A lot has changed for homes since '00

Prices nearly same, but affordability is far higher nowadays

By J.N. Sbranti
jnsbranti@modbee.com

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The buyer's market continues for housing in the Northern San Joaquin Valley.

That's a nice way of saying home prices plunged again in January.

Stanislaus County's median home price dropped to $131,750, according to just- released sales statistics from MDA DataQuick. That's about the same amount homes sold for in spring of 2000.

Buyer's market Continues

But a lot changed during that decade: Because average incomes increased and mortgage interest rates declined, Stanislaus homes are much more affordable now.

Stanislaus' medium-income families this winter could afford to buy about 84 percent of the homes sold. Ten years ago, about 52 percent of the homes were affordable, according to the National Association of Home Builders/ Wells Fargo Housing Opportunity Index.

That affordability statistic fluctuated dramatically during the decade, as did home prices and foreclosure rates. In 2005, when Stanislaus' median home price soared to $396,000 and almost no homes were foreclosed, only 3 percent of homes were affordable for families.

Now almost anyone with a steady job and decent credit can afford to buy a home. And families are jumping at the opportunity.

"We have double the number of buyers as we have inventory to sell them," said Larry Matos, president of Century 21 M&M and Associates. He said Stanislaus has half as many homes for sale now as there were a year ago.

And the homes on the market, Matos said, often are beat-up foreclosed houses that do not meet the quality standards required for Federal Housing Administration mortgages. Those FHA- backed mortgages are what most first-time buyers use, so they cannot purchase those homes.

Investors snap up fixers

But there are plenty of buyers for distressed properties.

"A lot of investors have an appetite to buy these homes, and they pay cash," Matos said. "Investors pick them up for 20 to 30 cents on the dollar. They fix them up and then flip them. They put them back on the market and make a profit."

DataQuick's statistics back up Matos' observation.

During January, 23.2 percent of Stanislaus' home sales went to "absentee buyers," which overwhelmingly are investors.

"That was a record-high percentage, going back at least a decade," said Andrew LePage, a DataQuick analyst.

Here's another record set in January: 31.7 percent of all Stanislaus sales were all-cash deals with no mortgages. That's the highest percentage going back at least two decades, LePage said.

Flipping also was popular during January. LePage said 3.4 percent of the Stanislaus homes sold last month previously had sold within the past six months. That's significantly more than before. In January 2009, for instance, only 0.5 percent of homes were flipped.

Foreclosures still dominate Stanislaus' housing market. Of the homes sold in January, 63.8 percent had been foreclosed.

And the flow of foreclosures continues.

During January, 472 prop- erties in Stanislaus County went to auction on the courthouse steps, according to ForeclosureRadar.com. Banks ended up repossessing 404 of those homes, and 68 others were purchased by investors. The foreclosure totals were slightly higher in January than they were in December or in January 2009.

"With delinquent payments rising, foreclosures slowing and foreclosure alternatives failing, it appears the fore- closure crisis will be with us for many years to come," said Sean O'Toole, Foreclosure- Radar's founder.

Foreclosure process longer

O'Toole said the foreclosure process keeps getting longer. To get to the auction stage, it now takes an average of 229 days from the first notice of mortgage default. In 2008, it took an average of 146 days for a home to be foreclosed on after default.

Even after the foreclosure is final, it takes months to get those homes resold. O'Toole calculated that in Stanislaus, it takes banks 188 days to sell repossessed homes. Investors who buy foreclosures on Modesto's courthouse steps, however, flip those homes in an average of 106 days.

O'Toole said statistics show foreclosure resales in Stanislaus are faster than elsewhere in California, where the resale time averages 224 days for banks and 149 days for investors.

Matos, however, said communities would be better off if the foreclosure and resale process was quicker.

"A lot of these homes sit vacant for six months or more," Matos said. "That's not good for neighborhoods."

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