Dramatic swings in home prices have been a hallmark of living in Stanislaus County the past 35 years, making a home purchase here much riskier.
The end result of all those price swings? Stanislaus homes are worth less today than they were in 1977, after adjusting for inflation, according to a Bee review of data from the Federal Housing Finance Agency.
Since 1977, the county's housing market has experienced three distinct booms and busts. Each subsequent boom was longer and more dramatic than the one preceding it as were the corresponding busts.
From 1977 to 1980, Stanislaus home prices increased 15 percent, after adjusting for inflation. Home prices nationwide jumped a similar amount during roughly the same period.
During the subsequent bust, county home prices fell 18 percent, slightly more than the drop nationwide.
From 1984 to 1990, Stanislaus home prices increased almost 50 percent, after adjusting for inflation. That was far more than the 12 percent rise nationwide.
But during the seven years that followed, Stanislaus home prices fell 40 percent, compared with a 5 percent fall nationwide.
During the most recent boom 1997 to 2006 Stanislaus homeprices soared 140 percent, after adjusting for inflation. That was far more than the 50 percent increase nationwide.
Since the bust, Stanislaus home prices have fallen 65 percent, compared with a 25 percent drop nationwide.
Add it all together and county home values have declined 14 percent over the past 35 years, after adjusting for inflation.
In other words, a home bought for $100,000 during the late 1970s now would be worth about $86,000 in 1977 dollars.
That's a big loss considering what has happened elsewhere in the United States: Nationwide, home prices grew 20 percent during those years after adjusting for inflation.
And in the Bay Area, inflation-adjusted home values have risen 150 percent since the mid-'70s. Even Sacramento's values are up 33 percent since then.
"I don't think it's fair to pick the lowest point in the cycle to do this kind of comparison," said Modesto's Patrick Wallace, president-elect of the Central Valley Association of Realtors. "Right now, Stanislaus is at the lowest point, but it's going to go up."
Long way to go
Stanislaus home values have a long way to go to catch up with what homes elsewhere in the state are worth.
In June, Stanislaus' median home sales price was $135,000, which was less than one-third what Bay Area homes sold for ($417,000) and less than half California's median price ($274,000), according to DataQuick statistics.
Wallace sees those price differences as proof that this a good time to buy here. "We're down now, but our prices are going to go up," said the Re/Max Executive broker. "Real estate is a long-term investment."
Some buyers apparently are anticipating the next boom. "Investors have been flooding into this market to buy homes," Wallace said. "They're betting on the future of the valley."
That's probably not a bad bet, according to Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton.
"From an investment standpoint, it's probably a very good time to buy," Michael said. "Housing prices in Stanislaus, I think, are 10 to 20 percent undervalued compared to what they should be, considering rental rates, vacancy rates and local incomes."
Michael said many investors are able to buy a house in the county, rent it out and make a 10 percent return on their money. He called such investments "a fleeting opportunity" that will end once prices begin rising.
"I wouldn't expect significant price appreciation, but I think we'll see prices moving up within the next two years," Michael said. He said he thinks Stanislaus home prices will be back to an inflation-adjusted par with 1977 by 2017.
So, that 14 percent gap would be closed and that hypothetical $100,000 home investment from 1977 would be worth about $100,000 again.
Bee staff writer J.N. Sbranti can be reached at email@example.com or (209) 578-2196.