Tuesday, May 13, 2008

Sales skyrocket as low prices, big selection draw interest

By J.N. SBRANTI
jnsbranti@modbee.com

last updated: April 20, 2008 05:17:11 AM

Realtors have been insisting for many months that this is a terrific time to buy a house: Prices are way down, selection is tremendous, and interest rates are relatively low.

Now buyers finally seem to agree. Stanislaus County home sales surged in March, and there's a giant backlog of pending deals working their way through escrow.

Nearly twice as many Stanislaus County homes sold last month as in September, according to statistics from the Central Valley Association of Realtors. And there are more pending sales than at any time in the past five years.

"Sales activities have exploded. We're seeing it all the way from Lodi to Los Banos," said Mike Zagaris, president of PMZ Real Estate, based in Modesto. "Home prices have dropped substantially. As a result, there's a flood of buying interest by families and investors."

Zagaris estimated that

70 percent of buyers are people who plan to live in the homes, with the rest going to investors snapping up rental property.

The deals are great, at least compared with the wildly inflated prices that buyers paid for property during 2005. Stanislaus County homes peaked at a median price of $392,000 in December 2005, and they've been plummeting since. March's median sales price was $232,163. That's a 41 percent drop.

"We've gone from very, very

unattractive prices to very attractive prices," Zagaris said. "It illustrates how the market can take care of itself."

Home values have fallen to 2003 levels, according to the Stanislaus County assessor's office, which is lowering tax assessments for 38,000 homes.

"For me, it's a good thing," said first-time home buyer Emily Pino, who is shopping for a downtown Modesto home. "It provides more people like me with an opportunity to buy."

Last week Pino, 25, made a $100,000 offer on a two- bedroom home on 15th Street that was built in 1885.

"I want to be able to walk to places and live on a tree-lined street," said Pino, a Riverbank city planner. She said she's not interested in the multitude of newer tract homes for sale.

There are plenty of houses of all types to choose from in Stanislaus County, where about 3,900 homes are on the market.

Bank-owned often spells delay

Tawny Holt and husband Philip Baird recently have toured more than 15 homes in Modesto's older La Loma and College neighborhoods. They hope to buy something this spring for $150,000 to $215,000.

"We currently have offers in on three homes," said Holt, a clothing designer who works out of her Modesto rental house.

She said most of the houses they're considering are in jeopardy of foreclosure or have been repossessed by lenders, which can draw out the buying process.

"We're having a heck of a time getting those deals closed," said Craig Lewis, president of Prudential California Realty in Modesto. He said bank-owned homes often have trouble establishing clear title to the properties, and the companies they use to process the paperwork "are just swamped."

Lewis said escrow delays often pose problems for buyers because their loans fall through. Many mortgage programs, he explained, have tightened lending standards significantly in recent months, forcing buyers to re-qualify.

"Even highly qualified buyers are having a hard time getting through the maze," Lewis said.

That's why there was a backlog of nearly 900 pending sales last month in Stanislaus County.

After two years of slumping sales and staff cuts throughout the housing industries -- including mortgage brokers, title company officers and real estate agents -- those left in business are busy.

"In the last week, I've been just bombarded with work," said Andy Constantinou, an appraiser for Stanislaus Appraisers. He said he has to hustle to keep up with changing home values. "The banks are selling foreclosed homes for way below the cost of construction."

Constantinou said there are "incredible opportunities to buy out there."

"Where you're going to see the biggest equity gains is in the ranchettes because they've taken the biggest hits," he predicted. He said rural homes that sold for $700,000 a couple of years ago now go for $400,000, but he doesn't think that will last long. "You can't go out and develop five-acre parcels like that anymore."

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