Long Road Back: Owning a home in reach at last for some

The housing market is still bloodied and dazed after the free fall of the past few years.

Median prices in the Northern San Joaquin Valley finally leveled off in recent months after hitting the bottom with a thud, plunging by two-thirds from 2006 to 2009.

Out of that dizzying downward spiral came something positive. The low prices it created provide an opportunity, perhaps of a lifetime, for purchases by first-time buyers, families of modest means and those hoping to get back into a home after losing it all.

Investors also are jumping into the market in a big way, prompting multiple bids and all-cash offers. In their search for rental properties and homes to eventually flip, they are snapping up houses for pennies on the dollar while taking advantage of others' disadvantage -- a flood of foreclosures.

But uncertainties remain for many:

• Homeowners stuck with high mortgages continue to face foreclosure.

• Job losses could continue to mount, notably in education and local government.

• The home-building industry, once a major employer, has shrunk drastically.

"There's still this black cloud that's hanging over this region, which makes me a little nervous about what's coming down the pike," said Shawn Kantor, an economics professor at the University of California at Merced.

Experts say the outlook eventually will improve as the economy grows -- and if homeowners can accept slow but steady appreciation rather than a bubble that can so disastrously burst.

'Stunning' slide

"If people think we're going to return to 2005 prices in 10 years, they're going to be disappointed," said Modesto home builder Mark Wilbur.

What happened over the past decade is nothing short of stunning, as shown by median price figures from MDA DataQuick, a real estate tracking firm:

Stanislaus County's median hit $396,000 in late 2005, compared with $122,000 in 1999. In February of this year, it stood at $140,000. (The median is the point where half the homes sold for more, half for less.)

The boom was driven in part by population growth, including Bay Area commuters seeking affordable homes. It happened also because lenders offered plenty of money to buyers who, in many cases, could not afford the monthly payments, Kantor said.

The crash battered the valley economy, forcing many construction companies, mortgage lenders and related businesses to close or trim jobs. The shock wave from those lost jobs and lost incomes rippled across other sectors of the economy, from retail to restaurants.

Subprime and other questionable mortgages added fuel to the widening financial crisis of 2008, when some of Wall Street's biggest players realized that bundling all those suspect loans into investments wasn't so smart.

About 54,000 of the region's homes were lost to foreclosure from September 2006 through last year, according to ForeclosureRadar.com. That's a seventh of all the homes in the region.

All this means bargains for people looking for homes for their families, or investors. They benefit as well from low interest rates, and in some cases from new income tax credits.

Dennis and Katie Coyle expect to close escrow at month's end on a $140,000 house in southwest Ceres. The seller still owed $316,000 and unloaded it through a short sale, where the mortgage holder accepts a price that's lower than what's owed just to get the property off its books.

The young couple found the market crowded with people looking for homes in their price range, making offers on 15 properties before finally succeeding.