Merced, CA

NeutralTier 1CBSA 32900Compare

Risk Rank: #158 of 287Month: 2025-12Score change (12m):— -4

48score

Composite risk percentile vs 287 metros (higher = higher risk)

Executive Summary

Merced's housing market shows average risk, ranking 158th of 287 metros. The market recently entered Recession. The market shows signs of liquidity stress with elevated inventory. Deep correction with severe liquidity stress — significant risk remains.

Merced experienced a market correction from early 2025 through mid-2025.

Inventory has surged +31% YoY with days on market up -17% — significant supply buildup indicating market stress.

Rent growth is roughly keeping pace with price appreciation, suggesting valuations are not stretched.

Cycle Phase

RecoveryExpansionHypersupplyRecession

1 month in current phase·from Hypersupply

Demand contraction with rising inventory pressure

Key Dynamics

Risk is primarily driven by permit growth and affordability, while price momentum provides the most support.

Top Drivers

Permit Growthp93

YoY permit change

Affordabilityp90

Mortgage payment / income

Migrationp62

Net AGI migration (risk inverted)

Market Signals

Inventory has surged +31% YoY with days on market up -17% — significant supply buildup indicating market stress.

Liquidity

Stress↑

Active Listings YoY

+30.6%p80

Days on Market YoY

-17.4%p20

Months in status1

Data through Dec 2025

Valuation

Balanced↑

Rent vs. Price Growth

+2.2%p88

Months in status14

Data through Dec 2025Rent growth vs price growth (rent support). Note: Affordability and Valuation measure different structural dimensions and can diverge.

Factor Details

Lower riskHigher risk

Low RiskBelow AvgNeutralElevatedHigh Risk

Price MomentumLow Risk

-1.2%p2

12-month HPI change — higher = overheating

Permit GrowthHigh Risk

+49.8%p93

YoY permit change — higher = supply pressure

Permits per CapitaBelow Avg

2.51p30

Permits per 1,000 residents — higher = overbuilding risk

AffordabilityHigh Risk

0.34p90

Mortgage payment / income — higher = more burdened

EmploymentLow Risk

+1.3%p12

12-month employment change (risk inverted)

MigrationElevated

-$7Kp62

Net AGI migration (risk inverted)

National Context

Credit Conditions

Credit Regime

Stable—

Active correction with weak transactions but available credit. Buyers can borrow — they're choosing not to at current prices.

Bank Lending Standards

-5.7Normal

Rate Change (YoY)

-74 bpsNormal

Mortgage Risk Premium

+191 bpsElevated

Stable for 8 quartersData through 2026-Q1

Supply Pipeline

Supply Regime

Accumulating—

Supply pipeline is building up while credit remains available. New units are accumulating in the system — watch for delivery pressure in coming quarters.

Pipeline Ratio

0.92High

Completion-Permit Divergence

+1.9 ppNormal

Accumulating for 4 quartersData through 2026-Q1

Local Signals

Metro Permit Activity

Permit Activity

Elevated

YoY Permit Growth

+49.8%Above norm

Raw signal — not the composite percentile

Relative to 2016–2019 norms for this metro

Based on limited permit volume

Above-normal supply meeting deteriorating demand. Correction risk is rising — new units are entering a market where existing inventory is already building.

Employment Concentration

Employment

Moderate

Largest SectorGovernment 26.9%

QCEW 2024 annual averages

Internal Structure

County-level structural analysis.

County-level structural analysis is not available for this metro due to fewer than 3 qualifying counties.

Score History

Month	Phase	Score	Price	Permits	Afford	Employ	Migr
2025-11	Hyp	39	2	78	88	10	39
2025-10	Rec	46	2	78	88	51	39
2025-09	Hyp	46	4	78	88	53	39
2025-07	Hyp	39	8	78	88	3	39
2025-06	Ress	49	21	78	90	48	39
2025-04	Ress	44	14	78	90	23	39
2025-01	Hyp	51	63	78	92	16	39
2024-12	Rec	52	80	78	92	9	39
2024-11	Hyp	58	92	78	92	30	39
2024-09	Hyp	66	74	78	91	97	39
2024-08	Rec	65	70	78	91	97	39
2024-06	Rec	60	66	78	90	69	39
2024-05	Hyp	60	46	78	90	87	39
2024-03	Exp	49	33	78	90	37	39
2024-01	Exp	49	52	78	90	19	39
2023-10	Exp	41	6	78	92	13	39
2023-07	Rec	45	6	78	93	39	39
2023-05	Rec	46	19	78	94	32	39
2023-03	Hyp	50	6	78	92	65	39
2023-01	Ress	50	4	78	92	68	39
2022-11	Ress	43	9	78	80	35	39
2022-10	Hyp	50	11	78	80	73	39
2022-08	Hyp	48	21	78	81	48	39
2022-07	Ress	41	28	78	81	2	39
2022-05	Ress	56	58	78	83	59	39
2022-03	Hyp	56	77	78	85	41	39
2022-02	Exp	57	77	78	85	47	39
2021-12	Exp	60	81	78	96	53	34
2021-09	Hyp	59	87	78	96	44	34
2021-08	Exp	59	87	78	96	44	34
2021-06	Exp	66	88	78	96	85	34
2021-05	Rec	66	85	78	96	89	34
2021-03	Rec	66	88	78	97	80	34
2020-12	Exp	52	49	78	71	66	32
2020-10	Exp	53	36	78	71	83	32
2020-09	Rec	44	16	78	68	54	32
2020-07	Rec	42	24	78	68	31	32
2020-06	Exp	41	24	78	67	27	32
2020-04	Exp	36	18	78	67	3	32
2020-03	Rec	40	28	78	69	18	32
2020-01	Rec	43	32	78	69	30	32
2019-10	Rec	44	39	78	72	22	33
2019-08	Hyp	40	22	78	70	21	33
2019-07	Ress	39	28	78	70	8	33
2019-05	Ress	44	62	78	70	1	33
2019-04	Hyp	46	72	78	70	3	33
2019-03	Ress	46	74	78	71	4	33
2019-01	Ress	44	64	78	71	2	33

Data Vintages

Price (HPI)2025-Q4

Permits2026-01

Income2024

Employment2025-12

Migration2023