbasket of the world,” Fritz said. “I think that we’re always going to have better affordability compared to the Bay Area.”

According to Redfin, a real estate data company, the overall median home sales price in Stanislaus County is $475,000 as of August. In San Joaquin County, it’s $526,000 and in Sacramento it’s $527,000. In Santa Clara County, homebuyers are paying an average of $1.5 million for their homes.

Compared to surrounding areas like cities in San Joaquin County, and even areas of Turlock (“North Turlock is a newer development”), Fritz said Modesto is more affordable.

There are states generally more affordable than California, Fritz said, but even areas like north Texas and Idaho have become pricey.

Is it better to rent or buy in Modesto?

What separates a starter home from a forever home, Fritz said, is price and size, and the two typically go together. A starter home usually is smaller, making the price more affordable. Also, starter homes sometimes aren’t in locations the buyer wants to live long-term, she said.

“I think starter homes you don’t typically have as much ability to choose your location,” Fritz said. “You’re just trying to get your foot in the door of homeownership.”

First-time buyers, statistically, don’t stay in their first home a long time, Fritz said. She said Americans move every seven to 10 years on average.

“I think that the benefit of being a homeowner versus a renter is it’s probably, historically, the single greatest way to build wealth in America,” Fritz said. “Unless you are going to become an investor in some other way.”

The average renter has about $5,000 combined assets, or “cash in the bank,” she said. The average homeowner has a net worth of $250,000, largely due to the asset of their real estate investment.

“I tell (renters), ‘You’re paying the mortgage, just not your own,’” Fritz said. “You’re just going to be stuck in the cycle of not owning something that has an appreciating value.”

The average monthly mortgage cost in Modesto is $1,608, according to previous Bee reporting.

Houses in Modesto cost between $900 to $8,601 to rent, according to Zillow. The company, which uses a different formula for calculating rent costs, found the median rent price for all bedrooms and property types in Modesto is $1,975 per month.

While the real estate market has up years and down years, Fritz said the historical average of appreciation is between 4% and 5%.

With the benefits of home buying also comes the question of feasibility.

Aside from mortgage, taxes, upgrades, maintenance and other costs, buyers also have to consider interest rates, down payments and closing costs.

Current interest rates in Modesto are 6.99% for a five-year adjustable rate mortgage loan, 6.83% for a 15-year fixed loan and 7.64% for a 30-year fixed loan, according to Realtor.com.

The current market is “surprisingly competitive,” Fritz said, because interest rates allowed buyers to negotiate prices at the beginning of the year but are back to competing offers.

Despite that, she said it’s a good time to buy because you can always grab the new interest rate if it goes down more than 1%.

“You marry the house and you date the rate,” Fritz said.

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