Northern San Joaquin Valley's housing market recovering

jnsbranti@modbee.comApril 25, 2013 

Home prices are up, foreclosures are down, rents are flat and construction is scarce.

Recently released housing statistics from various tracking agencies show the Northern San Joaquin Valley's housing market climbing its way out of recession.

Here's a sampling:

Prices rising: Stanislaus County's median-priced home sold for $160,000 last month. That's 24 percent more than a year ago, which was about when the real estate market bottomed out. Homes now are selling for about the same price that they were in spring 2001, according to DataQuick statistics.

San Joaquin County home prices also jumped last month, reaching a median $201,000 sales price. That's nearly 30 percent higher than a year ago.

"While there are several reasons why California home prices are rising so quickly, the most dominant is government intervention," said Sean O'Toole of Foreclosure Radar, which tracks home sales.

O'Toole said government intervention has significantly distorted the housing market by constraining supply and keeping mortgage interest rates artificially low.

Future price increases, O'Toole said, "will be constrained by availability of credit, appraisals that lag market prices, affordability and return on investment."

Foreclosures fading: The number of Stanislaus County homes lost to foreclosure fell to 371 this January, February and March.

That's the lowest quarterly number in six years. During the fall 2009 peak of the region's foreclosure crisis, nearly four times as many homes were repossessed by lenders.

Merced and San Joaquin counties — and California as a whole — have experienced similar drops.

The number of Northern San Joaquin Valley homes entering the foreclosure process has declined. Only 315 "notices of default" were filed against delinquent mortgage holders in Stanislaus last month, according to DataQuick statistics.

"It appears last quarter's drop was especially sharp because of a package of new state foreclosure laws … that took effect Jan. 1," said John Walsh, DataQuick's president.

"In recent years, we've seen temporary lulls in foreclosure activity after new laws kick in and lenders adjust. It's certainly possible foreclosure starts will pick up at some point this year if lenders need to play a lot of catch-up," he said

Walsh said the foreclosure mess won't disappear until home prices increase: "As values rise, fewer people owe more than their homes are worth, and more people can refinance into a more favorable loan. It also means more who fall on hard times can sell their homes for enough to pay off the loan."

Rents flat: Apartment rents statewide have been jumping, but they remain fairly stagnant in the valley.

California's average monthly apartment rent was $1,537 during the first three months of 2013. That was a 4.6 percent boost from last year, according to RealFacts statistics.

But in Modesto, apartments rented for an average $810 — less than what they were going for in 2008 and 2009.

Merced remained one of the state's least expensive communities to rent, with rates averaging just $785 per month. Manteca was more pricey at $1,005. Turlock was $821 and Sonora was $833.

New homes: Only 15 single-family home building permits were issued in Stanislaus County in March, according to the U.S. Census Bureau. In Merced County, there were just six permits, but San Joaquin County issued 78.

Distressed sales: So-called short sales and bank-owned home sales have dominated the Northern San Joaquin Valley real estate market since the recession began.

But that changed in March, according to data provided by the California Association of Realtors.

In Stanislaus County, for example, about 61 percent of the homes sold last month were "equity sales."

That means those homes sold for more than what was owed on their outstanding mortgages. That's a big change from March 2012, when only 30 percent of Stanislaus sellers ended up with money in their pockets after selling their homes.

Cash sales: Statewide, more than 30 percent of home sales this year have been all-cash deals without mortgages. They primary involve investors, rather than people buying homes to live in.

The percentage of cash sales recently has been about four times higher than what was normal from 2001 to 2007, according to Foreclosure Radar.

House flips: Last month, house "flipping" — reselling a property within six months of purchasing it — reached its highest level in California since September 2005.

"Flipping has steadily increased over the past 12 months due to the increase in profit potential in a market where housing prices are on the rise," according to Foreclosure Radar.

Mortgage relief: More lenders have enrolled in the Keep Your Home California Principal Reduction Program. Those lenders have agreed to help some financially strapped homeowners by reducing their mortgage debt by up to $100,000.

Bank of America, Wells Fargo, JPMorgan Chase, Cal Vet, Capital One, Ocwen, U.S. Bank and 55 other financial institutions have agreed to offer that debt relief.

To qualify for the free program, homeowners must owe more on their mortgage than their homes are worth. They also must be experiencing an economic hardship that makes it difficult to pay their mortgage.

For more information, go to www.KeepYourHomeCalifornia. org or call (888) 954-5337.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or (209) 578-2196.

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