Are home values on mend?

Finally.

After 17 straight months of relentless home value declines, Stanislaus County's median home sales price edged up in May to $135,000. That was $2,000 more than April.

The increase, while small, could signal the end of the free fall in home prices that has plagued the Northern San Joaquin Valley since the real estate market collapsed 3½ years ago.

The MDA DataQuick statistics tracked home prices as they soared for six years before peaking at a median sales price of $396,000 in December 2005. It's been virtually all downhill since then, as Stanislaus' home prices have plunged 66 percent.

Homes now are selling for about what they were nine years ago.

San Joaquin County's median price also rose in May, climbing to $152,000, which was $6,500 more than April. But Merced County prices dropped again to $105,000, down $1,000. Tuol-umne County dropped to $215,000, down $15,000.

May's price increase in Stanislaus was simply a matter of supply versus demand, according to some industry leaders.

"One property we listed had 40 offers in three hours. We had to cut it off," said Larry Matos, president of Century 21 M&M and Associates.

He said that three-bedroom Turlock house ended up selling for well above the list price. "Anything priced under $250,000 that is move-in ready is selling quickly with multiple offers."

That's because move-in ready homes are hard to find.

"There's no good-quality inven-tory left," said Chuck Bukhari, the president-elect of the Central Valley Association of Realtors. He said many bank-owned houses are in bad shape, and virtually all the homes on the market are former foreclosures.

Fewer homes sold

The numbers of homes sold dropped in May compared with April in Stanislaus because of the tight supply. Bukhari said there is only about two weeks worth of housing supply on the market, which is well below typical levels.

"But watch out for July," Bukhari warned. He said a flood of bank-owned homes will be listed for sale next month, which could push prices back down.

It wouldn't be the first time prices rose one month only to fall the next. Stanislaus last saw home sales prices edge up in October 2007, but the next month saw a big drop.

Matos is more optimistic: "I think we've definitely hit bottom."

While Matos agrees that many more bank-owned properties soon will be for sale, he is confident they'll sell quickly.

"If we get 100 new listings today, we've got 300 buyers who want those homes," Matos said.

Wells Fargo Bank, for instance, has pre-approved 1,000 buyers who want Stanislaus homes, according to Matos.

Only 888 homes were sold in the county last month.

Many Stanislaus sales are to investors who have cash in hand and are looking for good deals.

Bukhari said first-time buyers have a tough time competing against investors because their lenders won't let them buy homes for more than their appraised value. Cash buyers don't have that problem.

Matos said move-up buyers -- those who must sell their homes before buying better ones -- should start entering the market now. He said their houses would sell quickly, and they would be able to buy larger homes in better locations for bargain prices.

That's what has started happening elsewhere in California.

Bay Area prices, for instance, rose 12.3 percent from April to May as many more high-end houses sold.

"We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum," said John Walsh, MDA DataQuick president.

"As more sellers get realistic, more buyers get off the fence and more lenders offer reasonable terms for high-end purchase financing, we'll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose," Walsh said.

Buying season

This also is the traditional home buying season, so more people are house shopping.

"Many are concerned with finding the right home in the right area, not just the most deeply discounted home," Walsh said.

That doesn't mean home prices will start soaring again.

"We're not going to see a rapid price appreciation anytime soon," Matos said.

Bee staff writer J.N. Sbranti can be reached at jsbranti@modbee.com or 578-2196.