Prices are up. Foreclosures are down. Homes are selling at blazing speeds. And contractors finally are building again.
Is it too soon to say Stanislaus County's housing market is recovering?
Real estate experts don't think so. They are convinced 2012 marked a turning point, and statistics back them up.
For the first time since 2005, median home sales prices edged up in virtually every Northern San Joaquin Valley city last year.
Modesto's 2012 median home sales price climbed 6.8 percent to $126,000, according to statistics gathered for The Bee by DataQuick. That was the city's highest annual sales price since 2008, though it's far below the $339,000 median posted at the 2006 peak.
"There's no question we're past the bottom of the market," said Craig Lewis, president of Modesto-based Prudential California Realty. "My strong feeling is that home prices will continue on their way up and that mortgage interest rates will not get any lower."
Lowest-in-history interest rates are getting credit for bolstering last year's hot market. Mortgages with 3.5 percent rates fixed for 30 years became common, even for buyers who previously had lost homes to foreclosure.
Yep. Families that defaulted on loans after the market crashed now are eligible to buy again.
Some homeowners who were drowning in mortgage debt just a few years ago are benefiting from today's bargain-priced deals.
Modesto's Lish family, for example, recently bought their dream home after repairing their foreclosure-marred credit.
Julie and Sean Lish bought their first home in 2005 near the height of the market. They agreed to pay $340,000 for a 1,500-square-foot, 1946-vintage home in central Modesto.
"We got one of those horrible mortgages," Julie Lish recalled, explaining how their high-interest loan ballooned payments to more than $4,000 per month by 2008. "It was very, very creative financing," which Lish said she and her husband realized too late.
Their subprime lender was among the first to fold after the market collapsed, so Lish said they had no opportunity to modify their loan terms.
"Like a lot of people, we were robbing Peter to pay Paul" to keep up with the mortgage, which Lish said they couldn't refinance because their home's value had fallen so dramatically.
Three months after their 2008 foreclosure, their house resold for $132,000 $208,000 less than its 2005 sale price.
The Lishes rented for 3½ years, during which time they eliminated all their debts to re-establish good credit.
That enabled them to buy a newer, larger, nicer house for far less.
Their Newby Lane home has 2,248 square feet, plus what Lish calls a 500-square-foot bonus room, a swimming pool and spa on a large lot. It was built in 1979.
They bought it in July for $219,000 with a Federal Housing Administration loan that has an interest rate below 3.6 percent and monthly payments of less than $1,500.
"I think we got it at just the right time," Lish said. "The house we have now is the one we dreamed about owning someday."
Re-entering the market
Considering that more than 28,000 Stanislaus County homes have been lost to foreclosure in the past five years, many more families such as the Lishes soon may be re-entering the home-buying market.
"A lot of them have no idea they're in a position to buy again," said Aaron West, an agent for PMZ Real Estate.
Those re-entry buyers could flood an already crowded market.
West said competition to buy has become fierce in Stanislaus County because relatively few homes are for sale.
DataQuick statistics confirm the housing supply has shrunk. The number of home sales fell by 4 percent in Modesto last year. Sales declined far more in other valley cities 21.4 percent in Merced and 18.8 percent in Turlock.
Houses priced under $200,000 sell at "an amazing speed," West said. "We're having buyers agree to pay over the appraised value just to get a home."
Those bidding wars and the tight housing supply have pushed up prices.
"Home prices will continue to recover until there's balance in the market," West said. Right now, he said, it is mathematically better for people to buy a home than to rent.
Example: West said a buyer who gets a $125,000 FHA mortgage with a 3.5 percent interest rate owes only about $800 a month for principle, interest, taxes and insurance payments. According to Zillow.com, the median rental list price for the Modesto area is $950 a month.
That means it's cheaper to own than to rent.
But buying is easier said than done.
Searching and searching
Just ask Tonie and Jerry Raney, who have been trying to buy a Modesto home since August. They're willing to spend up to $250,000 well above the median sales price but they haven't been able to bid high enough or fast enough to get a home.
"I've literally watched the number of houses available for sale drop every day," Tonie Raney said. She said online home listings are deceptive because a lot of those shown aren't really available at the advertised price.
Many homes seem to be "purposely priced at the low end" to prompt buyers to bid up the property, Raney said. Even when she and her husband thought they had placed the top bid, they didn't succeed in getting the home they wanted.
"This is a seller's market, and it's buyer beware," Raney warned. "You have to be flexible with your criteria (for what you're willing to buy) and flexible with how much you're willing to pay. And you have to spend a lot of time searching."
That's a switch from several years ago when the market was flooded with homes for sale but buyers were reluctant to buy or were unqualified for loans.
"Now, it's not uncommon to have 10 purchase offers on one home," said Larry Mattos, president of Century 21 M&M and Associates, headquartered in Oakdale. He said the number of buyers has increased in part because people are more optimistic about the economy.
"People are more confident their job is going to be around," Mattos said. "It's nice to feel stability and consistency in the market."
Mattos said the upturn has convinced some Stanislaus County developers "to put their toes in the water and start building again."
U.S. Census Bureau statistics show more than twice as many single-family home building permits were issued in Stanislaus County during 2012 compared with the year before. That building increase, from 69 to 147 homes, doesn't include homes in every city, but it shows the upward trend.
The number of houses built last year still pales in comparison to 2005, when the Census Bureau tracked 3,431 building permits in the county.
Business is good
Among the builders benefiting from Stanislaus County's recent sales surge is Kiper Homes, which has been developing Hughson's Fontana Ranch Estates since 2006.
"We sold 24 homes last year with a flurry toward the second half of the year," Kiper spokeswoman Linda Hebert said.
Business has been so good that Kiper has started pre-selling homes in its next 62-lot phase even though model homes there won't open until Feb. 23.
"We have weathered the storm, and sales are currently pretty brisk," said Hebert, noting that Fontana recently has been averaging about one sale per week. "Traffic is definitely up and buyers that are touring the homes are very serious."
Jennifer and Jim Ford were among those serious shoppers, and they ended up buying a Fontana home. They moved in during December.
"I've been watching all the builders out here for years," said Jennifer Ford, a Hughson mail carrier.
The Fords had owned a home in Ceres, but they wanted a newer house with more space, three bathrooms and only one floor.
"A one-story home is really hard to find," said Ford, who expects her parents to eventually move in with them. She and her husband selected Fontana's new 2,585-square-foot floor plan. "I felt we got in at the right time for a good price."
That model's base price currently is $292,000.
Bee staff writer J.N. Sbranti can be reached at email@example.com or (209) 578-2196.